They Want Their Fuse TV
With music, sex, and clever marketing, upstart Fuse is taking on MTV to become the new voice of youth culture.
By Thomas Mucha

(Business 2.0) – For a cable channel that launched just two years ago, Fuse boasts numbers that are, like, totally awesome. Nielsen Media Research says Fuse has the highest concentration of 12- to 34-year-old viewers of any channel. And it's the top-ranked TV network in the likelihood of female teen viewers to trust advertising and pay attention to commercials, according to Jack Myers Teen Media Brand Tracker. While dwarfed by rival MTV, Fuse already reaches 37 million U.S. homes; Kagan Research estimates that the network's revenue will top $68 million this year, having more than doubled since 2003. Fuse even expects to turn in its first profit next year. "They've come a long way," says Kagan analyst Derek Baine.

A new network typically takes five years to reach similar benchmarks. So how did Fuse do it? It helps that the channel is owned by New York-based media giant Cablevision Systems, which guaranteed access to its 3 million subscribers in the New York metro area and opened doors that led to deals with the country's 10 leading cable distributors. But Fuse capitalized on that reach with a smart marketing campaign that taps into kids' rebellious instincts--a hallmark of youth culture since Elvis.

For starters, Fuse cleverly defined MTV as the Establishment and saw an opportunity to put the music back in music television. "MTV abandoned music and moved toward culture," explains Robert Weiss, Fuse's head of entertainment. The new channel's programming schedule is packed with videos, emphasizing up-and-coming bands like Modest Mouse and Simple Plan. The network has made the rivalry with MTV explicit, taunting its aging competitor with trash-talk slogans like "No whiny kids living together, no ridiculous tours of other people's homes."

The prankster tone carries through to Fuse's advertising. Last summer the network's print and outdoor ads parodied Apple's ubiquitous iPod campaign with colorful silhouettes of pole dancers and beer bongers clutching TV remote controls. The tagline: "Watch Different." "Fuse capitalized upon the golden rule of youth marketing--pushing the boundaries," says Drew Neisser of Renegade Marketing Group. "That made it impossible to ignore."

Advertisers are also finding Fuse tough to ignore. More than 60 major companies, including Pepsi, Starbucks, Toyota, and Verizon, promote their brands on the channel. No wonder: "It's a hard demographic to reach," says Laura Caraccioli-Davis of Chicago-based media buying agency Starcom Entertainment. And lucrative too: 13- to 19-year-olds spend $94.7 billion on goods and services each year.

Still, the growing network remains a pipsqueak compared with MTV, which reaches 86 million U.S. homes (and more than 400 million worldwide) and has estimated annual revenue of $1.1 billion. Fuse is estimated to have pulled in $54 million in 2004, but it's expected to turn profitable in the second half of next year. And for a young upstart, that's, like, awesome--no matter how you say it. -- THOMAS MUCHA