This streaming service is for cord-cutters in Middle America

Kelly Arbaugh, a 58-year-old executive assistant for a wealth management firm outside of Philadelphia, was tired of paying $300 a month for internet and cable TV service and this year became one of the thousands of U.S. households that cut the pay-TV cord each month.

But breaking up with your favorite channels is hard to do, so Arbaugh turned to Google for help. “I asked, ‘How can I get the Hallmark Channel and UPtv without cable?’”

The search turned up Frndly TV, a Denver-based streaming service that offers a modest number of channels — including her favorites — starting at $5.99 a month. The name conveyed what Arbaugh was looking for: an inexpensive subscription with “family-friendly” programming that will never earn Emmy nominations or raves from TV critics but soothes her after a long day.

“2020 beat us up really bad in a lot of different ways - personally, financially, career-wise — and I just wanted a break from it all,” said Arbaugh, who relaxes to Hallmark movies — the TV equivalent of a scented candle — and UP’s reruns of the breezy family sitcom “Reba.”

Frndly TV's founders say the service, launched in October 2019, has nearly 500,000 subscribers. The privately held company does not disclose its finances, but executives said the platform already is profitable.

Its rapid rise shows how consumers are willing to mix and match the growing number of platforms in the TV landscape to get the video experience they want, including live viewing, a practice that hasn't completely gone away among the older generations that grew up with it. Younger viewers tend to prefer watching shows on-demand, rather than when a network schedules them.

"A fallacy of cord-cutting is that people don't watch live TV," said Bassil El-Khatib, chief executive of Frndly TV. "Value is the biggest challenge. The primary reason for dropping cable is cost. We're giving the channels that they love."

Frndly TV is what the media business calls a virtual MVPD, which stands for multichannel video program distributor. Such services include Sling TV, YouTube TV and Hulu Live. They stream live channels once available only with a cable box or satellite dish and are often referred to as “over the top” or OTT services, which according to data from research firm Parks Associates, are used in 14% of U.S. homes with broadband internet.

Frndly has managed to carve a niche in the increasingly crowded market.

While OTT services were touted as an inexpensive replacement for cable TV, it hasn’t quite worked out that way. Prices have been rising and not every offering has channel lineups as extensive as those offered in traditional pay-TV subscriptions, requiring consumers to sign up for multiple services to satisfy their viewing needs.

Parks Associates found that in the third quarter of 2020, 31% of the households with broadband internet subscribed to four or more video streaming services. That was up from 14% a year earlier, a lift that was likely propelled by the COVID-19 pandemic that kept people inside and starved for entertainment.

In addition to Frndly TV, Arbaugh also subscribes to Discovery Inc.'s streaming service Discovery + to get her fix of home improvement and house-flipping shows on HGTV.

Phyllis Vanes, a 68-year-old retired certified nursing assistant in Coos Bay, Ore., gets YouTube TV to receive broadcast channels, which she can't pick up with an antenna on the Oregon coast. She signed on to Frndly TV for Hallmark mystery movies, which she missed after cutting the cord four years ago.

Frndly TV founders Michael McKenna and Andy Karofsky came up with the concept of FrndlyTV after recognizing that some of the most popular channels were not being offered on the big OTT services, which are largely aimed at millennials and Gen Z viewers. Both of them worked on the launch of Sling while serving as executives at the satellite company Dish.

They identified segments of cord-cutter consumers who were not satisfied with the streaming services available. They include people who hold traditional or conservative values. Frndly TV quantifies them as 140 million churchgoers — married couples with children younger than 18 and consumers with an interest in outdoor activities such as hunting and fishing.

Using a seven-figure investment from family members and the backing of Talkot, a Sausalito-based venture capital firm, the partners designed and launched Frndly TV as a low-cost service that starts at $5.99 a month and goes up a few dollars when features such as a DVR and on-demand playback are added.

They packaged 15 channels, some of which are among the most-watched on cable, according to Nielsen ratings, including UP, three Hallmark channels — packed with chaste romances, bloodless murder mysteries and old network sitcoms — and INSP, which airs classic TV westerns. The channels are for TV fans who look for escapism, not prestige television that test artistic boundaries.

“People tell us 'TV is stressing me out,'" said El-Khatib. "They’re saying, the needle keeps being pushed on violence and sex. It’s trying to push the envelope to engage you, and sometimes that’s good, but sometimes people want TV just to relax."

Frndly TV also has three hunting and fishing channels from the media company the Outdoor Group; BabyFirstTV, a channel for infants and toddlers; the Weather Channel; Game Show Network; and CuriosityStream, which carries documentaries that are far more sedate than Netflix's "Tiger King: Murder, Mayhem and Madness."

Frndly TV has no sports, news channels or local broadcast channels, which demand the highest fees from pay-TV providers (a cost passed along to consumers in their monthly bill). The company also hasn't done deals with large media companies such as Disney, WarnerMedia, ViacomCBS or Discovery that require pay-TV providers to take all of their channels when negotiating carriage agreements.

The tighter focus enabled Frndly TV to keep its costs down and its price below other inexpensive OTT services in the marketplace, such as Philo and Vidgo. PureFlix, a family-oriented streaming service owned by Sony Pictures which offers faith-based movies, charges $12.99 a month or $99 a year.

Frndly TV has marketed itself as a service that parents can leave on without worrying what their kids will see (one of its ad tag lines is “No Parental Controls”). The most graphic violence Frndly TV viewers are likely to see is a buck being killed by a crossbow during one of the Outdoor Channel’s “Meateater Marathons.”

“Taking your kids hunting is part of their lifestyle,” El-Khatib said. “When you look at our target market, that’s something that resonates.”

Frndly TV has also attracted older consumers who are adapting to the new TV technology. The company keeps its customer call center in-house, and even the partners will get on the line to help consumers who are not tech-savvy.

"My favorite is walking an 80-year old lady through how to set up her Roku so she can watch Frndly TV," said Karofsky.

Many customers are finding Frndly TV through Roku and other streaming devices such as AppleTV and Amazon Fire. The company is using Facebook for most of its marketing efforts.

Steve Nason, research director for Parks Associates, said Frndly TV has successfully carved out a position in the streaming marketplace. But he questioned how the company can grow with a limited number of channels while keeping its costs low.

"They are staying small, and from a business standpoint that's very smart," Nason said. "But once they reach critical mass with this wholesome brew, where do they go from there?"

Karofsky acknowledged that expanding Frndly TV while remaining true to its mission to provide channels at a low cost will be a challenge.

"We have to do deals with channels that understand what we’re trying to do here and are going to work with us in a reasonable fashion," Karofsky said. "Our channel partners today are extremely supportive."

Byron Allen, chief executive of Los Angeles-based Entertainment Studios, which owns the Weather Channel, said he is looking at placing other channels in his company's portfolio on Frndly TV. He believes the proliferation of streaming services that target audience segments will help sustain the demand for live TV.

“I don’t believe there is any such thing as cord-cutting," Allen said. "It’s audience migration. You didn’t wake up one day and say you didn’t want the Weather Channel or or you didn’t want sports. You woke up and just said I want it at an efficient price and in an efficient way and the technology is affording me that.”

This story originally appeared in Los Angeles Times.