The fashion channel case
no brandingno positioning strategy no detailed segmentation
CNN: fashion Tonight
Lifetime: fashion Today
The fashion channelMain competitors
TFC CNN Life�me
Interest in viewing 3,8 4,3 4,5
Awareness 4,1 4,1 4,5
Perceived Value 3,7 4,6 4,4
Alpha research study on customer sa�sfac�on with cable networks
Respondents were asked to rank on a scale of 1-5 5= Most/Very/High; 4= Somewhat; 3 =Neutral/neither high nor low; 2= Not much; 1= Lowest/not at all)
Affiliate Fees $80 million The fashion channelSources of Revenue
Advertising Sales $230 million
clusters
2006 Actual 2007 Base Scenario 1 Scenario 2 Scenario 3
Ad Sales $230 630 400 $207 567 360 $249 080 832 $322 882 560 $345 945 600
Affiliate Fees $80 000 000 $81 600 000 $81 600 000 $81 600 000 $81 600 000
Total Revenue $310 630 400 $289 167 360 $330 680 832 $404 482 560 $427 545 600
Cost of Opera�ons $70 000 000 $72 100 000 $72 100 000 $72 100 000 $72 100 000
Cost of
Programming $55 000 000 $55 000 000 $55 000 000 $70 000 000 $75 000 000
Ad Sales
Commissions $6 918 912 $6 227 021 $7 472 425 $9 686 477 $10 378 368
Marke�ng &
Adver�sing $45 000 000 $60 000 000 $60 000 000 $60 000 000 $60 000 000
SGA $40 000 000 $41 200 000 $41 200 000 $41 200 000 $41 200 000
Total Expense $216 918 912 $234 527 021 $235 772 425 $252 986 477 $258 678 368
Net Income $93 711 488 $54 640 339 $94 908 407 $151 496 083 $168 867 232
Margin 30% 19% 29% 37% 39%
Revenue
Expenses
TFC Estimated Financials
The fashion channelScenario 1
BROAD APPEAL
The fashion channelpluses
All segment includes female 18 – 34
Awareness and viewing delivera rating boost of 20%
No incremental programming expense
Rating increase 20%
The fashion channelminuses
The risk of higher expansion of competition
Not targeting a specific cluster of segment
CPM decrease 10%
The fashion channelScenario 2
Fashionistas
The fashion channelpluses
CPM Increase 75% to $3,50
Focusing on female between the age of 18 -34 (Premium age)
Strengthen the value of the audience
The fashion channelminuses
Add new programming $15mln additional coast
Higher risks to lose contracts with cable operators due to decrease rating from 1% to 0,8%
Targeting small percentage of HH only 15%
The fashion channelScenario 3
Fashionistas, Planners & Shoppers
The fashion channelpluses
CPM Increase to $2,50
Targeting 50% of TV HH, of which 50% female and 25% of them are 18-34 age
TV Rating increase to 1.2
The fashion channelminuses
Add new programming $20mln additional coast
Could decrease rating in the long-run
Might decrease loyal customers if they are not included in these segments
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