An Age-Old Story: Erickson Shooting for TV Spotlight

By Mark R. Smith



While the administration at UMBC has made a strong commitment to strengthen the university's standing in the academic and technical fields in recent years, its latest move would have been hard for even the savvy observer to forecast.

The new effort includes the construction of a $20 million, nearly 110,000-square-foot multi-use facility at the bwtech@UMBC Research & Technology Park with three production studios for Retirement Living TV (RL-TV).

The upstart cable channel was recently founded by one of the university's biggest supporters, Catonsville-based Erickson Retirement Communities (ERC). It produces programming focused on health, finance and politics that targets viewers age 55 and older.

Most of the new channel's employees are already hard at work at various temporary quarters, including offices off of Snowden River Parkway in Columbia. In addition, crews are producing programming at the studio in the nearby Charlestown retirement village in Catonsville; Reuters' studios in Washington, D.C.; and UMBC's Academic IV, which ERC just spent $1.3 million to refurbish and use until the new facility opens in mid-2008.

While ERC has a history of success in the senior living industry that is evidenced locally by Charlestown, Oak Crest in northeast Baltimore and Riderwood in Silver Spring, the new $50 million venture has onlookers contemplating the company's chances for success as it focuses in on the nation's 76 million baby boomers in the crowded television universe.



Sharing Synergies

The new facility will also house ERC's IT department, which will foster research collaboration and internship opportunities with UMBC students and faculty from the university's various technical and creative departments, and the Erickson Foundation will be located under the new roof.

The company has made an aggressive start out of the gate, as the network recently signed a national broadcasting agreement with DirecTV and Comcast's CN8 to expand its early viewing audience to more than 24 million homes.

Locating the IT department with the new channel was a good fit for UMBC from many perspectives, noted Ellen Hemmerly, executive director of the UMBC Research Park Corp. "The RL-TV staff is already talking with many of our IT researchers and faculty members about issues related to e-health, which I describe as our 'health informatics' area."

Other topics that will be addressed on campus, Hemmerly said, include information assurance, data security and real-time data applications. "But the TV part is what triggered ERC into this action," she said. "This is a new, innovative startup which employs a considerable amount of technology."

UMBC is currently partnering with RL-TV in the university's new media studio to produce two programs, "The Voice" and "The Daily Apple." "And we expect that there is going to be further collaboration" with the Imaging Research Center, as well as the College of Art, Humanities & Social Sciences," Hemmerly said.



Senior Stereotypes?

Brad Knight, executive vice president for ERC and president of RL-TV, is also excited about the possibilities the collaboration with UMBC represents.

"We aspire to be the inspirational portal for aging in style," said Knight, noting that the initial $20 million expenditure will simply cover the costs of the empty building. "When the construction is complete, it will cost at least $5 million more when you include the five studios, plus whatever the IT bunker costs."

The network currently employs 145 workers and the new building will accommodate a staff of up to 450 — a number that reveals ERC's plans and hopes.

"Our aim is to become the No. 1 daytime network because there is not enough good content available to seniors before primetime," Knight said, "and here is a fact: 13% of the population is 65 years old or older, but how many seniors do you see on TV? Only about 2% of all actors and talent.

"That's basically Raymond's parents and Seinfeld's parents, and they're crazy," he said. "That's how seniors are portrayed on TV."

Health in elder years comes down to attitude, he said, noting that Yale University Associate Professor Becca Levy conducted a study that revealed that people who have an optimistic outlook at age 55 add seven years to their retirement, as opposed to those who do not. "And we want to project good images of aging in America on RL-TV."

In fact, Knight learned in researching an informational DVD for RL-TV viewers (that is available via rl.tv) that "the U.S. government spends more money on Medicare than it does on the Department of Defense: It spends about 17% on defense and more than 20% on health and human services."



Unusual Approach

Observers are interested to see where ERC's journey into a new field will lead the company.

"We're not seeing many corporations set up their own TV channels," said Dave Bittner, co-owner of Pixel Workshop in Columbia. "[Chairman and CEO] John Erickson saw this opportunity to serve what, for him, is a preexisting market. So due to his enormous financial success, he was able to spend $50 million [in addition to the cost of the facility, Knight said] to get this on the air and see if it works."

Noting competition such as Discovery Health and Fine Living TV, Bittner called the effort "an interesting experiment ... with the baby boomers retiring and the huge potential audience of active seniors who want the kind of timely information that this channel is providing."

Getting a network off the ground without the backing of a major corporation "is not easy, but [ERC has] good financing. If anyone has a shot a making this venture a success, it's Erickson," he said.

But the lack of backing by a major broadcast entity like Time Warner, Comcast or Discovery Communications is part of what makes Erik Brannon, a programming analyst with Kagan Research in Monterey, Calif., "more skeptical about niche-type networks" like RL-TV "and its long-term viability in the vast cable universe.

"The short answer is that new independent networks are having an increasingly difficult time finding carriage in an already crowded cable landscape," Brannon said. "Operators are not usually willing to insert new niche networks onto extended basic tiers (of about 80 channels), leaving them with only a handful of subscribers who subscribe to services with vast tiers," such as Comcast Digital Cable.

So in broadcasting to only that relative handful of subscribers, new networks often find it difficult to earn affiliate revenues, as well as advertising revenues.



Long-Range Plan

While most new cable networks achieve a positive cash flow within seven years, Brannon said that accomplishing that feat is "becoming increasingly difficult.

"Discovery Health offers the best comparison to Retirement Living," he said, "and we estimate that Discovery Health will achieve a positive cash flow 11 years after launch. Prior to its first cash flow-positive year, we estimate that the network will have accrued slightly less than $400 million in negative cash flow.

"At issue is the ability to sustain operation for a period of time sufficient to build the business," Brannon said. "Private equity tends to be less resilient."

Indeed, that debate exists among broadcasters, said Joe DeMattos, the director of AARP's Maryland Chapter. "The traditional view holds that networks such as RL-TV only work with the backing of a major corporate institution over a long period of time to obtain critical mass," he said.

"However, there is a growing non-traditional view that the viral marketing that you see from such entities as MySpace and You Tube are offering lessons to be learned regarding how to market and network with boomers," DeMattos said.

AARP's perspective is based on the fact that it offers push (information directed by the organization toward the viewer) and pull (which means offering menu options chosen from a web site, for instance) marketing tools to stay connected with AARP members and others in the 50-plus market.

"Companies like ours and Erickson are offering options," he said. "What will be interesting with RL-TV is the extent to which it becomes like an on-demand TV network and provides information for the specific consumer."