Creature-Corner recently did an interview with the creators of the Horror Channel. It's a bit long, but it answers a lot of questions about the Horror Channel people have been asking.
We all knew it had to happen eventually, we just didn't know when or who would do it. Finally, after years of horror fans asking why we have no channel to cater to what we want to see (and you all KNOW Sci Fi don't count), it was announced that cable entrepreneur Nick Psaltos and a team of highly experienced and creative individuals were set to bring us...The Horror Channel.
Designed for a launch date of October 31st, 2004, we realize it's never to early to start getting as much information as possible about their plans for the channel, and let me just tell you right now, we're in damn good hands. These guys know what the horror fans want, but they also know enough to rely on us, the ones the buy the DVDs, talk on the message boards, go to the conventions, to tell them what should be on the channel. It's a beautiful thing.
I recently got the chance to speak with Nick Psaltos, founder and CEO of The Horror Channel, and Chris Apostle President and CEO of FusionPoint Marketing Group and one of the members of the Financial and Strategic Advisory Board. Read and get happy...
Johnny Butane: Tell us all how your basic history in cable…
Nick Psaltos: I've been in the industry for ten years. I worked for the Discovery Channel in business development, with A&E in financial planning, and most recently the Bravo/Independent Film Channel in programming and acquisitions. So I had a really broad general manager kind of training.
Chris Apostle: My background stretches in a of couple different areas. I was the vice president of marketing for Showtime Networks and advertising, which was followed by a number of different projects as a independent or professional services organization within varied cable companies and networks, as well as the more technologically oriented like broadband distribution and digital rights management.
JB: So where did the idea for The Horror Channel come from?
NP: I'd been wanting to start my own company for a long time, but I wasn't sure if I wanted to do a film company or do a cable network, so I talked to everyone I could within and outside of the industry to find out what had not been done. A really good friend of mine is a big horror fan and goes to the conventions a lot, he pointed out that there was no horror channel. So I said, "What about SCI Fi?" and he said if you talk to real horror fans, they didn't consider SCI Fi fulfilling their needs. So I started going to the fan conventions like Fangoria and the Chiller Weekend and things like that, and that's how I eventually met Tony Timpone who really unlocked the gates of hell for me (laughs).
Then it was a mad rush of information and people who are just fanatical and love the genre, people that have dedicated their entire lives to it. So I realized there is a real opportunity here, because the fans just didn't have access to the kind of programming they wanted to see without doing it themselves, and people go to great lengths to participate in this stuff. It's incredible, I've really never seen anything like it before, and I'm just really happy to be a part of a project that will unite the genre. I guess you could call it a cottage industry, but it's a lot bigger than just a cottage, more like a big haunted house (laughs).
JB: So how long ago was that?
NP: That was two years ago. My wife was pregnant and we had just bought a house in New Jersey. I was commuting everyday to the Bravo headquarters in Jericho, Long Island. Very long commute, about two hours in each direction, and I had this idea that just stayed with me and I said "Yeah, I'm going to start this network,"
So I spoke with a few investors that got me basically enough money for about three months, I had some savings of my own that got me up to about six months, and that was enough for me. I knew I had to do it.
JB: Wow, so you used your own money to get it rolling?
NP: Absolutely. Along the way every few months we'd find more angel investors that would help to keep us afloat.
JB: So how did you and Chris get involved?
CA: Well, Nick and I hadn't seen each other for a number of years…
NP: I would say at least 15 years…
CA: Yeah, for about 15 years we hadn't seen each other. We met again at an organizational function and started talking about our histories, he told me what he was working and I told him what I'd been doing, and it just seemed to be a great fit. I have a company that's really focused on bringing new products to market or introducing new concepts or ideas to their customer groups, and we had done some things like this in the past so it was just a perfect fit with what Nick and his group were looking for. So I attached myself to the organization and now I'm spearheading most of the marketing, developing the strategy, helping to illicit the response and the feedback, and to get the participation of the fans because we really want to make this about the fans. Which is in contrast to what most others do, who get their information from focus groups or usability labs, but we really want to engage the fan base in a much more Socratic fashion, invite them in and help them mold what this channel will ultimately look like.
