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The Fashion Chanel

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HBS CASE: The Fashion Chanel

1. Insights from the consumer and market data : * Most of current viewers are females 34-53 years old. * The fashion channel should target 18-34 years old female that is highly valued demographic group, to reach premium CPM (cost per impression, advertising pricing unit). * Both competitors Lifetime and CNN channels were achieving notable ratings. * The clusters that most engage in fashion and most likely to have interest in TFC contents is Fashionistas and planners/shoppers that make up about 50% of all US TV Households (HH) In their specific clusters, the 18-34 female demographic audience represents 50% and 25% of these cluster respectively. * Current source of revenue : * Advertisements sales $230.6 millions * Affiliation fee from cable companies $80 millions * There is need to rethink the existing marketing strategy by reposition to specific segment markets use advertisement as primary growth engine.

2. Expected Outcomes of each targeting scenarios (Exhibit 5)

| 2006 Actual | 2007 Base | Scenario 1 | Scenario 2 | Scenario 3 | | | | Broad-multi segment | Single segment | Two segments | Revenue | | | | | | Ad Sales | $230,630,400 | $207,567,360 | $249,080,832 | $322,882,560 | $345,945,600 | Affiliate Fees | $80,000,000 | $81,600,000 | $81,600,000 | $81,600,000 | $81,600,000 | Total Revenue | $310,630,400 | $289,167,360 | $330,680,832 | $404,482,560 | $427,545,600 | Expenses | | | | | | Cost of Operations | $70,000,000 | $72,100,000 | $72,100,000 | $72,100,000 | $72,100,000 | Cost of Programming | $55,000,000 | $55,000,000 | $55,000,000 | $70,000,000 | $75,000,000 | Ad Sales Commissions | $6,918,912 | $6,227,020.80 | $7,472,424.96 | $9,686,476.80 | $10,378,368.00 | Marketing & Advertising | $45,000,000 |

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