WILD WEST TECH SHOW12/03/2000 7:00 PM Eastern
LOS ANGELES -Most of Home Box Office's staff had cleared out of the network's booth at the Western Show here by 5 p.m. last Thursday. But cable pioneer Les Read, a 27-year veteran of the network, was still holding court.
"Once upon a time this was thought of as a programmers' show, because it was Hollywood," said Read, the HBO vice president of affiliate special projects, who first attended the Western Show more than 30 years ago, when he worked at TelePrompTer Corp.-one of the first cable companies.
Read may be a salesman, but that didn't stop a number of the new technology players from pitching him their goods, to no avail. His description of a typical new Western Show vendor: "Someone who breezes in saying how am I going to make a lot of money.com, and then breezes out."
HBO won't be exhibiting next year, nor will several other show-floor mainstays. Most exhibitors agreed the Western Show has become a tech convention. And it was the technology companies that drew most of the show buzz, from the floor to the conference halls, where panelists buzzed about the new money interactive TV will eventually bring to cable operators.
Ten years ago, then- Tele-Communications Inc. CEO John Malone made his famous prediction of a 500-channel universe at the Western Show. Last week, the Liberty Media chairman found himself on a panel with AT&T Broadband CEO Dan Somers-the man who runs his old cable systems.
Cable stocks have been battered in the last year, and Malone and other executives urged attendees to be patient.
"When you step on the accelerator, you push down the current results, and Dan has both feet on the accelerator," Malone said.
Somers also urged patience, insisting that ITV and the revenues that come with it will eventually be a reality.
"It's not going to be one day, all of a sudden, it's there. It's sneaking up," he said.
Many attendees said traffic seemed lighter than in years past, but the California Cable Television Association claimed 32,817 people showed up-an increase of about 1,600 from last year's confab.
Showtime Networks, Playboy and Starz Encore Media Group were among the major players that bailed on this year's show. In addition to HBO, pay-per-view vendor In Demand said it would join the list of programmers that will skip next year's convention.
"For traditional networks like us.these shows just don't tend to be as productive in terms of the investment that we have to make," said In Demand vice president of corporate communications Joe Boyle. Since the company has nearly full distribution on U.S. cable systems-and negotiates all of its major carriage deals with key operators outside of the trade-show circuit-it's no longer worth buying an exhibit, he explained. In Demand will continue to exhibit at the National Show and regional conventions, Boyle said.
California Cable Television Association president Spencer Kaitz downplayed the exit of the established networks from the exhibit floor, insisting that it's their loss.
He said there were 141 new exhibitors, including 58 companies that were able to grab floor space after Playboy, Starz Encore and Showtime pulled out.
"They apparently didn't have anything to say that is new, but their places are taken by 58 companies that did think they have something to say," Kaitz said.
"The programmers who want to be on the cutting edge of the programming that will be dominating tomorrow are here because they know the technology that will enable tomorrow's services is here today," Kaitz added.
Broadcasting & Cable
reported last week that Charter Communications Inc. was interested in buying at least some of AT&T's cable systems, and that Cox Communications Inc. and Comcast Corp. were also eyeing a possible takeover.
According to sources, one scenario would see AT&T Broadband swapping systems with about 1.4 million subscribers adjacent to existing Comcast and Cox systems, in exchange for their rights to Excite@Home Corp. stock.
AT&T, which has 74 percent voting control and a 25 percent equity interest in Excite@Home, reached a deal in August in which it agreed to eventually buy out Cox and Comcast's stock-purchase warrants in the company for about $48 per share. At that price, AT&T would have to shell out $3 billion to satisfy that agreement.
AT&T has been under criticism lately because of its heavy debt load-about $62 billion-and Wall Street has pressured the company to pare down its debt. Getting rid of the Excite@Home warrants would help to do that while at the same time consolidating ownership of the data-over-cable provider.
After Wednesday's general session, Somers told reporters that talk of system sales was "speculation." Officials at Comcast declined comment. Cox officials could not be reached for comment.
Banc of America Securities analyst Doug Shapiro said although he had no knowledge of an AT&T deal, it would make sense for the company to unload some subscribers, as long as it's in a tax-free manner.
"Clearly they [AT&T] are in a position of trying to minimize their leverage," Shapiro said. "I wouldn't be surprised to see them do anything they can, within reason."
