Agencies Lament N.Y. Interconnect

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New York -- Various ad-agency buyers, caught in the middle
of the war of words between Time Warner Cable and the New York Interconnect, expressed
disappointment and annoyance now that the MSO's pullout has eliminated the
interconnect's main attraction -- one-stop shopping.

Time Warner's exit means a return to the
pre-interconnect "bad old days" in the largest DMA. And agency time-buyers'
hopes for a swift end to the current multistop shopping appeared to be dashed last week,
as tensions heated up between Time Warner and Rainbow Advertising Sales Corp. (RASCO),
which owns and operates the interconnect.

Last week Larry Zipin, Time Warner's vice president of
ad sales, announced that National Cable Communications, archrival of RASCO-owned rep firm
Cable Networks Inc., had become its new cable rep firm. NCC has repped Time Warner's
New York 1 News network for three years. Earlier this month, Larry Fischer, president of
Time Warner CityCable, the ad-sales arm of Time Warner Cable of New York City, indicated
that the MSO was uncomfortable keeping CNI as its spot-cable rep.

"They [Time Warner] really shot the heart out of the
interconnect," said Howard Nass, senior vice president and director of local
broadcast at TN Media Inc. "We were hurt. Now we have two-stop shopping. We can live
with it, but it sends a negative message."

Nass said he understood why the MSO acted as it did, but,
he observed, "long-term, it's a mistake ... They may have acted too quickly, too
emotionally ... Working in their favor, it's a strong marketplace. But [thinking that
way] is short-term thinking."

"The New York Interconnect isn't quite connected
anymore" due to Time Warner's dropout, as Linda Ranieri, vice president and
management supervisor at Gallagher Group Inc., put it in a letter to Eglon Simons, the
interconnect's vice president and general manager. "Once heralded to us as a
panacea for all that's complex about buying cable, this new 'semi-connect'
is making life more complicated."

Lanieri was among buyers who had hoped for "a speedy
resolution of this mess."

Although the Big Apple interconnect has always been
"too limited to make WNYI an exclusive cable buy for our New York/Connecticut Ford
Dealer Association client," Lanieri said it has been "successfully utilized as a
complement to broadcast television and metro-cable schedules, helping to offset the heavy
male factor of the other 'metro' cable properties," namely the
regional-sports services.

For Gallagher's buying purposes, Lanieri continued,
"the interconnect's zones aren't narrow enough."

With Time Warner's exit, "now, we've got to
go to two sources -- an extra stop. It just takes us longer to do what we've got to
do,"said Ann Pomeranz, director of local broadcast at the Optimum Media
division of DDB Needham

Time Warner had pressed for DMA-wide sales, while RASCO
wanted to continue offering zoned sales as an option. Among the other interconnect members
that are talking,Adelphia Communications Corp. favored zoned sales, while Comcast
Corp.'s Comcast Cable Communications agreed with Time Warner's whole-market
focus. Ed Dunbar, MediaOne's vice president of ad sales, wouldn't take sides in
public.

"MediaOne believes very strongly in consolidated
markets," he said in a prepared statement, so the MSO is "very sorry to hear of
anything that makes our industry less competitive with other media."

Interestingly, two of the MSOs angling for equity in the
interconnect -- Comcast and MediaOne -- already share ownership of NCC with Katz Media
Group Inc., which controls the remaining 50 percent of the rep firm. Time Warner also has
a stake in NCC.

"Having made promises to our client to get budgets
approved upfront for the entire model year, we're left holding the bag and trying to
sort through buying and trafficking" for what's left of the interconnect and
what are now unaffiliated, individual systems, Lanieri said, speaking about life without
the full interconnect.

Due to this dispute, the largest DMA is moving counter to
cable's overall trend toward market consolidation. That and the related growth of
interconnects have contributed to cable-sales growth during the past five years,
Cabletelevision Advertising Bureau and MSO executives have said repeatedly.

With Time Warner's withdrawal, the interconnect has
lost some of its luster, and it is close to losing bragging rights to being the largest
interconnect, at least in subscriber count. Adlink, the Los Angeles interconnect, is now
breathing down its neck, with 3 million subscribers versus the Big Apple's 3.2
million. (Ranking third is the Philadelphia Interconnect, with just over 2 million
subscribers.)

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