Cuban’s Coups Enrich Roster

Jul 17, 2006  •  Post A Comment

Mark Cuban’s surprise deal to make his niche network HDNet Dan Rather’s new home wasn’t the only big television coup the billionaire had up his sleeve last week.

Mr. Cuban, chairman and president of HDNet, is close to acquiring all three seasons of the critically acclaimed Fox comedy “Arrested Development” from Twentieth Television, sources said.

The series, which was shot in high definition, will join a roster of recently canceled prime-time series on HDNet’s schedule. Mr. Cuban acquired former CBS drama “Joan of Arcadia” and former Showtime series “Dead Like Me” in April.

The deal for “Arrested Development” was being completed last week, days after Mr. Cuban stole the spotlight from exponentially bigger networks at the Television Critics Association’s semi-annual cable press tour with an announcement that veteran former CBS newsman Mr. Rather will join HDNet, which is available in about 3 million homes. (Fully distributed cable networks are available in more than 90 million homes.)

The moves are part of Mr. Cuban’s plan to fashion his 5-year-old ad-supported channel into a premium source of high-definition programming with exclusive content-not just higher-resolution versions of commonly available shows. The terms of the “Arrested Development” deal were not available. The series would be the network’s highest-profile series acquisition to date.

“Arrested,” which was produced by Imagine Television in association with 20th Century Fox Television, ran for three seasons on Fox. Though it was never a ratings performer, it is a multiple Emmy Award-winning show, clinching the comedy series award in both 2004 and 2005.

HDNet and Twentieth Television, which distributes “Arrested Development,” declined to comment.

HDNet’s schedule consists of movies, sports and original specials presented in 1080i, the highest widely used picture resolution. The channel also has off-network television series that were shot either in HD or on 35mm film (which contains enough picture detail to be displayed in the HD format). By limiting acquisitions to HD or 35mm, the channel has a mix of classic TV shows such as “Hogan’s Heroes” and modern off-net fare such as “Boomtown.”

HDNet is typically paired on cable and satellite systems with Mr. Cuban’s HDNet Movies, a theatrical spinoff channel.

The new high-profile programming could help drive distribution efforts for HDNet, said Bruce Leichtman, president of Leichtman Research Group.

“They’re smart in trying to gain recognition,” Mr. Leichtman said. “Clearly the thing from the consumer standpoint is to stay with brands the consumers know. But this is more to gain and manipulate carriage than gain eyeballs, at this point.”

HDNet’s reach also is expected to grow with the increasing adoption of HD. The channel has a significant number of distribution contracts. Adelphia, Charter, Time Warner, Brighthouse, Insight, DirecTV and Dish carry the network. But the channel’s subscriber base has been limited until now by the number of households with HD service.

Only about half of consumers who buy HD sets also purchase an HD subscription package through their cable or satellite operator. “There’s only about 8 million people watching HDTV-so [HDNet has] close to half of the HD homes,” Mr. Leichtman said.

HDNet lacks crucial carriage deals with the largest cable operator, Comcast, as well as Cox. In addition, the channel is tiered on Time Warner. Comcast, Cox and Time Warner own Mr. Cuban’s competitor, iN Demand Networks, which has a pair of general-interest HD channels-INHD and INHD2-that are in about 4 million homes.

INHD2 will soon be significantly scaled back, however. “There are some systems where it may go away, but it’s not unilaterally being shut down,” said a spokesperson for iN Demand Networks.

To evolve significantly, HDNet still must acquire more of the big-ticket programming that drives HD viewership, according to Pete Putman, president of ROAM Consulting and author of the HDTV Expert online column.

“In terms of HD subscribers, [HDNet is] way down the list of must-see programming,” Mr. Putman said. “ESPN HD, ESPN2 HD, Discovery HD, the HD movie channels and the major networks all draw way more viewers. The problem is access to premium content-no major league sports or first-run films.”

Last week Mr. Cuban surprised critics attending the TCA Summer Press Tour by hiring Mr. Rather for a weekly New York-based investigative news program, to be called “Dan Rather Reports.”

That Mr. Cuban was able to present a TCA panel was itself unusual, as the organization mandates that participating networks have a minimum of 10 million subscribers. The TCA made an exception due to the news value of Mr. Cuban’s announcement, TCA spokeswoman Sharon Radziewski said.

“We did it because they had Dan Rather and that’s news,” she said. Currently HDNet covers major news stories in the series “HDNet World Report,” presenting HD coverage of events such as NASA’s space shuttle launches and the funeral of Pope John Paul II. Mr. Rather’s show represents a serious expansion of the network’s news division, just as the acquisition of “Arrested” represents a significant play into entertainment programming.

Figures for Mr. Rather’s deal were not disclosed, but Mr. Rather said he expects the HDNet news division to have both financial support and creative freedom.

Unlike most start-up networks, HDNet does not have to constantly scramble for investment backing. In 1999, Mr. Cuban sold his company, Broadcast.com, to Yahoo and purchased the Dallas Mavericks. He is worth $1.8 billion, according to Forbes.

“I don’t give a damn about earnings per share; I’m not worried about advertisers,” Mr. Cuban told the press tour audience last week. “If somebody says, `I didn’t like what Dan reported,’ I say goodbye to the advertiser. Now, that’s easy now. I don’t have fifty-million-dollar advertisers. But you know what? I’m gonna eat no matter what.”