Every time the American consumer turns to CNN for the news, chooses an HBO movie over network fare, tunes in a ballgame on TBS or plops a rented movie into a VCR because there`s nothing good on TV, he is participating in a revolution.
It is a revolution that is forcing the broadcast and cable industries, telecommunications companies, local affiliated and independent television stations and the Hollywood production community to redefine relations that were crafted in a different, quieter time.
And it is a revolution that is far from over. While consumers may think the last 10 years produced a cornucopia of new goodies-namely VCRs, the cable television wiring of nearly two-thirds of American homes and the attendant explosion of cable programming-the next 10 years may make all that seem as outmoded as a grainy picture on a black-and-white box.
Demand for quality programming, consumer choice as a driving force, more collaboration among today`s feuding parties and technology of the future were among the themes that kept bubbling to the surface at the 6th Broadcast/Cable Interface conference here last month. This despite the fact that much of the discussion at the daylong session sponsored by Broadcasting Magazine centered around the recently enacted cable reregulation bill.
On that subject, there was general agreement: Broadcasters and cable companies will probably sit down and negotiate something they can live with on the provisions that allow a broadcaster to either demand that cable companies carry its signal or pay some fee for it. Consumers are unlikely to see lower cable prices. The bill likely will slow innovation and development of new networks and channel capacity but won`t stop it. The most immediate beneficiary will be lawyers challenging and defending various portions of the bill.
”Reregulation can`t improve customer service, only competition can,”
said Frank J. Biondi, president and chief executive of Viacom Inc. ”It hampers the industry. It hurts the wrong players and helps those who don`t need it.”
”It`s hard to see how our subscribers benefit from this bill,” said Tom Baxter, president of Comcast Cable Communications.
James C. Dowdle, president and chief executive of Tribune Broadcasting Co., concurred. ”The lawyers will be the big winners in this.” But Dowdle added: ”It does establish a value for our signal. We`re going to sit down with the local cable operators and negotiate. That value could be cash, other channel (locations), promotions. Who knows?”
”The ultimate big winners are consumers, particularly the 40 percent of America that doesn`t have cable,” said Jay Kriegel, vice president of CBS Inc. ”We think this bill will preserve free television in America.”
Federal Communications Commission Chairman Alfred Sikes called the cable act ”the regulatory equivalent of a land war in Asia.” And FCC Commissioner Ervin S. Duggan likened the cable bill to ”a grave dug up and a zombie let loose.” He added, ”We are being asked to answer the unanswerable with the inadequate.”
FCC Commissioner Andrew Barrett said trying to figure out rate-setting regulations for the nation`s 11,000 cable systems is keeping him awake at night. ”I`m very uncomfortable with rate-of-return regulation,” he said.
”Roll (prices) back? Based on what?” he asked. ”There is no comparable industry.”
And, as analyst John Reidy of Smith Barney, Harris Upham & Co. pointed out, ”The cable TV business doesn`t really have a rate of return. It isn`t like a telephone company.”
While Washington tinkers with regulation, warned Gregory Chapados, an assistant secretary of commerce, life goes on in the real world at warp speed. ”It`s a fantasy in Washington that telecommunications is a nice area immune from the markets. There are forces out there that dwarf the ability of the federal government to shape the future.”
The breathtaking speed of change was demonstrated the very day of the conference by Bell Atlantic Corp.`s announcement that it plans to offer video- on-demand to consumers through ordinary telephone wires, something that until recently was thought impossible.
That Bell Atlantic and the other Bell companies will ultimately be players in this field, likely in collaboration with cable or broadcasters is seen as inevitable. Horace Wilkins of Southwestern Bell Corp. told the conference: ”We don`t pose a threat. We`re an aid. We bring something to the marketplace. We don`t know anything about programming.”
That programming will be singularly important was mentioned repeatedly.
Speaking for the Hollywood production community, Barry Meyer, executive vice president of Warner Brothers, argued that the broadcasting signal itself isn`t valuable but ”what the signal carries.”
”People are going to watch good programming. We are dependent on the creative community,” said Kriegel. Even Sikes agreed, ”I`d rather be in the programming business than in the distribution-of-programm ing business.”
”Cable has made broadcasting part of a multichannel mix,” said Wendell Bailey, a vice president of the National Cable Television Association. ”The winner in all this is the programmers. Consumers will demand it. How we get it to them is ultimately less important than the program itself.”
Steve Rattner, co-head of investment banking for Lazard Freres & Co. pointed to two colliding trends: ”pressure to curtail programming costs and an increase in the demand for programming. On balance, programmers will do quite well.”
Rattner is ”highly dubious about (development of) a fifth network. It`s quite a daunting prospect to program nationally in 200 markets or so five to seven nights a week.” But he predicted the growth of ”groups of stations banding together (to) share costs and programming. It`s getting so much harder to buy programming if you aren`t affiliated with a group,” he added.
Rattner called the seven Tribune Broadcasting stations an ”ad hoc network. Look at what their programming is,” he said. ”They`re not doing entertainment. They`ve chosen another niche. They are heavily into sports in major markets. Next year, they`ll be broadcasting seven (baseball) teams. That takes care of a lot of programming.”
”Consumers` demand for choice will be the driving force,” argued Biondi.
And that goes beyond offering hundreds of channels, said John Abel, a vice president of the National Association of Broadcasters. ”I don`t care about 150 channels or 600 channels,” he said. ”I want what I want when I want it.”
”Programming is what people watch. They don`t watch technology,” Robert L. Schmidt, president of a wireless cable company, reminded everyone. ”They don`t care if it comes through two Dixie cups and a string.”
