News

Slow Going for PPV-Event Category

7/05/1998 8:00 PM Eastern

With the lack of big pay-per-view events in the past six
months, attributable almost entirely to Mike Tyson's suspension from boxing, many
cable operators are scrambling to meet their PPV budgets, attempting all kinds of
marketing strategies to lure viewers back into the PPV arena.

Direct-mail, telemarketing and couponing are just a few of
the tactics that they're employing to generate buys of movies, concerts and adult
offerings, hoping that the new strategies will -- at least in part -- fill the financial
hole left by the events category.

But many operators are still hurting, not only because of
the dearth of events, but because of the year-old Section 505 of the Telecommunications
Act of 1996, which limits adult programming to the "safe-harbor" hours of
between 10 p.m. and 6 a.m. This has all added up to a arduous period in PPV for many
operators, which find that they must now market old categories with new tricks in order to
generate sales.

"We're dealing with it all very painfully,"
said Holly Zachman, PPV manager at Prime Cable in Anchorage, Alaska. "It's been
a real double-whammy for us. We lost a lot of revenue with adult because of Section 505 --
that hit us very hard -- and we're now slapped again with this lack of events."

She and other operators have had to refocus their energies
by analyzing who has and who hasn't ordered PPV in the past and by going after those
potential viewers. Zachman said her system just did a campaign targeting
"nevers" -- those subscribers who have never purchased a PPV offering -- by
inserting discount coupons in billing envelopes. And Rick Lang, marketing director for
Cable One in Phoenix, said his company has just started a telemarketing campaign, going
after previous buyers in certain genres via the phone lines.

"We're getting more creative in promoting our
lesser titles," he said, "and overall, we're just beating the bushes a
little harder. Because there hasn't been a huge quantity of marquee events, we have
to make the most of what we have." So far, he said, telemarketing has been successful
in prompting buys.

"It's like a reminder," he said.
"Traditionally, subscribers would be lucky to even see an event listed in our monthly
guide, and now, suddenly, they're getting a phone call alerting them to a concert in
a few weeks, and they're saying, 'Oh, great!' It's working, but
it's a lot more effort. A drought year requires that you pump a bit more water out of
the well."

He added that Cable One went into this year "under a
cloud" due to Tyson's suspension -- a complaint echoed by many operators, all of
which acknowledged the boxer's incredible drawing power in the PPV-event category.

"Other boxers just don't draw like him,"
Lang said. "Luckily, his suspension happened before we did our budget, so we knew
ahead of time to adjust our events budget for the year."

In fact, many operators adjusted their PPV-events budgets
and began launching full-scale promotions in anticipation of the shortfall. White Plains,
N.Y.-based Bresnan Communications has been advertising free PPV offers in local
newspapers, and Prime Cable of Chicago has been offering two-for-one discount coupons (buy
two PPV movies and get the third free), in addition to partnering with various studios for
promotions on certain films.

"Events pay-per-view revenue is never really promised,
anyway," said Michael Woods, vice president of marketing at Prime of Chicago.
"Boxing is the main source of pay-per-view event revenue, but when it comes to
fighters, things happen. Someone may no longer be able to fight for any number of reasons.
That's why we've always spent just as much energy on movies and adult
titles."

But due to the Section 505 rollbacks, Prime is forking over
more promotional money for adult than it has in the past, establishing what Woods feels is
a "healthier balance" overall among the various PPV categories.

"Whereas before, we might have taken adult for
granted," she said, "we've now taken more of an interest in the genre. But
it's better for PPV overall not to be so promotionally lopsided. It's better to
cover all of your bases, so that you're not so devastated when one goes dark and
you're left with a big hole."

With so much distress over the lack of events, it's
surprising to hear some operators say that they're not having a hard time at all,
claiming that careful preparation and a consistent, balanced approach to PPV has spared
them the crisis. In fact, even though Woods said Prime has beefed up its adult promotions
to pick up the PPV-events slack, the company never counted too heavily on PPV events in
the first place, considering the category the "wild card" in the lot and,
therefore, spreading its promotional dollars among all PPV categories as a precaution.

