USA Today Piece Stirs Debate

3/22/1998 7:00 PM Eastern

An anti-cable article in USA Today last week set off
a brushfire in the industry that might be emblematic of the potential public-relations
problems that cable operators face in light of continuing rate increases in an election
year and upcoming Senate hearings on competition.

The article, which appeared as the lead story in USA
's "Money" section last Monday (March 16), was headlined,
"Operators Pad Channel List to Pad Bills." The story asserted that much of the
money that consumers are paying in recent rate increases "pays for new services that
few consumers want."

An accompanying full-page story debating increasing cable
costs ran under a headline reading: "Rate Hikes: Justified by Costs, Or a Raw

National Cable Television Association president Decker
Anstrom immediately fired back a letter to the editor, which ran the next day.
Anstrom's letter pointed out that although the story, written by USA Today
reporter David Lieberman, claimed that cable customers don't want new channels such
as Sci-Fi Channel and Animal Planet, Lieberman said later in the article that the ability
of satellite competitors EchoStar Communications Corp. and DirecTv Inc. "to offer up
to 175 channels has been a big selling point with 6.6 million satellite subscribers."

Anstrom also noted the newspaper's recent expansion of
its own programming grid to include more cable networks, and he concluded, "We
disagree completely with Mr. Lieberman's assertion that consumers are being force-fed

The article spurred some spirited discussion in both the
cable and satellite camps, with both sides drawing different conclusions.

While cable executives denounced the article and denied
that the industry had a serious public-relations problem, satellite executives praised it
and said that they intended to capitalize on it.

Barbara Sullivan, a Denver-based marketing consultant who
headed up EchoStar's marketing department last year, said, "If I were a DBS
provider, I would get reprints of that article like crazy. People believe newspaper
stories much more than they believe ads, and I would consider distributing copies of the USA
article at point-of-sale in retail outlets where they sell satellite

Jeff Torkelson, vice president of communications for
DirecTv, said last week's USA Today story was "just the latest in a long
series of articles" that are critical of cable-rate hikes. DirecTv has capitalized on
the public reaction to the cost increases, he continued, with a national TV-ad campaign
that began last month, featuring the tag line: "Tired of Cable Rate Hikes? Tell Your
Cable Company to Take a Hike Instead!"

But Mike Smith, director of field communications for
Tele-Communications Inc., said he has "yet to see" a public backlash against
rising rates. Even after the company's recent 5.5 percent average monthly price hike,
Smith said, "there wasn't a huge outcry."

Mike Luftman, vice president of corporate communications
for Time Warner Cable, concurred, asserting that local systems had "not gotten a lot
of complaints" about rate increases, nor had local Congressman gotten a lot of
letters on the subject.

When the "increased value" of additional cable
channels and services are communicated effectively, Luftman said, customers "accept
change without complaint."

Torie Clarke, vice president of public affairs and
strategic counsel for the NCTA, said she thought that the USA Today article was
"an anomaly," and that cable operators are generally doing a "much better
job" conveying a positive image to consumers.

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