Were a deal in the works, said ABN AMRO Bank analyst John Martin, Comcast and Cox are the most logical buyers. The
current state of the capital markets makes it difficult for other operators to spend heavily on acquisitions, he added.
"It would be difficult for other MSOs to spend significant amounts of capital on new subscribers while, at the same time, they're spending a lot of capital upgrading their existing subscribers," Martin said.
Malone, the largest individual AT&T shareholder, was among those who recently pressured the company to divide into separate broadband, wireless, long-distance and business units. The Liberty chairman told reporters after last Wednesday's general session that the company should remain open to offers from other cable operators for its systems.
Unlike years past, there were no major deals announced at the convention. No networks were launched, but Romance Classics did relaunch as WE: Women's Entertainment.
Though many programmers drew attendees with the standard celebrity fare and gifts for the kids, much of the traffic was based around the exhibits of the ITV companies and major technology vendors such as Scientific-Atlanta Inc. and Motorola Inc.
At Motorola, more than half of the traffic came from European, Latin American and Asian cable operators, said Motorola Broadband Communications Sector senior vice president and general manager Dave Robinson. The U.S. operators who stopped by the booth were interested in the thin-client set-tops like the DCT-2000, while the Europeans were more interested in the advanced digital set-tops, he added.
Motorola has partnered with dozens of the new ITV players, many of which set up shop in its booth. Although there has been little consolidation in that sphere, it's bound to occur, Robinson predicted.
"There's definitely going to be a shakeout and we knew that all along," Robinson said. "You have to work with 50 companies to make sure you're working with the 15 that survive at the end."
ITV may have dominated the show, but the oft-debated retransmission consent issue was also a hot topic on some panels.
"The players are not only bigger, but they're different," said Time Warner Cable executive vice president of programming Fred Dressler.
Dressler's MSO was at the center of a bloody retransmission-consent battle with The Walt Disney Co. earlier this year. In that dispute, ABC owned-and-operated TV stations were dropped.
He said the cable industry "grew up as collegial. Operators and programmers truly worked together to build it."
The prevailing wisdom is that a media company must have broadcast holdings-and retransmission consent-to win carriage for new cable networks, said AT&T Broadband executive vice president of programming Matt Bond.
"The customer is the big loser," Bond said. "There has to be an end to the cycle."
On a separate panel, Oxygen Media CEO Geraldine Laybourne expressed some frustration at the rapid consolidation of content companies and cable operators, and the impact that has had on independents like Oxygen.
"For new services like us.to consider that you would give more advantage to the big conglomerates is unthinkable," said Laybourne in discussing Disney's ability to use retransmission consent as leverage to gain carriage for start-up networks. Oxygen is still grappling for distribution with several MSOs, including Time Warner.
In the midst of the trade show, Comcast won yet another retransmission-consent extension from The Walt Disney Co., until Dec. 31. The latest extension covers the six ABC owned-and-operated stations in Comcast's footprint, which covers 3 million subscribers and includes Philadelphia, northern New Jersey, Los Angeles, Chicago, Toledo, Ohio, and Flint, Mich.
Comcast's prior retransmission-consent extension was set to expire at 12:01 a.m. last Thursday, Nov. 30. Both parties continue to negotiate.
Disney wants Comcast to carry Disney Channel on basic, and is also trying to secure distribution for some of its new services, such as Toon Disney and SoapNet.
Also at the show, a new broadband-content awards program emerged: The Bandies. TV company ICTV Inc., which came up with the idea, said before the show it would put up most of the $500,000 needed to put on the glitzy program at The Mayan Theater in Los Angeles. But only about 100 people attended.
parent Cahners Television Group was a sponsor.
No executives from TiVo Inc., which won best in show, showed up to accept the company's Bandie.
Kaitz was one of those in attendance, and the CCTA president was so impressed by the program he, hopes the association can take its reins next year.
"I would like to integrate it much more tightly into the show.so our operators see the technology that's actually applied and participate in awarding these very entrepreneurial start-ups for giving us the new tools," Kaitz said.
Next year, the Western Show will move back to Anaheim, Calif., its longtime home. The 2002 show is also scheduled for Anaheim, but Kaitz said CCTA is still negotiating sites for 2003 and beyond.
Mike Farrell and Linda Moss contributed to this report.