Cable looks for its edge

Jun 18, 2001  •  Post A Comment

The theme of the National Cable & Telecommunications Association’s Cable 2001 convention may have been “We’re Making Broadband Happen,” but the event, held last week in Chicago, was about more than just its multibillion-dollar infrastructure upgrade.
In addition to addressing the ongoing spectrum-space odyssey that is expected to bring VOD, cable telephony and high-speed Internet access, along with hundreds of new digital networks into millions of homes over the next few years, the annual confab was about who will control the future of telecommunications and what that future will be.
Cable’s digital conversion, said many panel participants, was spurred by competition from direct broadcast satellite, which used its technological advantage on the high frontier to snatch an 18 percent market share-and approximately $12 billion in revenues-in just “five or six years,” according to Kim Kelly, executive vice president, chief financial officer and chief operating officer of Insight Communications.
“Before digital we had an inferior product, and I’ll admit it,” said Jerry Kent, president and CEO of Charter Communications as well as the NCTA convention chair. But digital has more than leveled the playing field, Mr. Kent and several other participants on various panels agreed, giving cable capabilities that satellite providers cannot match.
However, the prospect that DirecTV may fall into Rupert Murdoch’s hands, giving him a North American platform to go with his international satellite capabilities, alarmed more than one prominent cable executive.
Steve Burke, Comcast Cable president, for example, predicted regulatory/legislative action if Mr. Murdoch acquires DirecTV and tries to “do what he’s done in England. I don’t think the U.S. government will allow him to do massive amounts of exclusive sports programming. It doesn’t make any sense in my mind that he would be allowed to own the Fox network and the Fox broadcast stations and DirecTV, when a cable company such as Comcast or Cox or Insight can’t own a local broadcast chain of stations.”
Other cable executives, however, including Barry Diller, according to reports, favor Mr. Murdoch’s possible acquisition of DirecTV, because it will be a further spur to cable’s own pricey infrastructure upgrade.
But will Americans, particularly those financially pressed in the current economic downturn, readily pay for cable’s new services, and will stereotypical couch potatoes actually bother to exert themselves enough to “interact” with their PC- and telephone-convergent televisions, even if the result is tailor-made TV?
Many panelists brought evidence, both anecdotal and experimental, that the answers to those questions, particularly the latter, will be yes. But not everyone was so sure.
Viacom’s Mel Karmazin, for example, shrugged off one of the more mundane possibilities of interactivity-ordering pizza through your TV screen-by noting the obvious: “I’ve had no trouble using the telephone [to do it].” As for new digital networks that will cost cable subscribers more in fees, Ms. Kelly observed that increasingly when new channels are added, customers are saying, “You keep the channels, I’ll keep the money.”
Mr. Karmazin created a brief media stir after one NCTA panel when he reiterated his desire to buy another network, specifically NBC or CNN-if regulatory prohibitions were lifted, and if the networks, particularly NBC, were for sale, which General Electric, the network’s corporate parent, maintains is not the case. On a separate dais, AOL Time Warner’s Gerald Levin took just the opposite view of the future: He suggested that the era of video-on-demand television that is coming will make networks as they are presently constituted considerably less valuable: “The networks are in trouble,” he said, sounding a note that had been heard at earlier panels too.
In the coming era, networks will not be broadcasters, they will be content providers, said Joshua Bernoff, principal analyst, Forrester Research, at one panel on the future of advertising.
Mr. Bernoff, who moderated that panel and attended several others, also summarized the overall consensus about this year’s convention, NCTA’s 50th, which was widely seen as relatively uneventful and relatively slow (though of course there were numerous exceptions, busy booths like those for Court TV, Fox, Hallmark, Time Warner, Lifetime and others, though whether the crowds and long lines were there for the freebies and the autographs, or to do business, was always an open question):
“My opinion of this show?” said Mr. Bernoff to one reporter. “It’s a really useful way to meet a lot of people in a small space. In terms of things happening, not that much.”
There were, indeed, a lot of people to meet at this year’s NCTA, but not as many as attended last year’s convention in New Orleans. The final attendance figure for Cable 2001 was 24,042, according to an NCTA spokesperson. That compares to approximately 31,000 at last year’s show and approximately 28,000 the year before in Chicago. Exhibitor floor space was down 10 percent at this year’s show, to 315,000 square feet, according to the spokesperson.
Those missing at this year’s show came primarily from one category only, according to Mr. Kent, the convention’s chair, and that was the once-high-flying world of the dot-coms.