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Briefly Noted

Nov 5, 2001  •  Post A Comment

Broadcasters OK total-carriage plan
The National Association of Broadcasters TV board last week approved a plan that could free cable operators from any obligation to carry both the analog and the digital signals of television stations during the transition to digital. NAB has been lobbying long and hard for such so-called “dual carriage.” But the concept has failed to gain traction in Congress or at the Federal Communications Commission.
Under NAB’s new total-carriage plan, cable operators would continue to be obliged to carry the analog signals of broadcasters during the transition. But they would not have to start carrying the DTV signals until after the transition. In addition, however, operators would have to carry all of the information on the broadcaster’s DTV signal and ensure that all of their subscribers are capable of receiving it. In a statement, the NAB TV board said it had directed the association’s staff to try to negotiate a deal that would ensure that all new TV sets include DTV tuners and that cable equipment is compatible with broadcast DTV needs. One broadcast industry source said the board’s move signaled its willingness to dump dual carriage if other industries affected by the transition are also willing to give some ground. Said Paul Karpowicz, NAB TV board chairman and a vice president of Lin Television, “Broadcasters are willing to negotiate to try to get something done and to move the transition forward.” In a statement, the National Cable & Telecommunications Association said the cable industry believes that “the marketplace, not government-mandated solutions, consistently achieves the best results.”
Third-quarter lows for Big 3
The Big 3 broadcast networks’ third-quarter advertising revenue comparisons fell to their lowest levels ever as a result of the economic slump, the Sept. 11 terrorist attacks and a summer without an Olympic Games, according to statistics released by the Broadcast Cable Financial Management Association. In the third quarter, ABC, NBC and CBS reported an aggregate 28.5 percent decline in total advertising revenues to $1.9 billion from a year earlier. Although prime-time revenues actually rose 10 percent in the period to $980 million, advertising sales were down 29 percent in children’s programming, 76 percent in sports programming and 10 percent in both daytime and late-night, BCFM said.
Hearst-Argyle posts loss
Hearst-Argyle Television officials say they are considering ways to further cut costs to meet the company’s bank loan covenants and to offset $18 million it will spend next year to complete its digital conversion. In a third-quarter earnings conference call with analysts, company officials said Hearst-Argyle increased news costs and lost more than $10 million in advertising revenues as a result of the Sept. 11 terrorist attacks and subsequent events. For the quarter, the company reported a $6.8 million loss, or 8 cents a share, compared with a $9 million profit, or 10 cents a share, a year earlier. Revenues declined 19 percent to $145.2 million.
Ups and downs for cable operators
Charter Communications on Nov. 1 cut its 2001 revenue growth target to 12.5 percent from an earlier target of 14 percent to 16 percent and cut estimates on this year’s cash flow by 2 points to between 10 percent and 11 percent. Charter reported a 17 percent rise in third-quarter operating cash flow to $467.5 million on a 24 percent rise in revenues to $1.04 billion. The company, backed by Microsoft Corp. co-founder Paul Allen, said its third-quarter loss widened to $317.4 million, or $1.08 per share, exceeding last year’s pro forma loss of $279.5 million, or 95 cents a share.
Also for the third quarter, Comcast Corp. reported a loss of $106.8 million, or 11 cents a share, which was better than analysts expected but down from net income of $1.25 billion, or $1.29 a share, in the year-earlier period. However, the addition of 243,000 digital cable subscribers in the period helped to grow revenue by 20 percent to $2.36 billion. The company said its consolidated operating cash flow grew 17 percent to $705.8 million. During an earnings call with investors, Comcast officials declined comment on their ongoing discussions with AT&T Corp. to acquire the latter’s Broadband unit.
AOL Time Warner CFO shuffle
In a move that fuels growing speculation about rifts among top executives at AOL Time Warner, Chief Financial Officer Mike Kelly was named chief operating officer last week at the company’s America Online unit, where he will oversee daily operations and report to AOL CEO Barry Schuler. Mr. Kelly is succeeded as AOL Time Warner CFO by Wayne Pace, chief financial and administrative officer at Turner Broadcasting. The move comes just weeks after the company removed longtime cable chief Joe Collins and made him head of a newly formed interactive video unit, replacing him with a team of three executives.
Wall Street response to the change was surprised and mixed. Christopher Dixon, veteran analyst at UBS Warburg, called the move “a net positive for AOL Time Warner as it may accelerate the deployment of content across AOL’s platform.” He called Mr. Kelly “a hard-nosed, disciplined executive who has the benefit of having worked closely” with all of the company’s units.
Mr. Kelly is well regarded among investors and analysts as the numbers man who has guided AOL Time Warner through difficult explanations about its merged economics. However, in recent months, the company has conceded it will fall short of its original financial targets this year due to a soft advertising market and declining economy.