Advertising Age On NBC, Alloy, Channel One

What Exactly Are NBC, Alloy Getting Into With Channel One Deals?
Controversial Ad-Supported In-School News Network Might Be an Idea Whose Time Has Come and Gone.

By Simon Dumenco
Advertising Age
July 16, 2007

In the past year or so, my colleague Claire Atkinson has been reporting on the slow-motion disintegration of the once-mighty Channel One, a daily, ad-supported news program that is broadcast to more than 7 million kids in 11,000 schools across the nation — roughly 30% of the nation’s teenagers.

Last year its longtime owner, Primedia, acknowledged that its revenue was tanking, and it not-so-quietly shopped for a buyer (Disney was among those that kicked the tires and passed). In April, Claire reported that Alloy Media & Marketing, the sprawling youth-culture-marketing concern, bought Channel One for roughly $10 million. (Alloy is expected to cough up at least another $8 million to update Channel One’s creaky technology, which involves teachers sticking a tape into a VCR to record the next day’s show via an overnight satellite dump.)

But the best news in years for Channel One broke last week: It signed a content deal with NBC News. The obvious upside for Alloy is that it presumably gets to largely or entirely offload the production of its newscast while enjoying the halo effect that its association with NBC News adds. NBC, meanwhile, gets to connect with a vast, captive teen audience without having to go slumming: Channel One, which is where a pre-gray Anderson Cooper came of age as a cub reporter, has snagged a couple Peabody Awards over the years.

I’ve got a bit of history with Channel One because I once worked for the company that created it, Christopher Whittle’s Whittle Communications — and then, by chance, I ended up working for a division of Primedia, the company that bought it for $250 million in 1994.

The amazing thing about the $10 million that Alloy paid for Channel One is that, according to its recent SEC statement, "The fair market value of the assets acquired is approximately the value of the assumed liabilities, resulting in a fair market value of zero." (That’s the kind of company Primedia is: It can take a quarter-billion dollars of value and expertly convert it to $0.)

Though I never worked on Channel One, I knew people, at both Whittle and Primedia, who did. And though the party line was pride in the product, there was also always the persistent subtext of, How long will we be able to get away with this? Because since the start, controversy over the two minutes of commercials (within a 12-minute daily broadcast) has roiled the network. Parents and educational advocacy groups have, over the years, noisily mobilized against Channel One to varying degrees of success; it’s faced on and off bans in various school districts and entire states, including New York, California and Rhode Island.

Alloy’s probably thinking that we’ve all grown up — we’ve all gotten real — about the commercialization of, well, everything. Today’s teens, of course, grew up in a culture hypersaturated with advertising, and many are virtual walking billboards for brands themselves. So what’s the big deal, right? Surely the trade-off is worth it?

Well, no. There are plenty of other avenues for marketers to reach teens effectively on their own time, and with a high level of engagement, that didn’t exist even a few years ago. And the smartest marketers — like Kellogg’s, which earlier this year announced self-imposed plans to stop advertising its sugary cereals to kids by the end of 2008 — know that there’s a karma issue, a corporate-responsibility angle, that looms larger than ever in the consumer consciousness these days. Advertising on Channel One seems like asking for trouble.

Anyone who’s ever seen a complete Channel One broadcast in a classroom, as I have, knows how truly weird and disturbing it is to see ads for Snickers, Clearasil, Gatorade, Taco Bell and the Army — all of which have been among Channel One’s biggest advertisers — in an educational context.

No matter how you spin it, you can’t ever escape the feeling of, This ain’t right.

It really is that simple.