How MTV Took Over Europe

In the heart of the city, a castle dominates the skyline from the top of a jagged rock face — Edinburgh is built to expect invaders. But few have been as welcome as the hordes that arrived last week. On Wednesday night Justin Timberlake gave an impromptu DJ set in a pound-a-pint student pub, while Beyoncé Knowles went on a private shopping spree in the city's Harvey Nichols store. They were here for the MTV Europe Music Awards, where Christina Aguilera burst out of a nun's habit to reveal her trademark chaps, and, of course, little else. The event was broadcast live to more than 110 million homes in Europe and will be seen by a potential billion viewers worldwide — almost certainly the biggest moment in MTV Europe's 16-year history.

You might have missed the awards that went to Myslovitz (Best Polish Act), AB4 (Best Romanian Act) and Tiesto (Best Dutch Act). But they're huge stars in their home countries and keys to the local-market strategy that has kept MTV a step or two ahead of aggressive challengers. "Rather than beaming down into a market, we wanted to reach out from a more relevant point of view from within each market," says Brent Hansen, the head of MTV Europe and the impresario behind the awards. Hansen, 47, knows as well as anyone how fragile success can be in the music-television business. He's been on the MTV team since 1987, when MTV first dipped its toes into the European market. Back then, the Viacom-owned network was the only music channel on the dial. But along with the satellite and digital revolution came competition — and nowhere more so than in the U.K., where around 50% of British homes now have multichannel capability beyond the terrestrial networks.

MTV Europe remains the only pan-European music channel. A strong challenge has come from Emap, the London-based magazine publisher and radio broadcaster, which in 1996 bought the first video-jukebox channel, The Box. In the last three years, Emap Performance, the company's music division, has exploded to become MTV's main U.K. rival. It now has seven music-TV stations to MTV's eight, and takes 41% of the U.K. market to MTV's 52%.

Emap's success has come from piggybacking on the popularity of its established music magazines, including Smash! Hits, Q and Kerrang! The audiences for these channels are well-defined and know what kind of music they'll hear — chart pop on Smash! Hits, heavy metal on Kerrang! "Emap have been very clear in the way they view music TV," says Paul Richards, media analyst with Numis Securities. "It's radio with pictures." And the niche jukebox approach seems to work: viewers even phone in on premium rates to request a play. Boasts Tim Schoonmaker, CEO of Emap Performance: "We've got a business model which is far less expensive than the Viacom channels." Which is why Emap says it makes €9 million a year in profit on revenues of €37 million.