Tanner Stransky
August 27, 2007 AT 04:00 AM EDT

In 2002, MTV sat atop the TV heap. The Osbournes was a sensation, the Video Music Awards drew record ratings, and TRL was still a crucial teen tastemaker. Problem is, when it comes to young-adult entertainment, 2002 might as well be 50 years ago. Today, the network can’t quite seem to recapture the zeitgeist. While viewership is up slightly, hits have been scarce, and competition from YouTube and social networking sites like Facebook has been brutal. Last February, the network began axing some 250 employees in a fat-trimming effort that, according to an internal memo, was designed to help launch ”the next great era for MTV.” A lofty goal, but to borrow a phrase from that wise sage Hilary Duff, how exactly do those layoffs help MTV avoid becoming ”So Yesterday”? MTV president Christina Norman freely admits that the 26-year-old network could use a tune-up. ”Reinvention almost feels too small,” she says, ”because it’s like you’re done — and I don’t think we’re ever done.”

For starters, the network’s flagship award show, the VMAs, is getting a big makeover. ”Our plan was to put a stick of dynamite in it, light the fuse, and blow it up,” says Norman. ”I think we were sort of getting a little stuck in tradition, which seemed odd. Music is changing constantly.” Last year’s telecast saw a troubling 50 percent drop in viewers from its 2002 high. The Sept. 9 telecast will film at the Palms Casino Resort in Las Vegas (site of both the infamously raunchy Real World season and the recent cast reunion) with Timbaland as its so-called music ”maestro.” (A source close to the network confirms that Britney Spears plans to make an appearance.) And after years of endlessly repeating the ceremony — and likely diluting its viewership — the show will air just once. The traditional auditorium setup has also been scrapped. Performances and award handouts will now be captured by cameras located throughout the Palms. Executive producer Jesse Ignjatovic says the overhaul allows artists to ”do things that they wouldn’t do on any other show.” Well, he is copying one show: The booze will flow as freely as at the Golden Globes.

So that’s two hours of programming down, but how about the rest of the schedule? Lately, the network has counted on a scattershot mix of throwaway dating shows and reality series about spoiled brats who drink, fight, hook up, and cry. It’s easy to see why MTV went in that direction. The formula worked for Laguna Beach and its follow-up, The Hills, whose season 3 bow drew a series high of 3.8 million viewers on Aug. 13. But its appeal is limited. The latest premiere of The Real World, for example, was down from previous seasons. So MTV will soon shake up its reality-dominated lineup with the fall launch of Kaya, a scripted series — its first in five years — about the tribulations of a young rocker, played by Heroes‘ Danielle Savre. ”Our audience is going to see this as completely relevant,” says Norman. ”It’s a good story.”

Sounds like a plan. But media insiders worry about MTV’s online presence. ”Not getting in earlier was a problem,” says Michael McGuire, an analyst at the tech-research firm Gartner. ”Advertisers want to believe in the brand — it’s still superstrong, but online? It’s kind of a blip right now.” Norman’s out to change that perception, too. Viewers will be able to vote online for their favorite moments and unaired outtakes from the VMAs; the winning clips will be remixed for a customized version of the show that will then air on the channel. And on Aug. 21, MTV Networks announced that it would merge its struggling digital-music subscription venture, Urge, with RealNetworks’ Rhapsody service in a clear effort to take on iTunes.

That sounds more promising than a now-shelved initiative to make over afternoon video-countdown classic TRL — which has seen its viewership plummet 37 percent since longtime host Carson Daly exited in 2003 — into YouRL, an Internet-based participation-driven version. Norman says she remains ”committed to TRL,” but is mum on how she plans to fix it. At this point, though, some question whether revamping it is worth the trouble. ”TRL has probably served its purpose,” says Horizon Media analyst Brad Adgate. ”If they’re just going to play videos that you can get in different platforms on demand, well, then…their work is cut out for them.” To which Norman replies, Bring it on. Reinvention, she says, ”is part of our DNA.”

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