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MTV : company profile

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MTV celebrated its 30th anniversary in 2011 as the world's biggest entertainment brand as well as the most widely distributed television network, reaching almost 700m households in over 160 countries around the globe. The channel's achievements are considerable. It completely transformed the nature of popular music during the 1980s and 1990s, arguably even more influential on that medium than the introduction of the compact disc or the iPod. It is also one of only a handful of media properties of recent years which has transcended its original format to become something close to a lifestyle brand. According to consultancy Interbrand, MTV is still one of the world's most valuable individual media brands (though it slipped to second place in 2014 behind Discovery Channel). Yet it began as simply a cheap way of filling a dead slot in a regional US cable system. How did it manage to come so far? And perhaps more importantly, how much further does it have left to go, now that it competes with even more nimble online rivals? A sharp decline in MTV's viewing figures is just one of multiple problems facing parent Viacom in 2016.

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Brand Analysis

MTV is unique, one of only a handful of truly global media brands, and an unrivalled innovator which arguably created a new entertainment form. Financially as well it was the most consistently profitable business within Viacom for many years, and managed successfully to expand its profile into other media, notably the internet, to compensate for saturation in the global cable TV market. More recently, though, MTV's dominant position as a taste-maker for the youth market has come under threat for the first time as a result of the rapid rise of social network and video-sharing sites such Facebook and YouTube. Partly as a result, MTV has evolved from its original content format into a youth-oriented lifestyle network where music videos are now noticeable by their complete absence.

MTV is the vehicle which transformed the music industry from a group of regional businesses into a truly global enterprise, and which turned singers into superstars. Before MTV, music was just something you listened to. In a global context, musicians existed only in terms of their music, still photographs and the very occasional world tour. But the rise of video in the early 1980s turned them first into actors and then into icons. From that point on, their success depended as much (if not more) on their charisma as on their music. Just as talking pictures had transformed the film industry in the 1930s, video entirely altered the nature of the music industry. Rock bands composed of nondescript or overweight blokes in beards or tight trousers found their careers eclipsed by good-looking, young, often solo performers, fresh-from-nowhere, and boasting a striking or unusual image. Before MTV, the biggest acts in America were soft-rock groups such as Journey, Foreigner, Styx and REO Speedwagon, and solo performer Christopher Cross. MTV swept them all away in favour of the likes of Duran Duran, Cyndi Lauper, Madonna, Michael Jackson and Prince.

Careers were transformed as well. David Bowie spent much of the 1970s as a critically acclaimed rock star with a large cult following in the US and UK. But he didn't achieve real commercial success until the 1983 album Let's Dance. Supported by a string of stunning videos which received maximum exposure on MTV, Let's Dance became the best-selling album of his career, eclipsing in sales all ten records which preceded it. MTV didn't invent the promotional video, of course, but it did become its primary distribution channel, especially in the United States, where it was renowned in the 1980s for being able to make or break upcoming artists. It also defined a whole age group, "the MTV generation", as well as a cultural phenomenon, the so-called "MTV attention span", whereby viewers required constant fast gratification, a constantly changing stream of new images.

More recently, the main MTV channel has moved almost entirely away from music coverage into youth-oriented lifestyle, culture and entertainment programming. It effectively invented the much derided but hugely popular "reality TV" format with The Real World, a fly-on-the-wall portrait of ordinary young people transplanted from their homes into a New York loft. The original show aired in 1992 and was followed by numerous sequels set in other cities, not just in the US but around the globe. Incredibly, The Real World is still running: its 30th season started in 2014. Other equally influential hit shows included crazy stunts show Jackass, foul-mouthed celebrity reality/soap The Osbournes, and two further reality shows, The Hills and Laguna Beach. Just as MTV's original format revolutionised the music industry, its fly-on-the-wall programming provided a lucrative new model for mainstream broadcasters, who quickly followed MTV's lead by jumping wholeheartedly into the low-cost, high-rating world of reality TV.

Serious questions were raised for the first time about MTV's strength during 2006 and 2007. Despite its huge audience, ratings growth had slowed significantly. A key concern was a sharp 30% drop in the TV audience for the 2006 MTV Music Video Awards, one of the channel's flagship events. This was exacerbated by the first results from Nielsen's new commercial ratings, which showed that MTV viewers were more likely than other channel viewers to switch channel or walk away during ad breaks. The channel was quick to address these concerns with a strengthened program line-up, with the result that ratings began to improve towards the end of 2007 after a two-year lull. By mid 2008, however, much of that improvement had once again evaporated, and the channel reported an 18% slide in viewer numbers towards the end of 2008. Average primetime viewer numbers have slumped from over 600,000 in 2006 to around 250,000-300,000 by 2014, unless boosted by one-off event shows. Worse still, the channel has lost almost half its core demographic of 18-49 viewers since 2011.