JB: That is an excellent strategy when you're dealing with a fan base that is so…
JB: Passionate, yes, but we're picky, too. There are a lot of people you're not going to please anyway, but it's great that you're aiming to get everyone's opinion.
So now that all of this has been announced, will we be seeing you at more conventions and gatherings?
CA: This is really just the beginning. Looking at the next 13 months as the real ramp-up period, our biggest objective is to announce ourselves and start to get the ground swell built and keep building it up until the launch. We want to start the noise level at a reasonable level and just keep getting more and more exposure, more and more opportunities, more and more announcements. We need to talk about how this initiative is going to create a value proposition to the three fundamental groups out there, which are the fans (of course), but also the cable operators and the investment community.
JB: Has a plan been developed as to what the basic format will be?
NP: We're going to be heavily into film. Unless you're a movie channel and play only movies, most channels tend to have a balance of 70% film and 30% non-film. That's kind of what we're shooting for now, even though we could probably start with 99% film and 1% everything else, because there's just thousands of movies out there. There's plenty of non-film content, of course, but we really want to have thematically branded non-film programs, including behind the scenes and filmmaker profiles, as well as fan-oriented shows like gothic music events and an actual awards show. If you look at the way Dick Clark handles New Years Eve, we want to be that to Halloween.
JB: Along with the existing shows, are you going to be creating new series as well?
NP: One of the reasons we assembled the creative advisory was not only to celebrate all their efforts in the genre, and let me just say that these people have been so warm and receptive and supportive of this process that I can't even describe it. People like Wes Craven, John Carpenter, Eli Roth, Lucky McKee…they've all been so enthusiastic about it because they've never really been treated with the type of appreciation in Hollywood they deserve, despite the number of blockbusters they create for the studios. So that's why we assembled this board, to help create a vehicle for them to get the recognition they deserve.
I remember my days at IFC, where I saw how important it was for filmmakers to win something like an Independent Spirit Award, even if there was no promise of making riches after putting so much passion into their film. If someone walked away with an award like that it was enough for them to possibly get their next project funded, but it also gave them the recognition that they've done a great job. And the spirit of a horror filmmaker is really that of an independent filmmaker.
To get back to your question, we wanted to create a situation where they could all contribute to this network, and they all saw right away that this channel was about their genre so it would need it's own original programming, and they knew they could benefit from that. Each of them is putting together their own list of pet projects they want to do, and then we're going to choose from that. We liken to the "Friendship 7" model NASA used during the Apollo space project, where you get 7 astronauts that are all pulling for each other but no one knows who will be chosen first. Whoever is then gets the support of everyone else.
JB: Getting back to your comment about all horror filmmakers being independent filmmakers at heart, will you also be focusing on truly independent horror directors, people that haven't gotten picked up by a studio for example?
NP: We want to create a process where people who aspire to be a horror filmmaker will have a home. We will encourage them and support them, perhaps even create vehicles for them. The best way for fans to help us to weed out what we can and cannot look at, when the day comes that we start looking at truly independent horror, is to make sure they've already achieved significant results or recognition at existing film festivals. We'll only have so many eyes within our programming department to review material, so that will be the best way to go about it. Every TV network throws away anything that comes to them unsolicited, which is sad because a lot of people put a lot of time and effort into their projects, but for a cable company there's nothing to do with it other than just set it aside.
But there will definitely be an independent voice in the channel and the network, that's really the only way we can run it and brand the network. Otherwise we'd just be the Horror Rerun Channel (laughs).
JB: In the original article that ran in Variety, it was mentioned you have over 2000 films to launch with…
NP: I really can't divulge the names of all the companies we're partnering with, but some but some are very large with an international focus and some are pretty small, but they're all names that you would recognize.
The one thing fans have to understand is that this is a long-term process. If anyone came out and said they'd be playing a brand-new Hollywood blockbuster every night of the week, they'd be lying to you. Many of the rights to those films are already at other networks right now, and especially during the Halloween period everyone has a horror movie or two on their channel. So we're trying to muscle our way in to get the rights to some of those movies, which may already be committed for the next 3-7 years.
