MTV's World (Business Week)
Mando-Pop. Mexican Hip Hop. Russian Rap. It's all fueling the biggest global channel
It's the Suit vs. the Tattoo Set. Foggy Bottom and the Hip Hop Crowd. The General and the Veejay. It's, it's...well, it's another weird but fascinating cultural moment on MTV, the Viacom-owned music network (VIA ) that supplements its core mission of delivering 150-decibel music to the world's teens with straight-talking programs on issues such as AIDS, drugs, and racism. On Feb. 14, U.S. Secretary of State Colin L. Powell will lead Be Heard, a no-holds-barred talk show on MTV Networks, where he will field questions on the crisis in Afghanistan from teens from Boston to Berlin to Bombay. The program will air on MTV's 33 channels worldwide and reach almost 375 million households. MTV's video jockeys--the ones who usually deliver wall-to-wall Hindi film music, German hard rock, Mando-pop, and Mexican hip hop to local viewers--will moderate the meeting, and translators will be on hand to turn questions into English. It will be, in other words, an Event.
Powell's appearance is a media moment that only MTV could pull off. Media moguls can babble on about the global village, on how CNN or BBC can reach out and touch the world. But those news shows are bush league operations compared with MTV's global clout. Thanks to the roaring success of its subsidiary, MTV Networks International, the music channel and its sister operations, VH1 and Nickelodeon, reach 1 billion people in 18 different languages in 164 countries. Eight out of ten MTV viewers live outside the U.S. CNN International reaches an international audience less than half the size of MTV's. Its impressive global reach has earned MTV membership in that tiny elite of such globally transcendent brands as Coke and Levi's.
MTV seems not to have missed a beat as turmoil roils the executive ranks at parent Viacom, whose board in late January called upon CEO Sumner Redstone and Chief Operating Officer Mel Karmazin to cease feuding. The stock is down almost 20% since early January, but analysts say the strife should have no impact on operating units like MTV. MTV Networks International makes buckets of money year after year from a potent combination of cable subscriber fees, advertising, and increasingly, new media. Very few other transnational media operations can claim to make profits at all. But revenues at MTV Networks International increased 19% in 2001, to $600 million, while operating profits grew a hefty 50%, to $135 million. They are expected to more than double by 2004, according to Merrill Lynch & Co. media analyst Jessica Reif Cohen. In the past three years, the growth of MTV Networks International has outpaced the domestic network, accounting for 16% of MTV Networks' overall revenues, says co-founder and Chairman Tom Freston. He aims to increase that to 40% within five years, as MTV in the U.S. begins to plateau. MTV's international success is attracting a host of imitators, one of them spawned by the relentless Rupert Murdoch. But for now, MTV's version of globalization really rocks.
MTV Networks International owes its success to a lot of factors. First, demographics: There were 2.7 billion people between the ages of 10 and 34 in 2000. By 2010, there will be 2.8 billion. Increasingly, this age group is acquiring the bucks to buys CDs, jeans, acne cream--whatever brands are hot in each country. That means advertisers increasingly love MTV International. Second, music: All that stuff about music being a universal language is true, and rock is the universal language for Planet Teen. What MTV does is customize the offering in a brilliant way. Third, television: The number of sets in the world's living rooms--especially in such places as China, Brazil, Russia, and India--is exploding. So are the globe's cable networks. "Everyone who has a TV knows there's something called MTV," says Chantara Kapahi, a 17-year-old student at Jai Hind College in Bombay. The fourth reason is Bill Roedy.
Roedy, a 53-year-old West Point grad, is president of MTV Networks International and, theoretically, is based in London. Theoretically, since his real office is more of a semi-perpetual airborne state involving him, his trademark army green pen and paper, and a business-class round-trip ticket to wherever. To give kids their dose of rock, he has breakfasted with former Israeli Prime Minister Shimon Peres, dined with Singapore founder Lee Kuan Yew, and chewed the fat for five hours with Chinese leader Jiang Zemin. Roedy even met with El Caudillo himself--Cuban leader Fidel Castro, who commended Roedy for his educational efforts on AIDS and wondered if MTV could teach Cuban kids English. Says Roedy: "We've had very little resistance once we explain that we're not in the business of exporting American culture."
Roedy & Co. are shrewd enough to realize that while the world's teens want American music, they really want the local stuff, too. So, MTV's producers and veejays scour their local markets for the top talent. The result is an endless stream of overnight sensations that keep MTV's global offerings fresh. Just over a year ago, for example, Lena Katina and Yulia Volkova were no different than most Moscow schoolgirls. Today, Katina, 16, and Volkova, 15, form Tatu, one of the hottest rock groups ever to come out of Russia. Tatu has won a cult following among local teens since their debut single, Ya Soshla s Uma (I've Gone Crazy), first aired on MTV Russia 15 months ago. Universal even plans to promote Tatu's next recordings in the U.S. "Our producers could have signed a contract with Sony or Warner, too. We had offers from all of them," says Katina.