As a result of falling interest in music videos, MTV was pushed to find a new direction of its own, moving into more socially aware content and even scripted entertainment. That resulted in a new set of shows, of which the most significant was undoubtedly Jersey Shore, an entertaining rethink of the Real World concept featuring less glossy participants. This led a strong comeback during 2010, as the network reported the best growth in viewing figures for eight years. The debut of a second series of Jersey Shore caused ratings to jump 30% in the third quarter of the year and established that show as the #1 series across all cable and broadcast channels. Audiences peaked at almost 9m in Spring 2011, a record for MTV, before gradually fading over the next year. The final Jersey Shore season ended in early 2013, although it spawned several spin-off shows.

The channel's biggest recent hit has been Catfish, a documentary series about fake online dates. Other shows included reality series Teen Mom, and comedy dramas Awkward, Faking It and Teen Wolf. In 2012, the network added a US version of the hit British series The Inbetweeners, but this failed to win over local audiences. The channel has seen a new relaunch in 2016, with the introduction of new music-themed shows such as Wonderland, the return of MTV Unplugged acoustic performances and Cribs, and a number of bigger-budget scripted series like Scream and The Shannara Chronicles. In 2016, the channel's single most popular show remains Teen Wolf with over 1m average viewers. Shannara Chronicles had just under 900,000.

Throughout this period, though, the channel has continued to attract its biggest audiences with its blockbuster annual awards shows, the VMAs or Video Music Awards, which celebrated their 30th anniversary in 2014, and MTV Movie Awards. However the biggest challenge now comes from myriad competing streams on YouTube and other online channels, which have successfully targeted MTV's traditional audience. Viewing figures for the VMAs plunged by more than a third in 2016 to just 6.5m including simulcasts on other Viacom-owned channels.

As a result of MTV's broader content, a series of spin-off stations have been spawned to provide more specialised music coverage. MTV2 became the main music video-based segment, while VH-1 targeted a slightly older market. However both those channels too have moved away from music video into broader pop culture content. MTV-U is an online and on-air college campus network broadcast live by satellite to some 750 US college campuses. MTV Tr3s launched in 2009 for a Latino youth audience. The brand has also diversified into movies, books, online and even consumer products ranging from clothing to pagers and mobile services. In 2015, secondary channel VH-1 Classic was relaunched as MTV Classic, with a renewed emphasis on music videos and re-runs of Beavis & Butthead.

Analyst Trefis estimates US revenues for MTV of $940m for 2015, comprising $478m in ad revenues and $501m in subscriptions. Sister channel VH-1 contributed an additional $494m, split 52/48 between subscriptions and advertising.

Brands & Activities

It is hard to believe that even after 25 years of existence, MTV had no credible worldwide competitor. Although several markets offered similar themed music channels, few achieved anything close to MTV's level of penetration. Only Channel V in Asia and Australia (a joint venture between News Corp's Star TV and record companies) and Viva in Germany (originally controlled by a group of record companies) have ever offered any real threat. In 2004 Viacom blocked the latter by taking control of Viva, buying the business for €394m. Following completion of that deal Germany became MTV's second-largest single channel market outside the US, behind China. In addition to Germany, Viva broadcasts to the Netherlands, Hungary, Switzerland and Poland.

By September 2013, the core MTV channel reached 99m US households. That figure had declined to 91.4m by Nov 2015. Its various international businesses are even more substantial, but have also declined, from 550m households in 160 countries in 2013 to 412m households in 178 countries by 2015. There are now 66 branded regional channels broadcasting globally in 18 languages, as well as MTV-branded programming blocks on other broadcasters' channel. Outside the US, MTV is delivered through a variety of wholly owned, joint venture or licensed companies, each of them offering local music content as well as syndicated network programming. One of the biggest is MTV Asia, which reaches over 124m households in 21 territories, and consists of eight regional channels presented in English and local languages. Originally a joint venture with Universal Music Group, it has been wholly owned by Viacom since 2002. MTV Japan operates separately but is also wholly owned. There are also joint venture operations in Indonesia, the Philippines, Australia and Korea.

Among other local operations, MTV Canada is managed under license by local company Craig Broadcast Systems; while Telecom Italia controls the franchise in Italy. MTV Brasil launched in 1990 as a joint venture with local broadcaster Abril, and is currently seen in over 16m households. Vicaom took back full control of the business in 2013. MTV Latin America, operates separately, and is owned by Viacom. Launched in 1993 and based in Argentina, it reaches 11.5m households in 21 territories in Latin America and selected US Hispanic markets. MTV Europe launched in 1987, covering the whole territory. Since then it has repeatedly fragmented, as individual local channels have spun off in their own right. There are now 8 regional feeds, reaching more than 117m households in 50 territories in the EMEA region. MTV Poland launched in 2000 as a joint venture, but is now wholly owned by Viacom. MTV Russia launched in 1998. A joint venture for several years, it was run under license by local broadcaster BIZ Enterprises until Viacom took back control in 2013. MTV Romania launched in 2002 under license.

