News

Cablevision Extends Brand Into PPV, Theaters

8/16/1998 8:00 PM Eastern

Cablevision Systems Corp. last week completed two deals
that it hopes will maximize promotional opportunities for its cable networks and systems
across the pay-per-view and movie-theater businesses.

The company hopes to create brand awareness for its
movie-based cable services through its purchase last week of Clearview Cinema Group, which
owns movie theaters that predominantly show art, independent and family films.

Cablevision also said it will offer events from its famed
Radio City Music Hall and Madison Square Garden facilities in New York as part of a
subscription/PPV package that it hopes operators will use strategically as a value-added
offering when rolling out new services.

Under the newly created Radio City Television (RCTV)
division, and with the marketing support of MuchMusic USA, Cablevision will distribute six
events from select attractions held at MSG, The Theater at Madison Square Garden and Radio
City.

Starting in 1999, the company will sell these as a package
of six events on a subscription basis, or individually, said Josh Sapan, president and CEO
of Rainbow Media Holdings Inc.

While RCTV has yet to choose what it will distribute,
sources close to the situation said the package could include such signature events as
Radio City's Christmas show and MSG's A Christmas Carol and The Wizard
of Oz
stage productions. Concerts from either venue are another possibility.

MuchMusic -- Rainbow's music-video service, which has
14 million subscribers -- will lend its sales and affiliate-marketing teams to the
promotion of RCTV, said David Kline, president of Radio City Networks, the umbrella
company for both RCTV and MuchMusic.

"I expect very interesting and mutually beneficial
synergies to develop as RCTV draws on MuchMusic USA's extensive marketing and
distribution experience," said Kline, who also runs RASCO (Rainbow Advertising Sales
Corp.). "In return, [the venture] will give MuchMusic a bigger presence within the
cable industry."

Similar synergies involving Cablevision's cable
networks were a major factor that drove the MSO's purchase of all outstanding shares
of Clearview for about $160 million -- roughly 55 percent cash and 45 percent Cablevision
stock.

Clearview either runs or is developing about 45 theaters
offering 254 screens, primarily located in the New York and New Jersey area. In fact, 35
of the 45 Clearview Cinemas are located in Cablevision's service areas, while the
rest are within "theatergoing distance," Cablevision said.

James Dolan, president and CEO of Cablevision, said the
deal allows the MSO to create marketing, cross-promotion and co-branding opportunities
between the community-oriented theaters and such movie-based Rainbow services as The
Independent Film Channel, Bravo, Romance Classics and American Movie Classics.

"It [further builds] the relationship between
Cablevision and a key subscriber group -- movie viewers," Dolan said. "There are
a lot of opportunities ... You could see commercials [for the networks] before the movie,
or [promotions] could be on the [popcorn] bags."

Cablevision will also be able to market its planned
video-on-demand, high-definition television, high-speed Internet and other
telecommunications services to some 6.5 million Clearview movie patrons -- a large part of
whom are Cablevision subscribers, Dolan said.

For Clearview, which will continue to manage the theaters,
the company said the deal provides value for its shareholders and enhances its financial
and organizational resources.

Bud Mayo, founder and chairman of Clearview, said the
company will continue to expand its theater roster within the New York DMA and beyond.
Mayo would not confirm reports, however, that Clearview is bidding for several Sony
Pictures theaters within the DMA.

"This business requires a lot of capital," Mayo
said.

On its RCTV plans, Cablevision has not set any prices,
although similar packages range between $100 and $300, while individual events can range
anywhere from $19.95 to $29.95.

But rather than offering the events on a PPV basis, Sapan
is encouraging operators to provide the package as an incentive to purchase new cable
products.

"Our hope is that they're offered by cable
operators as a value-added incentive for other things that they're selling,"
Sapan said. "It carries a very high price value, and it's a very
consumer-friendly HDTV broadband component that operators can offer to their
subscribers."

Sapan, however, would not reveal specific revenue splits
for the events.

Also, operators will have to find a way to distribute the
events. Sapan suggested that initially, they could air through a PPV network, such as
Viewer's Choice, or through another cable service, although he ruled out pre-empting
any of Rainbow's networks, including MuchMusic.

A Viewer's Choice spokesman would only confirm that
the network has had "conversations with the Rainbow organization, and we continue to
talk to them [about the package]."

Nevertheless, operators were encouraged about the prospect
of possibly offering new and well-branded product via PPV or subscription.

"The event category certainly needs a more consistent
presence and a broader range of events," said Phil Laxar, vice president of
programming for Jones Intercable Inc.

Another top 10 cable operator who wished to remain
anonymous said the package could attract a new audience to PPV.

"We have failed in attracting older viewers and women
to PPV," the operator said. "This package -- particularly if it offers family
programming -- could be the breakthrough product that the industry needs."

Eventually, Sapan said, RCTV could blossom into an
interactive showcase, where viewers will be able to choose from a menu-driven list of
HDTV-produced shows from the venues.

"We do think, even with the demise of Your Choice TV,
that there's something right with the idea that people will watch TV on a per-program
basis," Sapan said.

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