Dreams of the Big Bang

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NBC Universal’s Jeff Gaspin has few clues about how many people are watching Universal HD, the high-definition channel that his company launched about a year ago.

He is sure of one thing, though: “There are a lot of my friends” watching. In fact, NBC Universal Cable’s president of entertainment and content strategy says he has batches of e-mail messages and comments on the service from friends on the service.

For now, ratings are almost beside the point for Universal HD. Instead, it’s focusing on a game plan that hearkens back to the ancient days of television, when the NBC Television Network was a debutante.: It’s not just about selling a channel — it’s about creating a demand for TV sets with programming that people really want to watch.

NBC no longer cares about selling RCA television sets, to be sure, but its new HD channel is aiming to accelerate sales of high-definition screens at the same time it lures subscribers to the channel itself.

“We’re quite different than most cable channels,” Gaspin says. “Most channels try to stand for an attitude or point of view. This channel is just trying to use HD as a brand mechanism. We’re selling technology — general-entertainment HD.”

To do so, it’s blending programming from its Universal Pictures film and television library with reruns off other services in the corporate family — NBC, USA Network, Bravo and Sci Fi Channel. That’s helped it bag a universe of some 30 million to 35 million households through deals with most of the top cable operators, including Time Warner Cable.

To do so, it’s blending programming from its MGM Universal film and television library with reruns from other services in the corporate family — NBC, USA Network, Bravo and Sci Fi Channel. That’s helped it bag a universe of some 30 million to 35 million households through deals with most of the top cable operators, including Time Warner Cable.

Clearly, NBC is using its other networks as leverage to strike agreements. Time Warner Cable’s deal for Universal HD also gave it permission to carry USA, Telemundo Puerto Rico and mun2.

Clearly, NBC is using its other networks as leverage to strike agreements. Time Warner Cable’s deal for Universal HD also that gave it permission to carry USA, Telemundo and mun2.

But there is one significant holdout among the operators: Comcast Corp., which has more than 1 million HDTV subscribers. The sticking point for Comcast is the 70- cent to 75- cent subscriber fee that most large operators are shelling out for the channel, according to sources close to the situation.

LAUNCH NOW, NICHE LATER

Once it gets enough operators lined up —, and subscriptions to high-definition channel tiers reaches a critical mass — NBC executives say they will strongly consider the idea of spinning out the Universal HD channel into several genre services with strong brand identities, like Sci Fi HD.

But timing, as they say, is everything. NBC already tried that approach with the struggling Bravo HD service, which launched in 2003, and was finally absorbed into Universal HD when that launched a year ago.

NBC Universal Cable president David Zaslav, who helped lead that conversion process, says that so far, the aim has been to grab scarce shelf space before it disappears.

“Our assumption was because HD took up so much capacity … there was no way in the near-term, even if it got popular, that a lot of HD [channels] would be launched,” Zaslav says. “[Universal HD is] one of the few HD channels that is locked in for long periods of time.”

One problem, he notes, is the risk of running a river of red ink until subscription rates catch up with the hype.

“In order to get into the space, you need to deficit-fund,” he says, adding that sealing deals with reasonable license fees would enable the company to “stomach losses for a couple of years. Our bet is if the technology takes off, we’ll have a real business.”

Analysts say they wonder how long Universal can get away with the clustered approach — aggregating content from various channels and genres, rather than a more focused identity, like Turner Network Television with its “We Know Drama” slogan.

“It will rapidly look like an anachronism,” predicts Forrester Research senior analyst Josh Bernoff, in speaking of the “HD” part of the channel’s name. “Imagine it’s 1960, and you’re going to start the Color Channel. It would have stood out for a while, and soon everyone else would start a Color Channel.”

Gaspin maintains that he is well aware of the branding issues involved with his network. For now, he says, it’s more important to push the technology — not a genre — as its brand identity.

Gaspin compares Universal HD to USA Network, which was able to spin off more specific genre channels like Sci FiSci-Fi Channel as channel space allowed.

“It’s possible Universal would stay as a general-entertainment network, much as USA remains [one],” Gaspin says. “Certainly, we could add networks beyond [Universal HD] that could have a brand focus once the channel space is there. [Operators] have to have enough satellite [capacity] to handle it.”

Bernoff says he believes Universal will have to make that choice sooner rather than later, because sales of HD sets are escalating quickly. He thinks networks that embark on branding campaigns by the end of 2006 will have the advantage when operators begin to determine which of the bandwidth-heavy networks will make the cut in their tiers.

“The near future is a world where there is going to be a lot of marketing around HD,” Bernoff says. “It would be great if there were 50 channels, but there is not room for them.

Universal HD is resolutely staying the course: The format has changed little since its Dec. 1, 2004 launch. The channel is long on movies and reruns and short on original programming. Law and Order: Special Victims Unit made 24 appearances during one week in November, as did another NBC Universal-produced series, The District.

Universal HD is resolutely staying the course: Its format has changed little since its Dec. 1, 2004, launch. The channel is long on movies and reruns and short on original programming. Law & Order: Special Victims Unit made 24 appearances during one week in November, as did The District, the former CBS series produced by Universal.

Other series include the short-lived 2004 NBC drama Medical Investigation, and ABC’s quickly canceled Karen Sisco, also produced by Universal

Other series include the short-lived 2004 NBC drama Medical Investigation, and Karen Sisco, the initial broadcast run of which quickly canceled by ABC.

SPORTS PLAY WELL

Sports have gained increasing traction on the network, which recently added the Dew Action Sports Tour to supplement live events like early-round golf action from The Masters golf action and the U.S. Open Tennis Championships. “There are is a lot of interesting sports programs we put on because it’s in HD that we wouldn’t put on USA,” Gaspin says.

Block programming is common: Gaspin believes that stunting — such as running four-hour blocks of Law & Order — attracts more attention from viewers and the media. And the channel also runs periodic movie theme months.

Repeats of ongoing original series, such as USA’s Monk and Sci -Fi’s Battlestar Galactica, will typically air months after their initial run, depending on when their rights become available.

Don’t look for many changes in this formula, at least until the subscription figures for HD cable or satellite service reaches a critical crucial mass — perhaps Forrester Research’s estimates of 20 million for the end of 2007 and 40 million by 2010.

Says Zaslav says optimistically, “We lost money for a year or two, but we know we have a great business model.”

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