In 2006, MTV launched its own digital music download service, Urge, in partnership with Microsoft's MSN Music, designed to compete directly with Apple's dominant iTunes service. However the partnership was discontinued in 2007 and instead MTV agreed to merge Urge into rival service Rhapsody, which became a joint venture with Rhapsody's owner, RealNetworks. The latter has 51% of the enlarged company to MTV's 49%. Also in 2007, MTV launched its own social networking service, Think.MTV.com. The site carries a special emphasis on social and political issues. MTV Switch is a similarly worthy campaign to promote awareness of climate change.

MTV now forms the lead brand in MTV Networks, the division of media group Viacom which comprises the majority of its cable interests, which also include kids channel Nickelodeon, and other strands. MTV is the lead strand within the Music & Entertainment Group within MTV Networks, alongside VH1, CMT (Country Music Television) and Comedy Central. One of the group's newer offerings is Logo, a channel aimed specifically at a gay audience. VH1 reaches 91m households in the US, Comedy Central 92m and Logo 50m.

MTV Networks was also previously the reporting division for software developer Harmonix, acquired in 2006, and best-known as the original developer of the enormously successful games franchise Guitar Hero. It surrendered that game upon acquisition by Viacom, but launched a similar product in 2007 under the name Rock Band. Like Guitar Hero, that franchise has spawned several sequels, most prestigious of which was a version containing exclusive content licensed from The Beatles. However sales have lagged well behind Guitar Hero, with the result that Harmonix was eventually sold in 2010 to private investors. The group wrote off impairment losses of more than $320m associated with the business. A subsequent legal dispute with Harmonix' founders over earn-out fees cost several hundred million more.

Management

Long-time MTV Networks chairman & CEO Judy McGrath left the company in May 2011, just short of 30 years after she first arrived at the channel as a copywriter. She was not directly replaced. Another veteran manager, Van Toffler, president of MTVN Music & Logo Group, departed the company in early 2015. As a result, the music and logo group was folded into the wider entertainment group headed by divisional president Doug Herzog. However Herzog resigned from the group at the end of 2016. Sean Atkins succeeded Stephen Friedman as president of the main MTV strand in 2015, but he too departed after just a year in that role, to be replaced by Chris McCarthy.

Other executives include Robyn DeMarco (EVP, president, programming & strategy), Erik Flannigan (EVP, music & events strategy & development), Kristin Frank (EVP, strategy, revenue & operations), Michael Klein (EVP, original content) and Jacqueline Parkes (EVP, marketing & creative).

Background

Perhaps the most astonishing aspect of MTV's massive success is the fact that it was so wholly unintended. MTV was launched on August 1st 1981 as a cheap way of filling a dead slot on the Warner-Amex cable system, then a joint venture between Warner Communications and American Express. It was conceived by 27-year-old head of programming Bob Pittman and his team as the cheapest possible form of programming, a string of promotional music videos linked by a small team of good-looking "Video Jockeys" or VJs. However videos were themselves hard to come by. Few US performers made promos, and most of the 120 or so videos available at the time came from Europe, and the UK in particular. With fitting relevance, the first video broadcast was Buggles' Video Killed The Radio Star. Expensively groomed British group Duran Duran also received regular airplay, catapulting them to superstardom in the US, along with The Police, Billy Idol and America's own Prince.

Yet distribution of the channel was initially very limited. MTV's launch audience was around 2m homes, mostly in the American Midwest. Yet the effect on record sales was immediately apparent in retail outlets within the MTV catchment area. As a result, the channel had little difficulty persuading big-name performers to lend their services to its first national marketing campaign in 1982, virtually for free. Mick Jagger, David Bowie, Boy George and other performers were paid as little as a dollar each to film spots in which they encouraged fans to demand "I Want My MTV" from their local cable provider. The ads caused a storm of protest from the cable companies, suddenly flooded with phone calls from viewers, but they signed up regardless, and MTV began adding on 1m subscribers a month. Gradually the channel pieced together national distribution. However increasingly MTV also came under attack from black artists who complained that soul or dance music was virtually excluded from the channel in favour of white pop and rock. Early in 1983, MTV attempted to demonstrate it had no such policy, putting the first video for Michael Jackson's new album into heavy rotation. Extensive MTV airplay for Billie Jean and its follow-up tracks had a huge impact on Thriller's record sales, helping it become the best-selling album of all time by mid-1984, and cementing Jackson's position as arguably pop's first global superstar.

