Pre-Western Jitters

11/26/2000 7:00 PM Eastern

Plenty of programmers were stewing on the eve of the Western Show, now an event geared mostly to future technologies. Some are so mad that they've pulled out, while others wonder if they even have a place at the table anymore.

Why should these companies erect costly exhibits that may yield zilch at the end of the day, given there are now only six or seven final decision makers on the other side of the negotiating table?

On top of that, programmers are assaulted by hordes of middleware people who bombard them in their own booths, trying to sell

something which will purportedly take them into the age of Aquarius.

Making matters worse, programmers are fuming about how difficult negotiations with operators have become, and how the digital model-with its single revenue stream-doesn't work for them economically.

Honestly, you must ask, what does that say about the deployment of services even more advanced than digital, which are just down the road?

With that backdrop in mind, please read our annual programmers' roundtable, which appears on this week's front page. It speaks volumes about the present and future pace of deployment of new, enhanced broadband services.

But the four programmers who participated in our roundtable said that they are paying the freight for the new digital boxes that will bring new revenue streams to the distribution side in which they, as programmers, may or may not participate, given today's economics. They don't like it, but that's the present business model.

Programmers are becoming in- creasingly frustrated and, in some cases, have been drowned out by the non-stop, deafening noise from newcomers who promise operators even more new products and services, as well as revenue streams for cable's fat broadband pipe.

Clearly, someone has to pay, but it ain't gonna be me, if I may digress for a moment. Nor should it be existing cable subscribers. As I sit here reading our daily Web site,
, I see that my own cable operator, Cablevision Systems Corp, will again raise its rates for its New York area customers by an average of 7 percent this January.

So Cablevision subscribers- who have not been upgraded to digital-are, like the cable programmers, all expected to pay ahead for something we don't have. Thanks, Chuck and Jimmy.

And so it goes, as our programming roundtable attests. It's a pretty gritty tale, albeit one-sided in terms of the darling of cable's new enhanced services, digital video, now in 7.8 million homes, according to the National Cable Television Association.

On the surface, that digital-video penetration looks great. Even Wall Street likes what it's seeing. But our roundtable participants say this model is a bust for them.

These programmers are-no kidding-even willing to tweak the analog model by restraining costs to help their cable "partners" fulfill their future digital business plans.

And that, my friends, could be a harbinger for the future of the deployment of other advanced services, like video-on-demand, video streaming and interactive television.

Here's the problem: MSOs are being pressed by Wall Street to deliver a host of new services beyond digital cable. And most of the programmers-excluding those owned by broadcasters with retransmission-consent rights or those that own sports franchises-are not at all happy with the ongoing state of negotiations, in which the operator has become the gatekeeper and not a partner.

Digital video has been a home run, even though programmers don't like the economic model. But no one has the sense of the economics of VOD or ITV. What kind of fuzzy math are we talking about here?

Recently I combed though a bunch of Web site archives, catching up on my reading about VOD, interactivity and streaming media-the whole enchilada.

Do you know what was most telling? None of those articles had a single dollar sign in them. Think about that.

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