Oxygen Loses Some of Its Air - Company Business and Marketing

The women's cable and Internet operation still hasn't found itself. Now it's facing a brain drain.

THERE ARE SPLASHY LAUNCHES AND then there are splashy launches like the debut of Oxygen Media.

Oxygen, the new-media company for women that would accomplish the ultimate cable TV-Web convergence, wasn't just going to be a successful business. It was going to change the world.

A banner that hung in the company's New York offices proclaimed its goal: "A Revolution Led by Women and Kids." A 24-hour cable network and a network of Web sites that would produce nothing less than a new kind of communication.

It was easy to believe. Oxygen founder and CEO Geraldine Laybourne flew around the country evangelizing her company and raising money like a Southern Baptist who had just been struck by lightning. Her credentials are impressive: She's been hailed in the press for creating Nickelodeon, which blew by Disney to become the favorite TV destination of children everywhere. And with the headliners of her tent revival including partners Oprah Winfrey, Microsoft co-founder Paul Allen and television producer Marcy Carsey, the road show was a smash. The fledgling media company raised $300 million and hired a star-studded cast of journalists, TV producers and even actress Candice Bergen to host a talk show.

After two years, the buzz has quieted. Oprah, who launched her own magazine, O, is nowhere in sight and several insiders say they believe her interest in Oxygen has waned. Laybourne's success with Nickelodeon was supposed to attract cable operators, but while Oxygen is carried in Denver, San Francisco and Atlanta, it still has limited availability in media capitals Los Angeles and New York.

And even Candice Bergen, the cable channel's one star, is a question mark. Her contract is up for renewal and it's not clear if she will sign a new one.

The tussle over content and commerce, over old-media ideals and new-media realities has created tension at the firm's Chelsea headquarters.

While startups often experience personnel exits, Oxygen has gone through an especially grueling series of them over the past few weeks.

On the Web side, the brain trust that was brought in with much fanfare is starting to shuffle out the door. Two weeks ago it was revealed that Sarah Bartlett, editor in chief of Oxygen Media and a former Business Week and New York Times staffer, will leave to consult for Oxygen and other new-media companies, as well as spend more time with her two small children. Bartlett says that after 20 months with Oxygen, she wants more flexibility and control over her life.

She's not going out the door alone. Ellyn Spragins, VP of editorial, also resigned. Deborah Stead, editor of Oxygen's literary site, The Read, is exiting, along with three executive Web producers: Marc Perton of Ka-Ching, the financial Web site; Martha McCully of Picky, a shopping site that Oxygen shut down; and Amy Critchett of Oxygen.com's homepage.

Why the exodus? Perhaps it's just the burn-out typical of workers who put in 16-hour days. Or maybe it's something more.

When Bartlett joined Oxygen, she told The Standard she hoped that its sites would produce "really serious, hard-charging journalism ... and act as an advocate for women." But how would they accomplish that? According to some who have closed the doors of Oxygen behind them, the company's ongoing search for focus got frustrating.

"They're going to change the world with another article on parenting? Puh-leez," says one, adding that it's now not clear what the company is about. "The mandate has changed from content to commerce."

Behind the scenes, the age-old question, "What do women really want?" is at the heart of Oxygen. Do women want a forward-thinking political site? A beauty site? A shopping site? Do they want cable shows that are documentaries? Talk shows? Hip music shows?

Laybourne, known for her visionary leadership at Nickelodeon, admits that she herself doesn't know what women want from a media company. "But we believe there are commonalities that will knit all women together," she says.

"We're constantly changing, and will be constantly changing," Laybourne says. "If you don't, as far as I can see, you're dead. ... We're trying to break new ground. Miracles are made. You have to earn it, invent it."

In searching for the threads that bind women together, the multimedia company has been refining its menu of offerings, adding here and canceling there.

Shop02, a site set to launch at the end of the summer, will provide consumers with product information and recommendations and will link them to independent online retailers.

Oxygen Sports, which will launch in time for the summer Olympics, is a revamped version of the site previously known as We Sweat.

During the summer, two of Oxygen's cable shows were forced to go on hiatus after exceeding their budgets: Trackers, a show featuring such musical acts as Snoop Dogg and the Goo Goo Dolls and starring teens talking about them; and Pure Oxygen, a morning news program. Both are scheduled to return this week.

In the competitive environment of the Internet, Oxygen has never caught up with its two older rivals. In June, iVillage attracted more than 6 million unique visitors, Women.com drew more than 3.7 million, and Oxygen logged just under 800,000.

Oxygen's cable story is depressingly similar. Its No. 1 rival, Lifetime, an established joint venture of Walt Disney and Hearst, bills itself as "television for women." Because of a complicated arrangement that makes Oxygen relatively expensive for cable companies to carry, Laybourne's programming reaches only about 11 million households; Lifetime reaches 73 million.

The company will go out for another round of financing in the next year and will probably meet more resistance than it did the first time out. Investors, after all, are now more skeptical of Internet companies since the market took a dive in April.

As David Card, a senior analyst at Jupiter Communications, puts it, "the capital markets were incredibly, stupidly lavish with money" when Oxygen was starting up. But things are much different now.

He notes that the expectations of the marketplace and the reality of building a communications company are at odds. "Why do people expect media companies to be built overnight?" Card asks. "It takes years to build a successful media brand for a large audience, and Oxygen is trying to do some innovative programming. It was a very interesting idea to start cable and Internet at the same time."

An interesting idea, maybe, but some people who have worked at building an Internet and a cable franchise at the same time -- including Bartlett -- aren't sure they'd try it again.

As for Laybourne, she's as optimistic as ever about the future of Oxygen. "We're right on our marks and we're going to keep hitting those marks," she says. "We're still united in our basic beliefs. I see it happening. I think we're focused."

The focus for now, though, will have to be on pleasing the market and nourishing the business. Changing the world -- that'll have to come later.

It's a Woman's World

Oxygen Media consists of 15 Web sites and a 24-hour cable channel:

WEB SITES

* Oxygen.com -- home base for the Web sites

* BeFearless -- women making a difference in the community

* Breakup Girl -- advice on relationships

* Girls On -- chat and entertainment reviews

* Ka-Ching -- personal finance

* Moms Online -- parenting site

* O2 Simplify -- reducing life's clutter

* Oprah -- chatting about the show

* Oprah Goes Online -- Oprah guides readers through the Web

* Oxygen Sports -- women's sports

* Pulse -- what women think

* Shopo2 -- shopping site coming soon

* The Read -- opinion and comment

* ThriveOnline -- health and fitness

* Trackers -- for young women

SAMPLE CABLE SHOWS

* As She Sees It -- documentaries

* Exhale -- Candice Bergen and guests

* The Girl in the Picture -- classic movies

* Inhale -- yoga

* I've Got a Secret -- game show

* Ka-Ching -- money, business and career

* Pajama Party -- celebrity sleepovers

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