That same year, Warner-Amex spun off this business as MTV Networks, floating a third of its shares. When Warner bought out American Express's share of the Warner Amex joint venture a year later, Pittman and joint president David Horowitz attempted to mount a management buyout of the rest of MTV, but they were outbid by Viacom, which acquired Warner's stake for around $500m. One year later in 1986, Viacom paid a further $176m to take MTV private once again. By then, MTV's style had begun to exert its influence on other visual entertainment, not just youth broadcasting but even mainstream entertainment such as the heavily stylized police show Miami Vice, which featured two cops dressed like members of Duran Duran. (The show was originally pitched to commissioning channel NBC under the title MTV Cops). Hollywood fell completely under MTV's spell, releasing a string of movies which resembled feature-length promo videos, in which a youth-oriented fictional story line was accompanied by a wall-to-wall music soundtrack.

However, MTV found competition from other networks beginning to eat into its US ratings. The format of non-stop music videos was simply too easy for other broadcasters to copy. Guiding hand Bob Pittman made the decision to move on in search of fresh pastures in 1986, and the channel began reinventing itself, introducing other formats, such as request show Remote Control, which placed a heavier emphasis on the charisma of the channel's presenters. A year later the channel launched its first dedicated hiphop show, Yo! MTV Raps, bringing urban black music intro the mainstream. This was followed in 1990 by the enormously influential MTV Unplugged acoustic live performance series. In 1992, the channel introduced an unsuspecting world to foul-mouthed cartoon teenagers Beavis & Butthead. There were also a series of shows which dispensed with music video altogether, including arguably the first reality TV series, The Real World, fashion series House Of Style and later daring stunts segment Jackass. More recently Total Request Live, in which members of a live studio audience select the programming, became the channel's most popular show ever. Or at least until the first airing of The Osbournes, a fly-on-the-wall documentary about the family of British rocker Ozzy Osbourne. First aired in 2002, it was an unprecedented hit for the channel, more popular than any series on cable television except for professional wrestling. It also inspired every other TV network in the US to recruit other C-list celebrities for their own reality TV series.

The channel's power was demonstrated again in the early 1990s when it demonstrated that it could do more than persuade viewers to buy records. Presidential hopeful Bill Clinton was trailing both the incumbent George Bush and independent Ross Perot when he made an appearance on the channel's Choose Or Lose electoral special. The move clinched the youth vote for him, and Clinton went on to overtake both his opponents and become President.

Meanwhile, MTV continued to expand its global distribution. In 1987, MTV Europe launched, opening with the video for Dire Straits' Money For Nothing, which itself celebrated the impact of the fast-expanding channel. MTV Brazil followed in 1990, succeeded three years later by MTV Latin America, and MTV Asia in 1995; in 1996, MTV Europe was replaced by four separate services: MTV UK, MTV Central (Austria, Germany, and Switzerland), MTV European (76 territories, including Belgium, France, Greece, Israel, and Romania), and MTV Southern (Italy), while a separate MTV India service was added to the channel's Asian arm. MTV Australia followed in 1997; MTV Russia launched under a licensing agreement in 1998, and a separate service was launched for Scandinavia. In 2000, Japan, France, Holland, Poland and Spain all got their own channels, followed by Korea in 2001 and Romania in 2002. It brought the group's portfolio to more than 30 separate strands, on top of a wide portfolio of online, broadband and digital services. As if further proof was needed of its hold on its market, the channel was appointed by the European Commission in early 2002 to devise and execute a campaign to sell the concept of the new Euro currency to the region's youth sector. In 2003, the channel was selected by British Prime Minister Tony Blair as the home for a forum to explain his case for waging war on Iraq.

MTV was in the headlines again in early 2004, but for a very different reason. The company was responsible for producing the half-time entertainment for the 2004 NFL Superbowl, broadcast by Viacom stablemate CBS, which culminated in the unveiling of singer Janet Jackson's right breast. Stirring up further controversy shortly afterwards, MTV announced plans to launch the first lifestyle channel specifically targeting a gay audience. The new stream, named Logo, launched in the US in February 2005, offering a mix of music, movies, news and entertainment.

MTV's ultimate owner Sumner Redstone was at the centre of unflattering media coverage during 2010 after an employee leaked details of the elderly billionaire's attempts to pressure MTV management to give more airtime to an all-girl band, the Electric Barbarellas, in whom he had taken a personal interest. Redstone even went so far as to leave a rambling three-minute voicemail message on the answerphone of the journalist who broke the story. That recording was widely disseminated online.

Last full revision 27th September 2016

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