Back in the early 1980s, cable television swept through Lake County like a well-organized army looking to conquer occupied territory.
It was well armed: It had the promise of a clearer picture, improved sound and a world beyond the regular Chicago-based channels. Its leaders also could boast of destroying the ugly rooftop antennas that had painted the American landscape since the days of Milton Berle and the DuMont network of the early 1950s.
Its seemingly lone vulnerability: dollars. What had been free to viewers would now cost them money. They would have to pay for the channels, but instead of just seven or eight options, they would have 20 to 25. Surfing had moved from the beaches to the sofas of America.
Fast forward to the mid-1990s. The territory that has been occupied by cable franchises for more than a decade and a half suddenly finds itself with new invaders. They come in the shape of an 18-inch dish that sits on the roof as a 21st Century-style receiver, replacing coaxial cable and, yes, those holdouts with the rooftop antennas.
Direct Broadcast Satellite is, according to Shelley Miller, president of United Audio, with a store in Vernon Hills, the fastest-growing consumer electronics product in history: faster than big-screen televisions, video cassette recorders and even cable television.
“From the moment it went on the market, it was a fast seller,” Miller said. “And why not, with 200 channels, great video and superior audio?”
At another DBS dealer, Sears in Vernon Hills, sales have turned especially hot. Portia Hanamoto, a sales associate, said, “It had been steady since we first started selling them about two years ago, when we had a waiting list of 25 to 30 people. But since the price decrease about a month ago, it’s been going gangbusters.”
From Bob Cimaglio’s Digital Direct shop in Antioch to manager Sean Hoover’s Radio Shack in Libertyville, the response was the same: “We can’t keep them in stock,” Hoover said. Added Cimaglio, “We’ve been picking up more and more cable customers. You get so much more on this system and end up spending a lot less.”
Lake County is a particularly fertile battlefield. Its demographics, per capita wealth and sports-oriented population make the war one that observers in other markets are watching.
At stake is the lucrative home entertainment market. Perhaps more signficant, even within the next year, it could help determine which lands a beachhead for the larger share of the information superhighway as technology continues to advance.
“There’s no question but we are the service of the future,” said Richard Nock, head of the Chicago regional office of DirecTV, the leader in the DBS field. “We’re making it unnecessary to continue to subscribe to cable.”
Not so fast, said the three major cable operators that serve Lake County. Although admitting that direct satellite has its legions of followers, they say it does have its drawbacks.
“Sure, they have an impressive product. Good sound, good picture, but they have the drawbacks that you aren’t always hearing about,” said Paul Ashley, general manager of US Cable, the Waukegan-based company that serves 66,000 customers in 17 Lake County communities.
One of them is that satellite TV can’t provide local channels and community access channels, the two weapons in cable’s arsenal to fend off its competitors’ assault.
Jones, US Cable and Post-Newsweek all offer clear feeds of Channels 2, 5, 7, 9, 11 and all of the major UHF channels. Even though Channel 9, WGN, is on the satellite, licensing agreements prevent it from being shown on DirecTV. In addition, community access channels ranging from televised high school graduations or local prep basketball games to consumer-produced interview shows are available on cable.
“That’s satellite TV’s biggest problem, no local channels, no local access,” noted Dan Capasso, a spokesman for Libertyville-based Jones Intercable, with about 24,000 customers in the county. “We have a high school game of the week. You want to watch Libertyville vs. Mundelein, we’ve got it. We serve the community. We’ve had parents come up and ask if we have a tape of a game two or three years ago they want. We make them copies.”
Highland Park Mayor Raymond Geraci said the importance of local community involvement by cable is very strong.
“The drawback (from satellite) is you can’t get the local channels,” said Geraci, who presides over regular City Council meetings that are televised by Post-Newsweek. “Having our council meetings shown has been wonderful. People like to watch. One night, we had a guy watching at home. He saw something at the meeting, got in his car, raced over and got here to City Hall before the meeting was over.”
Additionally, if you are a Cubs fan, you can see them only on Channel 9 or CLTV. Cubs road games are blacked out on both the Major League baseball package offered by DirecTV and out-of-market sports channel feeds.
But Nock of DirecTV has the answer.
“We live in Chicago, and I tell you what I do and what many people have done. You make sure you have (an additional) antenna on top of the roof, and you pick up a perfectly clear picture of the local channels, plus you’ve got 200 channels on your satellite,” Nock said. “And, to be perfectly honest, of all the customer questions we have had, not one person has complained they aren’t getting the local-access channels.”
What the dish dealers said customers do complain about is cable.
