Hit Parade

MTV hears a chorus of rivals

When businessmen contemplate the success of MTV, they are often as envious as a teen-ager looking at his favorite rock musician. The round-the-clock music-video network carries all the trappings of a corporate superstar. Little more than three years old, MTV already boasts publicity, glamour and millions of loyal viewers. As a result, the cable channel now faces another consequence of success: hungry competitors.

Television Titan Ted Turner last week launched MTV's first 24-hour opponent, Cable Music Channel. Another contender, Discovery Music Network, plans to begin operating in two months. "MTV has good reason to worry," says Alan Gottesman, an analyst at the L.F. Rothschild investment firm. "If anybody can break MTV's hold on the market, Turner can. He has the money and the patience."

MTV's rapid rise astounded even its principal owners, American Express and Warner Communications. The companies lost more than $50 million on the venture between 1981 and 1983, but in the first half of this year MTV pulled in a profit of $8.1 million on sales of $30.2 million. The channel now beams to 23.5 million households, up 57% from last year. Indeed, MTV has become almost a generic term for music video. To preserve that status, MTV promotes itself tirelessly. Last month the network staged the First Annual MTV Video Music Awards, a $100-a-seat glitterfest for 5,800 guests. Prizes were given only to videos that had appeared on MTV.

The two new channels will try to compete with MTV by aiming at a broader audience. MTV plays mostly hard rock that appeals to a viewership whose ages range from about twelve to 34. DMN and CMC will serve up a wider spectrum of music, from jazz to country, for an audience in the 25-to-49 category. The channels will adjust the hardness quotient of the programming throughout each 24-hour cycle, playing easy-on-the-ears music during the day and funkier fare for after-school hours and late at night. The newcomers, though, will have to share this concept too with MTV. Less than two weeks after Turner revealed his plans for CMC, MTV said it would launch its own mass-market channel called Video Hits One.

MTV's would-be competitors contend that the channel, not long ago an underdog, has turned into a bully. In June the company signed contracts with four major record firms guaranteeing MTV exclusive use of many new video clips for as long as one year. DMN promptly sued MTV in a Los Angeles federal court, charging restraint of trade. Last month the Justice Department began a preliminary inquiry to find out whether MTV's strategy violates antitrust laws. Contends MTV President David Horowitz: "These contracts are normal practice in the [entertainment] industry and totally legal."

The Atlanta-based Turner may have employed tough tactics of his own. He revealed his idea for CMC only one day before MTV was planning to make its initial public offering of 5.1 million shares. The company had hoped investors would pay up to $18 a share for the stock. Possibly spooked by Turner's musings, they paid only $15, which cost MTV some $15 million. Turner's company claims that the timing of the announcement was a coincidence.