Demolishing the Dish

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New Orleans— One would have thought the stink bomb Rupert Murdoch tossed in the general direction of the cable industry would have left attendees of last week's Cable & Telecommunications Association for Marketing Digital conference here reaching for nasal clothespins.

The general reaction was more of a cautious shrug.

Maybe that's because ever since EchoStar Communications Corp. chairman Charlie Ergen's vain attempt to buy DirecTV Inc. fizzled, it's been assumed that Murdoch would get DirecTV — probably for a lot less than he previously offered.

Most likely, it's because cable marketers here, one, acknowledge direct-broadcast satellite already is eating cable's lunch, innovation-wise; and two, realize they have to focus on their own businesses, rather than worry about whether News Corp.'s owning DirecTV (if the deal closes) makes the DBS provider significantly hungrier, and better able to steal more meals.

Cable executives at past trade conferences I've attended generally emphasized how much better their product is than satellite. That wasn't the case here the past week. Concessions that DBS has out-innovated cable on the merry way to some 20 million subscribers were delivered from general sessions here as if they were already generally accepted facts.

The question is: What to do after you acknowledge that higher (but smaller) power?

Answer: Emphasize what works best for cable, and innovate back in a way that enhances cable's advantages.

Time Warner Cable's dog-and-flying-pig show, which kicked off the conference Wednesday, was all about that. Thinking about buying a dish for its DVR tricks? We've got that, plus VOD, plus high-speed data from multiple providers, Chuck Ellis and company are saying, with wittier ads than anyone expects from cable. High-speed data is cable's cash cow, but the profits it generates need to get plowed back into video innovation and subscriber retention. More than one big MSO executive on panels here said new video services have to be judged by one criterion: how much they'll help keep customers wired.

Subscriber losses might end up being the biggest impact from the Yankees Entertainment & Sports Network-Cablevision Systems Corp. mess. The contretemps gave DirecTV even more ammunition to attack cable, and from what I hear it took subs from other MSOs in the New York area, too — even ones that already had YES on basic.

Time Warner isn't the only MSO planning marketing offensives against DBS. A marketing executive at another Big Five operator told me about one on the books that'll capitalize on an underappreciated aspect of cable: local news capabilities. Cable One Inc.'s rate-freeze declaration in last week's Multichannel News
deftly addresses a perceived weakness of cable, following some rate hikes from the DBS duo.

Speculating on Murdoch's impact is loads of fun — and hard to assess, given his enviable track record of building market share, offset by his reliance on cable carriage of his bread-and-butter stable of cable networks.

But the most important decisions being made have to do with acting on the lessons DBS has already taught cable and getting the most out of that $70 billion investment in cable plant.

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