“It was a monopoly, and like any monopoly, it grew lazy in terms of providing good, quality service and what the public wanted,” Nock asserted.
Consumers griped about long delays for installation and/or service; busy signals when they called their local cable operator; puzzling channel additions and changes, and what customers perceived as arrogance on the part of what was basically a monopolistic business.
But Lake County cable officials claim that service problems are a thing of the past.
“I think our industry has made great strides,” Capasso said. “You have to remember that back in the 1980s, cable was a relatively young industry. We have made great strides in our service, which has drastically improved.”
Mitch Bland, general manager of Post-Newsweek, which serves 22,000 Lake County customers, including Highland Park, Highwood, Deerfield, Bannockburn and several other neighboring communities, went a step further.
“We aggressively went out and made contact with the community through customer surveys to see what the problems were, and we have emphasized to our staff the need for prompt customer service and satisfaction,” Bland noted.
Ashley said US Cable, which is to be taken over by media giant TCI early next year, responded to the negativism regarding service and has corrected it.
“Our customer staff does a great job not only of responding to problems but keeping them informed. We provide information stuffers when we send out our bills, but frankly, I don’t know how many people are reading them. We are pretty prepared, better trained, especially in the last five or six years.”
So confident is US Cable now that it has on-time guarantees for service, saying it will respond in three hours.
“What you also have to remember in our case is we serve a large area of Lake County. There are about 1,400 miles of cable wire serving our area, but we’re doing the job,” Ashley said.
Anne O’Connell, public information officer for Lake County government, said most complaints about cable fall into three categories.
“They run the entire gamut, but most are concerned about the cost, service and channel selection,” she said, adding that she has not noticed a significant drop in consumer complaints to her office through the years.
Channel selection seems to be one of the features that dish customers are sold on. Consumers read about a new startup service and, like a kid in the candy store, want it all. The trouble for cable is, it isn’t that easy.
“People read about a new channel coming out and wonder why we don’t have it the next day,” said Wayne Vestal, general manager of Jones Intercable. “It isn’t that simple; it’s a complex business, negotiating with various companies about the services.”
And Jones, US Cable and Post-Newsweek said they often conduct customer surveys to determine the most popular channels. When new ones become available and contracts can be worked out, the lesser “niche” channels are cast aside in favor of others. For every new successful startup, such as Ted Turner’s TNT, ESPN-2 or The History Channel, is a product like the Popcorn Channel (24 hours of movie clips), The Game Show Network (24 hours a day of rerun quiz shows) or a cable channel exclusively devoted to informercials all day (yet to debut).
DBS hasn’t had to drop any channels yet and can still add about 15 more. As new satellites are added, even that will increase. But like cable, it is involved in the same type of contract negotiations with the various suppliers of product.
DBS has yet another drawback, cable operators pointed out.
“One of the problems with DirecTV is the price,” Bland argued. “You see an ad in the paper for a price and you think, `Fine, I’ll go in and get a dish for a certain price,’ but they aren’t giving out the entire story.”
When DBS debuted in early 1994, RCA was the lone supplier of the dish, and the cost for the dish, installation and an IRD (Integrated Receiver Decoder or, in layman’s terms, the box that gets the signal from the rooftop dish) was about $900. That was strictly for one television in the house. An additional hookup to a second TV usually meant at least $200 extra and probably more. That seemed a stiff price compared with cable rates that hovered around $50 to $60 for complete packages.
In late summer and early fall, ads showed the price of the dish had fallen to $199.
Still, the $199 figure can be misleading. The actual price for the dish and box remains at $399, but consumers are offered a $200 rebate that Nock said can either be applied toward the one-time cost of the dish or toward programming. But add to that $200 or more for installation just for one television.
The cable operators maintain that the cost of programming is the most sobering for potential satellite customers when they go into a United Audio, Best Buy, Sears or some of the larger electronics stores in the county.
DirecTV currently offers 175 channels. United States Satellite Broadcasting (USSB), which can be bought either separately or in conjunction with DirecTV, has 25, meaning DBS purchasers can get a maximum of 200-plus stations if they purchase the top-of-the-line service.
DirecTV offers several options to subscribers. For instance, the Total Choice Platinum option costs $44.95 a month. Included are all the movie channels they offer (which does not include premium services such as HBO), 20 sports channels (such as Sportschannel Ohio, Prime Sports Northwest), the Golf Channel (24 hours of nothing but golf), nearly all of the basic cable channels (such as TBS, CNN, C-Span, MSNBC, USA Cable) two feeds of the Disney Channel (East and West Coast), Turner’s Cartoon Network, plus 55 Pay Per View Movie channels. The cost of each movie is $2.99. Cable franchises in Lake County generally have one to three pay-per-view movie channels.
