Paul LaMonica Commentary:
Media Biz by Paul R. La Monica Column archive
Do you like scary movies?
Hollywood is betting yes. Big media is investing in cable and broadband channels geared to fans of blood and gore.
By Paul R. La Monica, CNNMoney.com editor at large

NEW YORK (CNNMoney.com) -- It's October. And you know what that means ... boo!

Halloween is here. And this October, people who like to be spooked had an even bigger treat. This October contained... you guessed it ... a Friday the 13th.

saw_3_movie.03.jpg
Lionsgate has had a big hit with its "Saw" franchise of horror films. The third "Saw" movie was released just before Halloween.
FUN MONEY

Sadly, there's no new "Friday the 13th" movie hitting theaters. What a wasted opportunity. I'm eager to see what the hockey-mask-wearing psycho killer Jason Voorhees can do next now that he's rampaged through Crystal Lake, Manhattan, outer space and even done battle with Freddy Krueger. Maybe Jason goes to North Korea?

Anyway, even though horror fans won't have a new Jason movie this year, they did have several other fright flicks to keep them busy. A "Texas Chainsaw Massacre" prequel was released this month and pulled in a respectable $19 million at the box office in its opening weekend.

Two weekends ago, "The Grudge 2", the sequel to the 2004 hit movie based on a Japanese horror film, took in more than $20.8 million in its debut. The first "Grudge" generated more than $110 million in the United States. And "Saw III", released Friday, took the top spot at the box office over the weekend, selling $34.3 million worth of tickets. The first two movies, about a sadistic killer named Jigsaw, have combined to gross (figuratively and literally) $142 million in this country.

Nothing scary about the big profits

Horror films are typically a very easy way for studios to make money. Budgets tend to be small since the actors are usually not of the A-list variety. So it should come as no surprise that many big media companies are making an even bigger bet on the genre.

On Halloween in fact, cable company Comcast (Charts) and Sony Pictures Entertainment are launching Fearnet, a video-on-demand cable channel for Comcast subscribers that will feature horror films from the Sony and MGM libraries. Comcast digital subscribers will not have to pay extra to watch movies, and the companies plan to generate revenue mainly from advertising.

Lionsgate (Charts), the studio behind the "Saw" franchise, is also reported to be investing in this channel. A spokesman for Lionsgate was not immediately available for comment.

Fearnet is not the first channel to focus solely on horror. EchoStar's (Charts) DISH Network offers a high-definition channel to its subscribers called Monsters HD. That channel is owned by Rainbow Media, a subsidiary of cable company Cablevision (Charts).

"Horror is cheap to make and still manages to get college students out on a Friday night. It's no wonder cable operators would see the same opportunity," said James McQuivey, a professor at Boston University's College of Communication, in an e-mail.

There's also a privately held online video channel called the Horror Channel, which mainly features movies from independent filmmakers as well as some original programming.

And it too has attracted the interest of a major media firm. The site recently struck a programming and distribution agreement with nbbc, the broadband arm of General Electric's (Charts) NBC Universal media unit.

But are there enough people interested in horror to justify several channels?

Advertisers aren't afraid of horror fans

Matthew Harrigan, an analyst with Janco Partners who follows Comcast and Lionsgate, said that Fearnet should do well once it launches.

"I think it will certainly be a success. There is definitely enough demand for horror and it's a pretty profitable genre," he said.

Thomas Eagan, an analyst with Oppenheimer & Co., added that if Fearnet finds a sizable audience, he would not be surprised to see Comcast launch a version of the channel that other cable networks could carry as part of their basic or digital subscription services.

One media buyer said that, in addition to Fearnet, other channels focusing on scary movies should also find an audience ... and interest from advertisers.

Brad Adgate, senior vice president of corporate research for Horizon Media, said that younger males tend to be the biggest fans of horror films. And that's a notably tough demographic for advertisers to reach through traditional media.

"Young males are among the most elusive when it comes to mass media, so if you could get those viewers, there are advertisers that would follow suit," Adgate said. "Horror fans would be a very appealing target to advertisers."

Nick Psaltos, founder and CEO of the Horror Channel, also thinks there is enough room for smaller, independent channels like his. So far, he said that the site's main advertisers are movie studios but that the company's sales team is looking to expand to other advertisers.

Psaltos added that he's been trying to work with cable companies for the past few years to get his channel distributed on television but that carriage fees would be too expensive.

But he's content to be an Internet-only channel and added that his company has signed a deal with privately held tech firm Akimbo on technology that will allow the broadband stream of the channel to be viewed on standard TV sets.

"We've hung tough and decided to use tech in our favor and focus entirely on streaming video and broadband for the past few years," he said. "Cable is just not what it used to be. Wall Street is starting to figure that out as consumers are spending more time online than watching TV."

And clearly, online video has become a hot market. Google's (Charts) decision to buy online video-sharing site YouTube for $1.65 billion earlier this month is proof of that.

So it seems like media companies have nothing to be afraid of when it comes to investing more in horror.

--------------------------------------------------------------

This is an update of a story that originally appeared on Oct. 11.

Oppenheimer's Eagan owns shares of Comcast but his firm has no banking ties with it or other companies mentioned in this piece. Janco's Harrigan does not own shares of companies mentioned in this story and his firm has no investment banking relationships with them. Top of page

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.