What eventually happens is the distributors know we are the go-to guys for horror movies, so they will be able to sweeten the package of, say, 100 films, with a few of the bigger ones like Halloween or The Shining (for example) to entice us to take a larger package of movies.
JB: Are you also planning any kind of online strategy to get the word out there?
CA: Oh, absolutely. It'll be a combination of leveraging partner sites with the breadth and depth of their exposure to different areas of horror, which will be a lot of our early stage initiatives. People will be going to our site for the purpose of checking out what the network will be like, but also to participate in surveys and filling out a petition that will go to the MSOs (multi-system operators). As far as paid media goes, we're in the process of finalizing a media strategy that will look at not just the core horror fan public, but those who fall within the horror fan base but don't necessarily have their own sites or BBs. It has to be beyond the core group in order for us to demonstrate the validity and the ability for sustainability…that's a lot of "bilities" (laughs).
So the short answer is yes; the long answer is that it's somewhat undefined. We really want to build momentum over the next 6-12 months, but with the holiday season upon us now it becomes difficult to fight for mind share let alone a share of voice because there's so much floating around as it relates to commerce. What we may end up doing is offering up the opportunity for people to buy products through the Horror Channel site.
JB: Horror Channel products?
CA: Possibly Horror Channel branded stuff, but other horror-related products as well. We're still in the research phase and are developing an idea of what our customers are looking for, but the interactive market place is such a great breeding ground for networking-based market initiatives. We want people to take some equity in the process, as they will help to mold this thing we want them out there talking to their friends and bringing more people back to the website.
JB: Of all the people that are involved in the channel, how many of you are horror fans?
NP: All of us…
CA: All of us, yeah...
JB: That's good, because it is a concern our readers and I have if these people are just creating this because it's an untapped market, or are they doing it with real love for the genre.
NP: To be honest, I think everyone in the country is a horror fan in some form or another, I don't think they're all fanatical, but everyone's a fan to some extent. The thing we like to say is "there's always something that scares you". When we pitch the channel we say, "Everybody in this room has something that scares them. You may not want to admit it to yourself or others, but there's always something."
And that little tingle you get when you're scared, that's almost like a sexual pleasure, which is something a lot of people don't want to admit to themselves. We all have some horror movie that we liked, even if we say we hated it, because it scared us.
Once we brought Tony Timpone on to the advisory board that really changed things for us. I had never been to a Fango convention, but when I met him at the first one I went to he opened up this whole other world for me, and really unlocked the potential for us to embrace this at a higher level. We weren't a bunch of Fangoria groupies, but I think we're becoming that way (laughs)…
JB: If I may, some technical questions. When the channel launches next year, will it be on the major cable networks, or will it be a pay channel like HBO?
NP: There's two ways to answer that question, and I'll give you both. Number one is that we intend to be a basic digital channel, so if you have a digital cable box you would be able to get us. The difference between digital and analog cable is the amount of channels you can get. If you have an older analog box, you can get about 60-80 channels depending on the technology, but with digital you can have anywhere between 150 and 500 since there's a lot more bandwidth. The advent of digital has created a lot of shelf space and an opportunity for a land grab by any new cable launches, so we have built our business model on only getting digital carriage.
That being said, there are a lot of people out there that you and I know that would probably make this the number one channel they'd watch, and that's pleasing to the ears of cable operators. So there might be a desire from cable operators to but us on an analog channel as well as digital. There's a lot that goes into the decision process, but if we become a profitable opportunity for them, they will even want to put us in the homes that can't upgrade to digital.
JB: What's the ratio of analog to digital users?
NP: Right now, probably 70% analog and 30% digital.
JB: Have those numbers changed since last year?
NP: Digital's growing about 12% a year, so yeah it has.
I still haven't answered your question, though, which was if we're going to be ad supported or a premium channel. Unless we can prove that there’s enough support to warrant a premium service then we will need to be ad supported.
JB: Premium service equates to no ads, but relies on subscribers, correct?
