When the Backstreet Boys needed to tell the world this month that one of their members was grappling with depression and alcohol excesses that could derail their concert tour, the group did not issue a press release, call a news conference or dial up Rolling Stone magazine.
Instead, the teen pop icons flew to the New York studios of MTV to present their earnest faces to the music world.
FOR THE RECORD
Los Angeles Times Tuesday July 24, 2001 Home Edition Part A Part A Page 2 A2 Desk 2 inches; 41 words Type of Material: Correction
MTV news--A story in Sunday's business section on cable network MTV misspelled the name of Jeff Kwatinetz, whose firm manages the Backstreet Boys. The article also incorrectly described the scope of MTV's international distribution. The channel has 31 local feeds reaching 140 countries.
It was a telling choice and, according to their manager, an obvious one.
"MTV works with the music community; it's that simple," said Jeff Kwantinetz, whose company, the Firm, also represents Limp Bizkit and Staind. "Their needs are ratings and the bands' needs are being presented in a great way."
That sums up MTV's unique position as a taste maker of youth music, culture and celebrity. The channel, which celebrates its 20th anniversary Aug. 1, has become as big as--or bigger than--any of the music acts that cross its screens in 78 million U.S. households.
MTV's ascent has resulted in a dramatic shift of power in the $40-billion-a-year record industry by creating a marketing machine independent of the five major conglomerates. The channel's dominance of the field it created also has made it a massive profit center for its parent company, media conglomerate Viacom Inc.
"The imprimatur of MTV is a very powerful thing," said Andy Slater, president of Capitol Records. "It's part of the discussions you have to have now when you plan a career."
The cable outlet that began as a scruffy $20-million endeavor based in a Fort Lee, N.J., studio now enjoys a tall, glassed-in perch above Times Square in New York and a brand name with global juice. Although it attracts an average of just 496,000 viewers at any given moment, the channel's hammerlock on the 12-to-24-year-old group has made it a must-buy for cachet-starved advertisers. Analysts project MTV's cash flow will increase 10% this year, to $450 million, on $808 million in sales.
With cash-flow margins ex ceeding 50%, MTV is five times more profitable than most broadcast networks and beats the typical cable outlet by 15%, analysts say.
"They're probably more powerful than they've ever been before," said Barry Weiss, president of Jive Records, the label for the Backstreet Boys, Britney Spears and 'N Sync, acts that shape much of MTV's current tilt. "They've become such a part of the culture."
Created as a joint venture of Warner Communications and American Express Co., MTV quickly exploded across the media landscape in the 1980s as cable operators wired millions of homes. MTV reached more than 10 million households in just two years, and turned the music video into an "event" (and an all-but-required expense for record labels) with big-budget clips such as Michael Jackson's "Thriller" in 1983.
The cable outlet soon branched out into other forms of programming, from comedy series to game shows to public service campaigns. In 1992, MTV's news division covered the presidential primary election and was widely credited with drawing a wave of young voters that buoyed Bill Clinton.
MTV's dominance has stirred interest in Washington. The Justice Department in 1999 began an antitrust investigation into MTV Networks, which encompasses MTV, the all-video MTV2, the powerful VH1 and Country Music Television and other channels. The probe was prompted by Viacom's acquisition of the Box, a small competing video channel. A spokeswoman for the agency said the investigation was closed in December.
Channel Criticized for Airing Fewer Videos
The coveted teen audience of MTV lets the channel charge premium rates for advertising, but there's another reason for the lush profits: MTV does not pay production costs for the videos that put the "M" in MTV.
Record labels and artists pay those costs, and the labels also typically foot the bill for travel, hair and makeup and some production expenses when their artists appear on the channel. (MTV does pay record labels a licensing fee to air videos.) The idea of label-financed programming made sense when MTV was a nascent concept, but in the years since it has rankled some in the industry who wondered whether the channel--to quote the title of a Dire Straits song that mentions MTV by name--was getting "Money for Nothing."
That complaint has echoed even louder since the channel made dramatic cuts in the number of videos it plays. That's frustrating for many music executives who allocate millions of dollars annually on the mini-movies.
The channel has turned instead to original programming that gets better ratings and helps shape its brand name.
MTV's 2001 schedule, for instance, has a karaoke show, a talk show hosted by pop singer Mandy Moore, two wrestling shows, assorted unscripted programs and an oddball stunt show called "Jackass"--programs that have little to do with music videos. Unable to get the same number of showings, or "spins," as they once did, label executives now vie with each other to get their artists on MTV's other programming.