USSB offers a seven-tier option, ranging from a basic package of $7.95 per month for MTV, Nick at Night, Comedy Central, VH1, Lifetime and the All News Channel up to the USSB Entertainment Plus package of $34.95 a month. That includes five different HBO channels (HBO 1, 2 and 3 and an East and West Coast feed of HBO), Robert Redford’s Sundance Channel (independent movies), three different Cinemax channels, three Showtime channels, two channels of The Movie Channel and another movie channel, Flix, plus the basic service, including Nick at Nite’s new TV Land (old reruns).
“There’s no question the variety is there, but the real lure is the sports and pay-per-view movie packages,” Nock said.
Not included in the DirecTV and USSB packages are the separate sports packages. The most popular, and the one generally credited with getting DBS on the map, is the NFL Sunday Ticket. For $159 a season, customers get nearly 200 NFL games, as many as 13 on a given Sunday. So when the Bears play at noon on Sunday and it’s a blowout, you can turn to Green Bay-Dallas, Kansas City-Oakland or Minnesota-Tampa Bay.
DirecTV also has signed exclusive agreements with the NBA, NHL and Major League baseball for similar packages. In addition, the company has hooked up with ESPN and Creative Sports for packages of out-of-market college football games ($69 for the season) and basketball games (price to be set in November.)
Another package of regional sports channels provides regional sporting events from areas other than Chicago. DBS subscribers can pick up sports channels in areas such as Philadelphia, Cleveland or San Francisco as well as SportsChannel in Chicago.
“It has allowed our programming that we do in Chicago to have a much broader reach,” said Jim Corno, vice president and general manager of SportsChannel-Chicago. “We’ve had responses on programs, especially the Bulls broadcasts we have, from all over the country. We had a pretty large coverage area with other cable systems in the Midwest that take our service, but the satellite service has made it a nationwide thing.”
But Corno said he believes satellite and cable will complement each other.
“In the future, I think they will co-exist. Cable can give the local sports that DirecTV can’t touch yet,” he added. “I believe there is room for both.”
The cable companies argue that when potential buyers start adding all the peripherals such as the additional sports packages, what looked like a competitive rate is suddenly turning into upward of $1,000 a year in programming costs.
Cable TV has had its share of price increases and can’t compete with the satellite in terms of number of channels. In Lake County, the number of channels per system is 57 to 64.
“But realistically, how many times do you want to watch the `Andy Griffith Show’ in a certain day?” asked Ashley of US Cable. “And how many of those channels they offer can you actually watch in a limited amount of time?”
Although the sports bonanza is a lure and did help kick off the service, the real battleground is over movies. It is this area where both cable and satellites are claiming victory, particularly over the rental movie industry.
Part of cable’s initial allure in the ’80s were the movies shown on HBO, Cinemax and Showtime and its spinoff, The Movie Channel. Movies that were playing in theaters one year earlier were being shown on cable compared with a two- or three-year-window between theatrical release and network TV.
Cable operators eventually came up with creative pricing structures, allowing viewers the option of adding as many as nine premium channels along with the basic cable service.
Ashley also cited the pay-per-view movie option, which cuts the time between theatrical release down to as little as three months in some instances.
But it is the movie lure that DBS has used as another reason to drop cable.
Bob Marsucci, DirecTV’s national service manager based in Los Angeles, said the combination of DirecTV and USSB offer more than 20 premium movie channels, double that of any cable system in Lake County.
“That’s not counting the 50 pay-per-view channels. Cable systems may have a couple of movies available on a specific pay-per-view channel, and when they are shown is limited compared to us,” he said, “where we have more than 50 pay-per-view movies with more showings.”
“What is misleading about the satellite services is they say they are offering all these channels, but basically they are the same movies we are offering at different times,” Ashley said. “Initially, when VCRs became more widespread in the ’80s, we lost some business to them because people were taping the movies and playing them back when they wanted. Well, that’s the same now. It doesn’t really matter how many different times a movie is played, once it’s taped, it’s there to be watched when you want.”
Although DBS has established a beachhead, cable points toward the next two to three years with optimism. Advanced technology called digital compression will enable cable to offer more than the 60 or so channels now available, according to Bland.
“It’s going to be basically one channel split with that capability of up to 500 channels,” Bland said. “Some tests are already being done; TCI is doing it in San Jose.”
Once cable has the ability to increase its capacity, it may be able to diffuse DBS’ promotional weapon of 200-channel service.