NP: Right, premium is based on how many people are willing to pay for your channel, whereas the other model goes by how many households they can fit you in and you then you generate Nielsen ratings based on the number of people that are viewing. In order to qualify for Nielsen you have to be in 20 million homes, before that happens you have no way of measuring, outside of maybe polling people, who's watching your channel. That makes it tricky to entice advertisers to try and spend money
There's a lot of concern that we'll be cutting up movies, but I will say right now we will be showing films the way they were intended to be seen. There is no issue there. Part of that is because of the incredible appeal and influence channels like HBO have had on TV viewing in the last few years. Even network television is putting on more gory, more salacious, more sexual content on their shows. We'll put on what our fans want to see, and that's uncut and uninterrupted films, which we bookend with commercials. TV series that are older already have commercial breaks built in, so that works out for regular commercials. Fans, and especially horror fans, want to see the films the way they were intended to be seen.
JB: So no worries about the OAR (original aspect ratio) or anything like that?
NP: I'm a big fan of letterbox, and I'm the CEO of the company so if I have anything to say about it everything will be letterbox. I hate when it says, "formatted to fit your screen" (laughs)…
JB: That is a very ominous message to see.
So how do advertisers agree to advertise on a channel when there's going to be a 2, possibly 2 ½ hour block with no commercials?
NP: Well right now, in the early stages of the company, we're not going to have any Nielsen's for a couple of years. The ad deals we cut now are actually sponsorship deals. For example, let’s say we have a sponsorship deal with a video game company called Company X. We present a movie saying Company X is sponsoring tonight's film presentation, and throughout the day they get plugs over and over across the network, even as far back as the weeks preceding the movie, so they get plenty of attention. Every time you do a bumper or lead in for that movie you mention the company's name and they get even more coverage.
JB: Since you mention video games, might as well ask now; Will there be other avenues of horror you will be focusing on outside of movies, like video games, toys, books, etc.?
NP: Not right now, we really want to launch The Horror Channel as a TV network. I won't lie to you, it's appealing as far as advertising goes, but we're first trying to create the branding. We're going to listen to the fans and find out what they want and work with that.
CA: Now if I can interject here…the idea in a typical brand development model is that if we're smart and diligent about the way we build the brand, the opportunities for licensing the brand and looking at other revenue generating opportunities will present themselves. The market will tell us what it's looking for, but for now as Nick said, we want to be focused on bringing this to market as a network and seeing what opportunities present themselves as a result.
We will constantly be proactive, polling the marketplace to see what will make sense in developing and evolving our business model through other revenue generating opportunities.
JB: Back to that original Variety article for a moment, if you don't mind. It had said that because you're launching digital instead of analog you might have to be providing free carriage for he first few years. How does that work?
NP: That deals with the revenue sharing between a company like ours and a company like, say, Comcast. In the old cable world the two steams of revenue were advertising and affiliate fees. So when you pay your cable bill every month, A&E gets $.25, ESPN gets $.25, and that trickles down through the cable operator into the pockets of the cable network. Today, with the proliferation of all these channels, they can't quadruple the monthly bill so everyone's sharing a smaller piece of that pie. Some channels like A&E may have a contract guaranteeing them that same $.25 for the next eight years, but eventually that cost would go up and the cable operators are under pressure to not pass that cost on to the their viewers. So anytime a new channel starts up, they have to agree to be free, meaning they don't get any affiliate revenue from the cable operators. We have to find other ways to stay afloat during that time, and that's why advertisers are so important, because we either advertise or agree to be a premium (pay) channel.
JB: Which would you prefer?
NP: If the market tells us people will be willing to pay an extra $9 or $10 per month and we can program it like HBO, then we'll consider that route. The landscape is very different now, nothing like it was five or even three years ago, so you can't predict what you're going to do, or how the cable MSOs want you to be positioned. All we know is we have a great opportunity with a great genre, and we want to get that in place, all the other monetary and fiduciary issues will figure themselves out.
JB: Have you heard of any other horror channels that are trying to start up?
NP: Well, there's Scream TV in Canada, and AMC is launching a Monster Channel on their new high-def satellite, but I don't see either of them as direct competition.
JB: I have to say it was a great move on your part to get together with someone like Tony Timpone. Was that your idea initially, Nick?
NP: Yep, that was me. I worked at IFC and I remembered how proud I was that Spike Lee and Martin Scorsese were affiliated with the channel. They were part of all the image campaigns and it was just so powerful for us. So I knew it was a good idea to get those that were really passionate about the genre involved as early as possible.
