Cable Ops, Programmers Ready for High-Definition

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Last year's NCTA buzzed about on-demand programming. This year, high-def was the new toy.

Cable executives at the Chicago convention said it's important to be ready for the eventual boom of HDTV.

"This whole transformation is coming," George Bodenheimer, president of ABC Sports and ESPN, said. "It's a no-brainer to get started, and [we're] pedaling as fast as we can."

Cable operators are increasingly ready to deliver high-def to subscribers, and programmers like ESPN and Discovery are stepping up with content.

But consumers aren't quite so ready to pay for the sets. Currently, there are about 2 million HDTV households, according to a report by PriceWaterhouseCoopers LLP, and penetration is expected to increase to 8.5 million by 2007. Yet there are nearly 90 million cable households.

While the customer base is still small, MSOs are tinkering with distribution models and packaging. Time Warner has unveiled plans for a free HD tier that includes content from existing services HBO, Showtime, Discovery HD and Fox Sports Nets, which unveiled plans to carry some local games in high-def. New services like InDemand's two HD channels will come at a charge.

Cox Communications offers different packages, and varying prices, from market to market. Charter, for its part, keeps it simple, pricing HD at $9.95 per month; its offerings, though, vary by system. DirecTV's new HD package will be priced at a month.

According to the NCTA, in 78 of the top 100 markets, at least one cable operator provides HD service, and 112 markets out of 210 DMAs nationwide have some HD service.

Cable programmers are trying to nail down the production model.

Starting ESPN's fledgling HD channel involved more than merely launching a new feed. It developed a new production system, including four production trucks.

By next year, ESPN expects to be producing 3,000 hours in high-def, including live events and studio shows like SportsCenter. Bodenheimer said ESPN will spend "tens of millions" of dollars annually to put out HD content.

Discovery used to spend $50,000 more per hour on HD; now the tab runs about $30,000 extra. Showtime plunks down about $50,000 extra to shoot episodes of its original dramas and movies in HD. The investments help build libraries of HD programming.

"We need to make the investment in advance," said Discovery Communications Chairman John Hendricks. "It may take 10 or 12 years, but, ultimately, everyone will have HD."

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