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Company Town | THE BIZ Q&A

MTV Networks Chairman Channels His Energy to Expanding Brands

April 06, 1999|CLAUDIA ELLER and MARK SAYLOR

Tom Freston, MTV Networks' 53-year-old chairman, has one of the more unconventional resumes in entertainment. Abandoning a short-lived career in advertising in New York because of the "slow pace" and the prospect of working on a toilet paper account, Freston took off to see the world and, in the early 1970s, landed in Asia, where for eight years he and a partner ran a textile business out of Kabul and New Delhi manufacturing trendy peasant clothes for Bloomingdale's customers.

"I didn't have a clue what I was doing," admits Freston, who recently spent his second honeymoon in Laos. Tired of dealing with Third World strikes, power blackouts and 120-degree days, he returned to New York. After reading an article in Billboard magazine about a few guys starting a music-video channel, he called them and said, "Hey, I'm an entrepreneur--you should hire me."

He became director of marketing in March 1980 and the following August helped launch MTV, which Warner Amex Satellite Entertainment thought was not much of a business and sold to Viacom Inc. in 1985. A year later, Viacom was bought by Sumner Redstone, who often boasts about being MTV's biggest fan.

Today, Freston oversees the company's five basic cable TV programming networks--MTV, M2, VH1, Nickelodeon/Nick at Nite and TV Land--focusing his energies heavily on expanding the brands in all corners of the globe and on the Internet. Some analysts regard Freston as a possible successor to Redstone.

Freston has been instrumental in the networks' strong growth over the last two decades and their influence on pop culture. MTV Networks' worldwide revenue has nearly tripled over the last five years from $700 million to $1.9 billion, and its estimated earnings before interest, taxes, depreciation and amortization have more than doubled, from $275 million to nearly $750 million. Last year, the division accounted for 15% of Viacom's overall revenue and 39% of its operating cash flow.

Freston was interviewed at MTV's headquarters in Manhattan.

Question: There was a period a couple of years ago where MTV looked like it was flattening out.

Answer: That happens every few years--a generation sort of changes or the creative product gets stale or you lose your way, but in the last 18 months MTV has been in a major period of growth. MTV is, in a way, the most difficult network to manage, because it's so much about what's going on today. Nickelodeon is much more of a traditional type of television business. And VH1, because of the nature of the audience, isn't so fickle. MTV is in a constant state of flux.

Q: The core MTV audience is 18 to 24. How are today's MTV viewers different from those of a few years ago?

A: They're much more optimistic, hard-working, experimental, open-minded, tolerant--a lot of good values--and they're very technically oriented. A pretty remarkable generation. They are going to just wreak huge amounts of change throughout the economy as they go forward, just like the boomers did.

Q: What music do they like?

A: You see a lot of these kids that are very open in their musical tastes today. . . . The generation before, I was into alternative rock, or I was into hip-hop, or I was into classical Jimi Hendrix stuff. Today they're very open-minded when it comes to music. They like swing, they like hip-hop, they like a lot of the hard rock, they like all kinds of different music.

Q: Is that easier for you?

A: Much easier. We have shows that specialize, but the bulk of the music that we play is all that stuff mixed up together, and it works. Our real focus here as a company is an almost maniacal view of our audience, trying to get into their heads, get into their closets, get into their lives, find out what's going on.

Q: Is your goal to have networks that cover basically every age group?

A: Right now we're cradle to near-grave.

Q: How old do you go?

A: Well, about 50. I wouldn't say that's the grave, but--it's actually TV Land. But we're looking at a [new] channel that serves the 50-plus audience.

Q: In the future, will your channels grow by taking from broadcast networks or in the international markets?

A: Both. I think the networks are going to be nibbled away at by us and others forever. You could posit that aggregate network share every year is going to get lower and lower and lower. Some networks will have a higher season than maybe the one before, but in the long run, their future is a steady, inexorable downward drift.

I think our international operations are profitable now. MTV is in 88 countries. . . . Nickelodeon is in about 100 million homes internationally, and in aggregate they're profitable, and it's the fastest-growing piece of our business.

Q: Is there some point at which broadcast networks become just another cable service?

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