Tony Timpone's one of the first people I met, and when I talked to him about and how important it was to have these people involved he said "no problem" and got us introduced to all of them. A lot of people say it was putting the cart before the horse by getting these directors involved from the beginning, but I disagree. That's where the value is. But then again, when you're speaking to people in the cable industry, they're used to a different paradigm. They think you get your distribution and sell your idea, then you get the content. That works for a big company, like Viacom or Time Warner, but not for Nick Psaltos.
So the only way for me to entrench myself was to circle the wagons. Get a fierce group of loyal enthusiasts who also happen to be household names.
JB: So what can fans find on the official site for The Horror Channel?
CA: It's a combination of what you've seen already with the informational areas, but we're also launching a bulletin board area as well as the petition and the survey I mentioned previously. I'm not sure if you're familiar with Uncle Creepy?
JB: Right, from the Fango boards…
CA: He's actually going to be our BBS admin as well, so he'll be able to build some good contextual references to what we've been doing and create discussions about specific areas of the genre that he sees in his bulletin boards.
The idea is to start out with something basic but informational, and every 4-6 weeks launching new content, so I can't really go too far into what we have planned. What we didn't want this to be was just another horror site. We want to maintain our focus on the fact that we are a network, and our primary goal is to launch the network and build the Horror Channel brand, doing things that are going to be in line with that, and maybe some things people haven't seen before. We've got some content development groups that are working on things much more interactive in terms of…well I don't want to say games just yet since I'm not sure if that's the direction we're going in, but it will be something that will bring people back more often than just once every few months.
And over time we're looking to not be just an online TV Guide for the network. That is a lot of what other networks fall into, and if that's what the market tells us is all the fans want, we can wrap that in some pretty cool content and interactivity, but we're definitely going to use it as a platform for ongoing communications with the fans. We're not saying "help us now and then go on your way", we're developing a customer relationship management platform that's going to allow us to even pitch ideas to the viewers that we're thinking about and see what kind of feedback we can get.
JB: I like that idea a lot…
CA: It's just not something that's done in any great way these days. Sure, there are companies that build panels and will help you figure out what the market wants. In retail there are all types of companies that do that to help you understand how and what products are moving off the shelves, for example. Here our fundamental goal is to understand what kind of non-scripted stuff will work going forward. And in case there are other channels that launch over time, we need to continually make ourselves relevant to the genre as well as the fan base.
JB: Is that a concern for you? You have a good 12-months until the channel launches, are you worried something else might come along?
CA: If someone were going to launch prior to October of 2004, we would've known about it already. There's always the threat of something new coming along, but the idea is that we are talking to the studios about their libraries which gives us a sense of what the availability is for their films. One thing about the name of this network is that it's perfect. It encompasses the entire genre, it's not specific to just one sub-genre, and we may end up being the de facto standard (well, hopefully we will be the de facto standard) that all other channels will benchmark against.
There is room for more than one, but any other channels that appear will only serve to prove out the market for us. The idea is that there will only be one that will excel to the extent we are looking to. My formal education and training tells me first to market is a great position to be in, but if you can't be number one in a market it's always about creating a market that you can be number one in.
JB: Nick, did you have any comments on that?
NP: Yeah. Not only the fact that we would have heard about them by now, but we know from our intelligence within the companies that typically do launch networks that there is nothing out there. The financial markets have been really brutal the last few years, and may of these entities like Time Warner are suffering, so that's distracting them from doing anything new. We also have information from industry analysts that are saying that these companies would rather acquire a start up than launch a new network.
Even if they have money to throw at it, they’d rather invest after someone else has proved the concept. So here we are struggling with the day-to-day battles with financing and distribution and programming and all that, but when the day comes that we're about to launch they’ll become believers, see that it can be done. That’s when they’ll look to invest in us.
The executives in a big company don't know who Stuart Gordon or Tony Timpone are, so they're not going to approach them for anything. They just don't think that way. They're going to ask how much they have to pay us to own our opportunity, to which we will say, "There is no price, because we running this company ourselves". Basically we see this as being a very long term opportunity and we want to see it through. If you're going to do this, you have to do it right.