The five companies involved in the venture are EMI Music, PolyGram Holding Inc, Sony Software Corp, Warner Music Group and Ticketmaster Corp, which sells tickets to pop concerts and sporting events through a national network of computerised outlets.
The new channel, which should be on air by the end of this year, will operate as a 24-hour music video channel supported by advertising. It will be offered to cable subscribers in the US and Puerto Rico as part of the basic cable package.
Margaret Wade, a spokeswoman for Warner Music Group, said yesterday that the venture was looking for additional partners, including cable operators, although no specific role had been agreed yet for Warner Music's parent, Time Warner, which is the second-largest cable operator in the US.
The four record company partners are already working together on a music video channel in Germany, which was launched in late December under a joint venture agreement with Frank Otto, a radio executive from Hamburg. The Viva channel is carried by 90 per cent of the 13 million homes in Germany that have cable.
The new channel in the US will give the record companies involved a new marketing medium for their artists, and lessen their dependence upon MTV, which can make or break a new release. This power also gives MTV a strong bargaining position over the royalties that it pays the record labels to play their videos.
A statement released yesterday said that the partners' US affiliates engaged in the music business 'will license music videos to the channel and will continue to license their music videos to other entities', adding that 'the channel plans to license music videos from all available sources'.
The challenge to MTV comes at a time when MTV in the US is increasingly moving away from its original format of music videos 24 hours a day, and is carrying lifestyle programmes such as The Real World or cartoons such as Beavis and Butthead.
Since it is owned by record companies the new channel will have a promotional incentive to concentrate more on playing videos than showing lifestyle programmes, although Ms Wade of Warner said yesterday that 'no format has been established yet'.
MTV is owned by Viacom International, the programming and cable company that is currently embroiled in a battle with QVC Inc to take over Paramount Communications.
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