Cable Operators

Verizon to Convene With Court TV

1/09/2005 7:00 PM Eastern

Las Vegas— Court TV last week disclosed that it had signed an affiliation agreement with Verizon Communications Inc. through the National Cable Television Cooperative, joining Discovery Communications Inc. as the second programmer signed by the telco.

And more agreements are likely to come soon. Terry Denson, the former Insight Communications Co. executive who is now Verizon’s vice president of video programming, said the Baby Bell is talking to all the top-20 pay TV programmers about standard-definition and HDTV content for Verizon’s fiber-to-the-home platform.

Denson said the Baby Bell’s first video system will launch by the end of the second quarter. “We’re hustling,” he said.

Although that may be a lot of ground to cover, Denson said: “We expect to be competitive. We have the capacity.”

Court TV senior vice president of affiliate relations John Moran said the network is also talking with SBC Communications Inc. about carriage, but said nothing was imminent on that front. He would not discuss deal terms, other than to say that Verizon is “working off our standard rate card.”

“We offer volume discounts, but they [Verizon] are nowhere near any of those break points,” he said.

The deal — for now — is strictly for Court’s video programming and does not include video-on-demand or other applications, said Moran. Asked about other potential offerings, Moran said Court has made some presentations, but Verizon had not “come back to us with anything in depth” at this stage.

“We’re talking to them about some other opportunities,” he noted, referring to The Smoking Gun Web site (www.thesmokinggun.com) and “a wealth of content from our trial coverage and daytime schedule.”

The NCTC arrangement is a vestige of GTE Corp.’s membership in the co-op. Verizon bought GTE, including the company’s video operations in Thousand Oaks, Calif., and Tampa, Fla. Though those systems were all sold off by 2003, Verizon maintained its membership in the NCTC.

Denson said Verizon is using the co-op as a “backstop,” if it can’t get deals done any other way. Verizon negotiated its deal with Discovery directly, Denson said.

Representatives from ESPN, Turner Broadcasting System Inc. and MTV Networks all confirmed talks with Verizon about cable video rights and other content-distribution opportunities, but none would comment on specifics.

None of the companies would comment on whether or not Verizon could tap cable-video rights for their respective networks as part of existing deals with the NCTC.

Denson said Verizon prefers to deal with programmers directly, because Verizon can offer VOD, HDTV and channel capacity for all of a programmers’ networks, and, eventually, a larger home base of subscribers.

“We want to have direct relationships with every content provider,” he said.

Denson pointed out that Verizon will likely carry local broadcast channels on its first 50 channels, then offer a standard national cable package from channel 50 on up. That will allow the company to co-locate channels of similar interest.

Consumers will be able to see that they are in a sports or documentary zone, he said — something cable, with its legacy systems and channel lineups can’t necessarily do.

All cable channels will be digital on day one, he added, as opposed to analog or a digital simulcast hybrid.

Verizon realizes it’s likely to get most subscribers from existing cable and DBS operations, but that’s not necessarily a zero sum game for programmers. If a cable programmer has 10 networks but a cable system only carries seven, Verizon has the capacity to carry all 10, he said.

Even a cable sub lost to Verizon, in that case, would still grow the programmer’s reach by three units. Denson said Verizon is negotiating with TVN Entertainment Corp. for VOD programming from the major studios, as well as content delivery services.

Denson said TVN has deals with all the major studios, save for The Walt Disney Co. It also has a satellite-transport delivery platform in place for VOD.

“We’ll have a lot of VOD,” he said, with the initial target at 1,500 hours.

Like cable systems, Verizon will launch with a variety of set-tops, including HD-only boxes and DVR boxes, for example. Motorola Inc. will supply boxes.

Although Verizon will concentrate on digital set-tops, it will provide a lower end analog only set-top that will still be VOD-capable, Denson said.

Because the cable programming package will be digital, a much higher percentage of subscribers — perhaps as many as 95% of Verizon customers — will have VOD access, compared to cable’s roughly 40% rate of digital penetration.

Mike Reynolds contributed to this story.

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