Preparing for BattleThe cable industry faces new threats as its faithful prepare for the NCTA National Show in San Francisco 3/27/2005 07:00:00 PM Eastern
Leggy casino girls in hot-pink leotards strutted into TV trade-magazine offices last week, toting fuzzy dice and chocolates— a showy stunt by CGTV, the casino and gaming television network, whose smirking executives trailed behind, shaking hands and handing out marketing brochures.
The Vegas-based channel, looking to get publicity for its third-quarter launch, is one of more than a dozen newbie networks—mostly digital—trying to get attention before and during 2005’s cable-industry confab, the NCTA National Show; this year, the show takes place April 3-5 at San Francisco’s Moscone Center. The National Cable & Telecommunications Association estimates more than 17,000 attendees this year—and scores of new presenters from outside the cable industry.
Networks with large corporate parents stand the best chance of winning hearts in San Francisco. Fox Reality Channel and Viacom’s upcoming gay-targeted Logo will both have a major presence, as will A&E Television Networks’ Crime & Investigation Network and Military History Channel. Comcast launches a yet-unnamed kids network April 4 with PBS, the Sesame Workshop and HIT Entertainment.
If gay programming or crime shows don’t fit the bill, cable operators can also choose from several religion-focused upstarts: Gospel Music Channel; GOD TV, a European Christian channel; and Hope Channel, a Seventh Day Adventist network.
The upstarts will have a tough time getting much attention from the MSO executives and financial analysts trolling the convention center’s 190,000-square-foot floor. Although the number of digital subscribers is steadily rising (24.3 million customers in 2004), bandwidth is at such a premium that cable operators are looking to established networks’ alternative services—VOD, broadband and HD—to fight erosion from satellite and phone competitors, rather than picking up new networks; discussions at this year’s NCTA will reflect that.
Year of the response
“It’s really not a 500-channel universe anymore—it’s more like 100. Anything more than that, and there’s not usage to sustain it,” says Jeff Gaspin, president of NBC Universal Cable Entertainment, which owns USA, Sci Fi, Bravo and Trio. “It’s not the direction cable operators are going in. Their belief is, viewers want access and on-demand—not necessarily 900 choices, but 20 good ones.”
Cable subscriptions dipped for the first time in two decades in 2003, so chatter this year will likely surround establishing the best models for VOD, VoIP and telephony services that the satellite companies can’t offer, says Steve Effros, a cable-industry consultant. “This is the year of the response,” he says. “You can run around in circles and say, 'Oh my God, we’re getting competition,’ or you can get down to the nuts and bolts of being an active competitor.”
Three major pavilions at this year’s show will highlight cable’s focus on being a triple threat: offering voice, video and data. CableLabs’ “CableNET” exhibit will display video, home-networking and VoIP services. Best Buy will stock its “Fun Zone,” a 53-foot tractor-trailer complete with a 16-foot stage, to resemble a mini– consumer-electronics store, in order to spark discussion about cable’s fate in the retail environment. “The thing about cable now is, it’s all three industries, and all three are firing on all cylinders,” says Dan Brenner, NCTA’s SVP, law and regulatory policy.
Given the show’s proximity to Silicon Valley, executives from several major tech companies will speak at the show’s four general sessions. The conference’s 2005 chair, Comcast COO Steve Burke (whose company’s recent deal with TiVo capped off a year of new cable-technology ventures), will speak at Sunday’s “From Baud Band to Broadband” panel, sharing the stage with NCTA’s Kyle McSlarrow, Vulcan’s Paul Allen, Electronic Arts’ Bing Gordon, Cablevision Systems’ Tom Rutledge and Yahoo!’s Jerry Yang.
Google co-founder/President Larry Page will headline Monday’s general session, called “Attack of the Empowered Consumer: Understanding New Media Markets,” along with AOL CEO Jonathan Miller and DreamWorks co-founder Jeffrey Katzenberg.
Gaming will claim a major presence at the show for the first time this year, with cable operators eager to capitalize on subscription-based gaming applications using broadband or VOD capabilities. Shorecliff Communications’ 3,800-square-foot GameNET pavilion will seek to wow cable operators with game demos and info sessions on using broadband to deliver videogame content. “Gamers aren’t just there to kick the tires,” says Barbara York, who has coordinated the conference for NCTA for more than 20 years. “They have products in the industry pipeline. They are doing business, writing deals, making contacts with the cable industry.”
The Indecency Issue
The biggest buzz on the convention floor will center on Washington. Cable operators will likely be griping loudly about carrying rival ISPs on high-speed networks, especially because, earlier in the week, on March 29, the Supreme Court will hear oral arguments on the topic. Cable companies argue that they have spent $95 billion to upgrade their systems with broadband and digital services, and they protest free piggybacking from rival ISPs.
Policy issues are paramount for cable, with the industry facing potential crackdowns on everything from indecency to carriage of digital-broadcast streams to à la carte packaging, any of which could be included in Congress’ rewriting of the telecommunications laws this summer.
New FCC Chairman Kevin Martin will make his first industry-wide appearance at Tuesday’s public- policy lunch. Several FCC commissioners, FTC Commissioner John Leibowitz, and Michael Gallagher, assistant secretary for Communications and Information, U.S. Department of Commerce/NTIA, will also speak.
Indecency is perhaps the greatest concern in Washington, and cable executives are expected to speak on the issue extensively. With new Attorney General Alberto Gonzalez promising a crackdown on pornography, several senators are pushing to let the FCC fine cable operators for indecent programming. Sen. John McCain is expected to continue a campaign for à la carte legislation in the coming months.
Senate Commerce Committee Chairman Ted Stevens, who has urged cable to create a ratings system and offer family-themed packages, plans to attend and will discuss indecency issues with industry executives.
“Cable as a whole needs to join together at this point because we need to be concerned [about indecency],” says NBC Universal’s Gaspin. “Broadcasters have tried to sit back and be quiet. I don’t think cable can do that.”
|How the business stacks up|
|SOURCE: National Cable & Telecommunications Association|
|Basic cable customers||73,575,460||73,365,880|
|Annual cable revenue||$57,600,000,000||$51,300,000,000|
|Total advertising revenue||$18,800,000,000||$16,600,000,000|
|Residential cable-telephony customers||2,800,000||2,500,000|
|National video-programming services/networks||390||339|
|Average monthly price/expanded basic packages||$38.23||$36.59|