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Content Still King to Cuban

May 18, 2008  •  Post A Comment

Having launched HDNet on DirecTV in 2001, entrepreneur Mark Cuban was an early believer in high-definition programming. The network, which has about 10 million subscribers, has since spawned a movie channel and in 2006 brought on former CBS anchor Dan Rather for his own news series, “Dan Rather Reports.”
In October, Cuban, whose $2.6 billion in net worth ranked him No. 446 on Forbes’ billionaire list this year, launched HDNet Fights to capitalize on the growing popularity in mixed martial arts by producing and broadcasting more than two dozen live events this year.
The outspoken Cuban, who turns 50 in July, has always been a believer in technological advancement, and with good reason. He co-founded content-streaming Web site Broadcast.com in 1995 and sold it four years later to Yahoo! for $5.7 billion. He went on to buy the NBA’s Dallas Mavericks in 2000—he’s since racked up more than $1 million in fines for badgering referees—and has been reported to be interested in purchasing baseball’s Chicago Cubs. His opinions on technology and other subjects can regularly be found on his blog, BlogMaverick.com, and he shared some of them with TelevisionWeek’s Danny King.
TelevisionWeek: As more mainstream and cable networks run HD simulcasts, how do you keep demand and ratings up for HDNet?
Mark Cuban: Great content. Using HD as a differentiation ended years ago. More than 90% of our prime-time programming is original and exclusive to HDNet. HDNet prides itself as being a network that is original, thinks independently and takes on unique content and programming opportunities. From “Dan Rather Reports,” which not only has won awards, but has our viewers calling it the last real news show on TV, to “World Report,” to “Deadline,” our “InFocus Documentary” series to our Sunday concert series and our mixed martial arts programming on Fridays and Saturdays—you can’t find programming like HDNet’s anywhere else. For HDNet Movies, we have our “Sneak Previews,” premiering movies before they are in theaters, and of course a long list of movies that have never before been seen [on television] in their original aspect ratio and in HD. While other networks are shoving more and more advertising and product placement and on-screen promotional bugs down viewers’ throats, we respect the viewing experience. Our movies are uninterrupted, as is much of our programming. We have very limited commercial breaks and we never put those crazy graphics for upcoming shows over top of our programming. We would rather charge more for fewer commercials and allow people to enjoy our shows. That’s the benefit of being an independent programmer. We don’t have the corporate mission of maximizing earnings per share. We have the personal mission of creating great programming and creating an amazing viewing experience for our subscribers.
TVWeek: Is Sony’s victory in the HD DVD player format war going to unleash huge demand for Blu-ray, or did that industry blow its opportunity to be the primary HD content source by not coming to a next-generation player consensus soon enough? How does that process affect the HDNet networks from a competitive standpoint?
Mr. Cuban: I don’t know. Personally, I think the problem both HD DVD and Blu-ray faced is that they didn’t make the quality good enough. They left a lot of bits on the table that could have gone to make the picture quality amazing. Instead you get ATSC-quality video at best.
TVWeek: How many U.S. subscribers is HDNet available to? How are its ratings and how have they changed over the past year or two?
Mr. Cuban: We are past 10 million subscribers and growing. As far as our ratings, we are rated by TNS in certain regions. In those ratings we beat our competition—TNT HD, Discovery HD, ESPN HD and even some broadcast network numbers—quite a bit. Our Friday nights in particular often beat standard-definition networks that have 10 times the distribution that we have. So we are very happy with our results, which continue to get better.
I think our viewers appreciate the independent approach to programming we take. There is no corporate-think at HDNet and HDNet Movies.
TVWeek: You said on your blog entry earlier this month that HDNet is working toward ending the practice of network a la carting. How are you trying to do this?
Mr. Cuban: We have spoken to regulatory agencies, lobbying groups and are working with other independent programmers to create change. It’s absolutely wrong that some mega-entertainment groups are forcing video distributors to take product they don’t want, and that distributors are giving carriage and pricing to networks they have equity ownership in, at the expense of independent networks like HDNet. There is a need for independent voices on TV. You aren’t going to get that from companies that are far more concerned with squeezing every nickel out of every program rather than maximizing the viewer experience. Our goal is to make sure the door is open for networks like HDNet and others to have a chance to thrive.
TVWeek: You’ve also mentioned that there’s an imbalance between television and Web advertising rates because a Web show has about one-eighth the ads of its TV counterpart. What will happen to Web advertising rates in the future?
Mr. Cuban: It’s hard to say. While there are fewer ads per show, the inventory of shows online is going through the roof.
TVWeek: Japan’s Communications Ministry said earlier this year that it’s working on adopting an HD standard where the resolution is many times that of the 1080dpi currently used. Do you see the U.S. doing the same thing, and is there any point to this, or is the HD viewer seeing about as clear a picture as they’ll be able to see?
Mr. Cuban: No chance in my lifetime. Bandwidth is too valuable for too many different applications. That said, I do see regulatory agencies saying something about what passes as HD. I think it’s wrong that shows that are shot in less than HD quality are being upconverted and passed as HD and that networks that have less than 30% of their programming in true HD resolution are calling themselves HD. It’s creating enormous confusion in the marketplace. Consumers are buying HDTVs, buying HD service from their provider and believing they are watching HD shows on HD networks, not realizing that because none of the shows they like are offered in true HD, they have yet to see a single show in HD. From the conversations I have had, I can see something coming out sooner than later and having an impact on the marketplace. There could be 80 or more networks that call themselves HD that find themselves no longer being able to apply the tag to themselves. That could make things fun.
TVWeek: Viacom Chairman Sumner Redstone last month criticized CBS Chief Executive Officer Leslie Moonves for greenlighting mixed martial arts broadcasts on CBS, saying it wasn’t “socially responsible.” Fox Sports President Ed Goren followed up by saying he’d never broadcast MMA fights. What’s your response?
Mr. Cuban: Sumner Redstone is clueless. I’m a fan of Ed Goren and what he has done with Fox, but Fox Sports has been broadcasting MMA for years. Personally, I hope both networks avoid MMA at all costs. We love it and want to have it all to ourselves.
TVWeek: Cable and satellite operators are boosting their on-demand HD choices, while the choice of downloadable or streamed HD content will only increase over the next couple of years with services like Hulu, Unbox and AppleTV either providing HD content or working on it. Do you have any concerns that the popularity of schedule-based programming networks like HDNet could drop as more people will be able to get their HD content exactly when they want it?
Mr. Cuban: None. The threat of over-the-top Internet delivery of HD content is way overblown. First of all, what’s being offered as HD online isn’t HD. It’s low-bit-rate stuff. Second, when the flow of HD downloads reaches even 25% of movie downloads, the cost of supporting it in terms of servers, infrastructure and bandwidth will cause companies to reconsider their approach. It all sounds great now because HD is an outlier. If it reaches mainstream demand, it’s going to be a lot more difficult and expensive to deliver than business models are accounting for now. That’s the technical side. On the consumer side, unlimited choice has its own set of problems. Sometimes people don’t want to have to work for their entertainment, so there is a long, long life ahead for HDNet and linear channels.
TVWeek: Where are the next directions for HDNet? You’ve gone more intensively into news with Dan Rather and boosted sports programming with HDNet Fights. What’s next?
Mr. Cuban: We will continue to create and find original content that reflects our independent approach and spirit. You will probably see less traditional sports, and more MMA. You will see us introduce shows that you won’t be able to find anywhere else.

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