News

Operators: Expect More Switch-Outs

12/06/1998 7:00 PM Eastern

Anaheim, Calif. -- With programming costs skyrocketing,
several top MSO officials said at the Western Show here last Wednesday that they expect to
carefully look over their channel lineups and to "prune" underperforming
services.

During a panel on programmer and operator relations, both
Matt Bond, executive vice president of programming for Tele-Communications Inc., and Lynne
Buening, Falcon Cable TV Corp.'s vice president of programming, said they will closely
examine and not renew contracts with networks that aren't performing up to snuff.

Said Buening, "It's a very deliberate process" to
review and not renew networks. "I absolutely believe that we're going to have to
start moving stuff off," she said. "We actually have made some drops."

In fact, Douglas Holloway, USA Networks Inc.'s executive
vice president of network distribution, suggested that because analog space is so scarce,
"Unless operators are willing to drop something, Oxygen [the women's network being
created by ex-Nickelodeon chief Geraldine Laybourne] and other such networks could be
totally shut out."

Bond noted that all programmers typically seek rate
increases higher than the U.S. Consumer Price Index, which, in aggregate, is jacking up
program costs. He saw no easy solution to stemming rising sports costs, other than
"getting scale in a market [by clustering systems] to get bargaining power," or
by vertical integration -- owning sports team and sports networks.

Nonetheless, Bond doesn't want the government to step in
and regulate program costs.

The programmers on the panel defended themselves.

"There are programmers who are keeping their costs in
line," said Kate McEnroe, president of AMC Networks.

"In some cases, you get what you pay for," added
Rich Cronin, president and CEO of Fox Family Channel and Fox Kids Network.

On the subject of digital networks, Holloway said USA
Networks decided not to jump in yet because of the prospect of losing too much money in
the next few years. He added that the company will wait until there is a critical mass of
digital set-tops in the marketplace.

"Just because you're first in the market doesn't mean
that you'll be the winner in the market," Holloway said, pointing to Discovery
Channel and other networks that launched in the mid-1980s and after.

But Cronin, whose company is launching The Boyz Channel and
The Girlz Channel on digital tiers, said the new networks will drive digital into the
home.

"If you wait for there to be enough digital boxes, the
business will never take off," he added.

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