"We tend to be more pay-per-view promotion-oriented,
rather than event-driven," she said. "There has to be stability among all
aspects of the business. We do have events as a category, and we do expect the revenue
associated with that, but our pay-per-view budget for promotional activities is balanced
among all of the genres. We don't just budget when we get excited about a
pay-per-view event: We're also very aggressive when it comes to movies."

Coaxial Communications in Columbus, Ohio, also seems to be
taking this Tyson-less period in stride. In fact, Gregg Graff, senior vice president of
marketing, programming and advertising, said his budget for events is up 35 percent over
last year. He attributed his overall PPV success to his movies, adult and wrestling
categories, all of which he said are "very strong."

"Our wrestling is way over what we did last
year," he said, "mainly because the WWF [World Wrestling Federation] has started
to market to a new type of fan. For a long time, they worked with the superhero story
lines, like Hulk Hogan's, which went after kids. But kids' interest waned, and
they're attracting a new crowd. The new wrestling is more violent; it's edgier,
with more sex, half-naked women and swearing at the audience. It's all really
energized the business, and we've ended up making more money. I'm surprised that
other operators are not experiencing this."

He also attributed his increased buys this year to
Coaxial's carrying of Ultimate Fighting Championship events, which many
operators have steered clear of because of the genre's controversial nature. The
category is responsible for 9 percent of Coaxial's buys so far this year.

"Ultimate Fighting was always criticized for
being too violent, too barbaric -- the human version of a cock fight," he said.
"But back then, there were only three rules: no biting, no fishhooking and no
eye-gouging. You could do anything else, like stepping on someone's throat. Since
then, because of the crackdown, the rules have changed dramatically. But for some reason,
companies that banned it, like TCI [Tele-Communications Inc.] and Time Warner [Cable],
didn't put it back on. It's been an added source of revenue and buys for us that
a lot of cable companies don't have."

One such company is Bresnan, which carries neither adult
nor UFC, purely on principle, positioning itself as a family-based company. Its
vice president of marketing, Joseph Lawson, said Bresnan could undoubtedly make more money
by carrying the genres, but its values are more important.

"We're very careful that what we show is
something that we could sit with our families and watch," he said. "We're
not carrying these genres now, nor will we carry them in the future, even though it would
be more profitable for us to do so."

To make up for the current lack of events, Bresnan is
promoting its movies "at an unprecedented rate," according to Lawson, with
newspaper advertising and on-air promotions.

Graff, however, sees no values issue in carrying UFC
and adult. "The only people who see pay-per-view are those who pay for it," he
said. "That's the way that pay-per-view works."

One thing that most operators agreed on is the importance
of WWF events, which have been the steady performer in the PPV-events category. What makes
them unique, they believe, is that each program is a one-of-a-kind event that can only be
seen that night. If a viewer misses a PPV concert, for example, there may be an
opportunity for that viewer to see that same show when it passes through town. The only
type of concert that usually garners big buys, according to Lang, is a concert like the
final show by The Judds.

"In the event business, the show has to be
compelling," he said. "It's only going to happen this one time. When Tyson
gets in the ring, you really don't know what's going to happen, so there's
a big draw. But if you miss a concert, you can drive two hours and see it at another
venue. The reason why The Judds' concert was so successful was that it was their
final show. You couldn't see them next week."

Of course, all operators expressed a desire to see Tyson
reinstated sometime soon, but in the meantime, they're trying to be patient and
taking more philosophical approaches to the issue.

"Pay-per-view is a significant business, but not a
huge business at any point," said Jedd Palmer, senior vice president of programming
at MediaOne. "It's real money, but it's not like pay television or expanded
basic. Right now, our movie business is fine, and our adult business is fine. The events
business, however, isn't what it was before Mike Tyson went cannibal. We just have to
stick to the basics and hope that Tyson gets rehabilitated, or that someone else comes
along."

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