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Murdoch Factor Looms Over Last Western Show

Dec 8, 2003  •  Post A Comment

Rupert Murdoch did not attend the final Western Show last week, but he was clearly on the minds of most attendees. The pending acquisition of DirecTV, the largest satellite program service, by his company, News Corp., cast a long shadow and ignited lively discussions throughout the four-day conference at the Anaheim Convention Center.
While attendees were concerned about competition from satellite TV and phone companies, the mood was generally upbeat, especially among cable system operators. Many are close to completing multibillion-dollar system upgrades, which they believe gives them a technological
edge over satellite, and most are benefiting from high-margin business opportunities in high-speed data transmission and telephone services.
“Obviously [Mr. Murdoch is] an excellent programmer and he’s been successful at building media properties around the world, so we don’t want to underestimate him,” said Tom Rutledge, president of Cablevision. “The cable platform we’ve built, however, is superior to satellite. It has more capacity for broadcast and interactivity.”
With rebuilt networks, Cablevision, Insight Communications and other MSOs were now ready to focus on selling, servicing and building new products. That included discussions about an alphabet soup of new and pending options such as high-definition TV, video-on-demand, voice over Internet protocol) and digital video recorders.
The big job ahead is to market all of these new services. “We have to win back from satellite providers that perception of technology leadership,” said Maggie Belleville, executive VP and chief operating officer of Charter Communications. “We let them take that position through better advertising, better messaging, a better value proposition. We have to constantly and diligently do a better job at telling our story.”
The candor was typical of the panel sessions during the convention. Executive after executive readily acknowledged cable’s shortcomings-a poor reputation for customer service, churn to satellite and a confusing array of products. Successes such as the growth of broadband and steadily rising ratings, mostly at the expense of broadcast, were only passingly touted. Nobody seemed comfortable resting on cable’s laurels.
Like modern-day Paul Reveres, session moderators continually sounded the alarm that “Rupert is coming!” and drilled panelists about what they intend to do about it. “Who’s afraid of the big bad Fox?” barked Ron Insana, co-anchor of CNBC’s “Business Center.”
Programmers, by and large, sounded tentatively hopeful notes. Oxygen’s Geraldine Laybourne said the “lively competition” of DirecTV will result in a better market for consumers and drive technological innovation.
But Mr. Murdoch’s pledge of a satellite new deal that would include a DVR in every box was a source of concern. “You have [News Corp.], a very large, advertising-revenue-driven company, making the decision of moving into this new world, which is creating the response from cable to deploy PVRs,” said Mindy Herman, president and CEO of E! Networks and a former Fox executive. “Hopefully people thinking through these decisions won’t cut one of the great pillars of the cable programming industry. It would make no sense to anyone in this room to end up with a single revenue stream from subscription.”
Other programmer fears, discussed in more private settings, were that Mr. Murdoch would pack DirecTV with exclusive Fox content and use the DBS menu to give prime channel placement to his own stations.
According to some analysts, even built-out operators should be worried. Mr. Schaeffler predicted Mr. Murdoch will bring HDTV programming, more DVR boxes, interactive television, broadband and new content to DirecTV. “It’s going to require a significant cost in the short term, but he’s shown he’s willing to do that,” Mr. Schaeffler said.
Matthew Harrigan, managing director of Janco Partners, pointed out that Mr. Murdoch has not shown interest in one of cable’s best new strengths-HDTV programming. “He’s less evangelical about HDTV-certainly if you look at what the Fox stations have done,” he said. “Murdoch has always been a genius at mass marketing. He’s looking for something that’s a more broad, populist brush.”
By the conclusion of the 36th and final Western Show, it was clear the conference was a shadow of its grandiose peak in 2000, when about 30,000 attended. But it was still better-populated that most expected. There were about 6,000 registered attendees and 150 exhibitors on the floor. During the opening general session, hosts had to scramble to provide additional seating and rearrange the auditorium for the crowd.
By the end of the conference, everybody had heard the joke: “This last Western Show thing is so good, they ought to do it again next year.”