Tatu is just one of a slew of emerging local music groups gaining international exposure through MTV and a wider audience in the U.S., too. Colombian rock singer Shakira, unknown outside Latin America until she recorded an MTV Unplugged CD--the acoustic live concerts recorded by MTV--in 1999, is now the winner of one U.S. Grammy and two Latin Grammy awards. Her CD has gone platinum, selling more than 2 million copies worldwide. After releasing four CDs in just three years, Taiwanese pop star Jolin Tsai, 21, is gaining popularity in mainland China thanks to heavy airplay on MTV. More unusual is Pakistani-born pop singer Adnan Sami. He's a cross-border phenom, too--only this border is bristling with guns. After appearances on MTV India last year, Sami's first album, Kabhi to Nazar Milao (Look at Me Sometimes) has sold 2 million copies there.
Viacom is now counting on MTV to be one of its biggest growth drivers in the next decade. There's plenty of room to launch new channels on cable and satellite outside the U.S., where penetration, at 38%, is about where the American market was in 1983. As digital television takes off in Europe, MTV plans to introduce more music channels, such as the seven it has in Britain that focus on such genres as rhythm-and-blues and dance. Another part of the strategy: make MTV "a vehicle to develop business [for other Viacom brands]," says Viacom COO Karmazin. "Let's face it, the way people know Viacom is through MTV." Viacom can parlay growth abroad for its lesser-known VH1, Nickelodeon, and TV Land brands "off MTV's reputation."
MTV also is betting heavily on emerging technologies. Last November, MTV UK created interactive applications for digital TV that enable viewers to buy CDs, get information on gigs, and vote for nominees in MTV's European Music Awards. Now available on Sky Digital, the applications will be rolled out across Europe this year. Another premier, this time in Scandinavia, was MTV Live, which goes to homes with broadband cable. Viewers can play virtual games, such as Trash Your Hotel Room, where users get the chance to be a rock star and wreak virtual havoc.
Meanwhile, in July, 2000, MTV Asia launched LiLi, a virtual animated veejay who interacts with viewers on air and online in five Asian languages. An actor behind the image controls LiLi's responses, letting her interview artists and offer viewers tips on pop culture in real time. LiLi is now so popular with Asian teens that Ericsson has launched a line of LiLi mobile phones. In Japan, an MTV wireless Internet service lets users download entertainment news, vote for their favorite veejays, or choose music. MTV "tries to make a lot of noise off the channel," says Nigel Robbins, CEO of MTV Group Japan.
MTV's early international expansion--it got into Moscow in 1993, for example--puts it ahead of the competition in nearly every market. Hong Kong-based Channel V's 24-hour music channel, owned by Rupert Murdoch's Star TV, reaches nearly 47 million homes but has yet to make a profit. VIVA--owned 45.9% by AOL Time Warner (AOL ), EMI, and Vivendi Universal (V )--is MTV's biggest rival in Europe. It reported a net loss of $9.4 million on sales of $40 million in the first nine months of 2001 but expects to be in the black in 2002. "The market is big enough for both of us," says VIVA CEO Dieter Gorny.
The music channel also faces some risks in a handful of countries, such as Italy and Brazil, where MTV operates its channels in partnership with a local player. "It's really a question of whether they can maintain distribution on outlets they don't own," says Sanford C. Bernstein & Co. media analyst Tom Wolzien. Wolzien says News Corp. and Vivendi have much stronger relations with local regulators, giving them an edge in launching music channels they can control.
MTV's best response to these threats is to make its programming as strong as possible. Its policy of 70% local content has resulted in some of the network's most creative shows, such as MTV Brasil's monthlong Rockgol, a soccer championship that pits Brazilian musicians against record industry executives. In Russia, the locally produced Twelve Angry Viewers was voted one of Russia's top three talk programs. In a colorful studio amid bright blue steps and large green cushions, a dozen teens watch and discuss the latest videos. Periodically, they break into spontaneous dance or pop one another over the head with inflatable lollipops. O.K., it's not Chekhov. But Russian groups beg to be featured on it. Says producer Piotr Sheksheyev: "MTV trusts that we Russians know best what works."
Ceding so much control to local channels does result in the occasional misstep. While watching MTV in Taiwan, Roedy was aghast to see nude wrestling. That was one time we had to "intervene," he recalls. When MTV first entered the Indian market in 1996, Hindi film music--the romantic, colorful soundtracks of Bollywood films--was wildly popular, but the channel's locally hired programmers disdained it as uncool. Viewers abandoned the channel, forcing it to air Bollywood music. Since then ratings have soared by 700%.
India is one of the giant markets that MTV is determined to dominate. The other big-country play is China. Analysts believe it is likely to be some time before the government grants 24-hour broadcasting licenses to foreigners on a nationwide basis. Still, in 2001, MTV's ad revenue in China almost doubled--even though the network airs only a maximum of six hours daily through Chinese cable systems.
Roedy has spent the past decade cultivating relationships in China. At one long dinner with Chinese cable operators, he desperately attempted to hold his own through countless toasts and karaoke songs. While his Chinese counterparts sang Chinese opera arias, Roedy sang a few songs from Madame Butterfly, while MTV Chairman Freston belted out House of the Rising Sun, the bluesy ballad about a New Orleans whorehouse. They must have been in tune: MTV Mandarin is seen in 60 million homes in China via 40 Chinese cable systems. Last year, more than 10,000 teens came from all over China to audition to become the next veejay on MTV Mandarin. One finalist, who had traveled 18 hours to Beijing, was so distraught at losing that MTV offered to let her veejay for a day. Anything to keep a viewer.
