Emerging or Submerging New Nets?

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Here's a shocker to ponder as the cable industry careens into the digital era: The typical cable operator will add only three new basic analog or digital networks in the year 2000, even though in the next two years, almost all U.S. cable systems will have digital capability.

That gloomy Gus conclusion for many a struggling new programmer came from a just-released poll of 112 cable operators conducted by The Myers Group, "Emerging Networks Survey."

The whys are pretty easy to understand, although difficult for most programmers-especially the new soloists-to embrace.

The simple facts are that everyone wants a piece of cable's big broadband pipe, and much of that real estate will not be zoned just for new basic programming networks, but for enhanced products like expanded PPV, multiplexed-premium services, VOD, telephony and high-speed access to the Internet.

Myers further concludes that most new programming services that get launched will wind up with digital carriage, and not analog carriage.

Even established cable networks trying to launch new channels are finding that although they signed long-term contracts with MSOs, those deals "do not always include their little sisters," writes Myers senior vice president of market analysis Craig Leddy, former editor of our sister publication, Cablevision.

In this research, cable operators complained that programmers are not delivering what they need. In essence, that's everything and the kitchen sink: New nets should serve as a hedge against competition; new nets should have attractive financial terms; new nets should promote subscriber retention; new nets should be those that subscribers request; and, of course, new nets should help to drive digital penetration, even though they would prefer to be on the analog side of this seemingly lopsided equation.

That's a tall order, but it's a very real one from cable operators that have seen their world change dramatically with industry consolidation, centralized decision-making and a "hypersensitivity to the bottom line and larger corporate agendas," writes Leddy.

"The days of small, upstart programmers cutting carriage deals with mom-and-pop cable operators are long over," he adds.

Indeed: The report is dead-on, and defines a landscape that many programmers don't want to accept as reality.

Some programmers have apparently already seen that glaring light of reality, like perhaps Canada-based Trio, which must have come to the conclusion recently that life as a member of Barry Diller's tumultuous USA Networks-lately a most dysfunctional family of networks-is better than flying solo.

Trio, indeed, did not make Myers' very short "hot emerging networks" list. That little chart includes the Discovery Digital Networks-no surprise, as it was the first programmer to embrace digital-as well as ZDTV, TV Guide Interactive, ESPN Classic and Outdoor Life, among a handful of others.

In the spirit of full disclosure, and in fairness to the programmers that did not make the cut on this Myers list or the countless others the firm has produced over the years, they will all whisper that if you don't pay to participate in the research, you wind up as a loser.

But ask Jack Myers, the firm's principal, about that, and not me. That's his ongoing struggle, but I personally don't think he would still be in business today if that were the case.

In this research, Myers identified 71 basic services with distribution of less than 20 million homes. The survey did not include pay, PPV, local/regional channels, home shopping nets and interactive or other advanced services.

The survey did give operators the chance to write in any other new service they are adding. Myers even inserted one fictitious network, Watch Dog Channel, into its listing. "Nobody bit," writes Leddy.

But some programmers will bite the dust until they learn to understand and deliver what their customers-a changed breed of cable MSOs-think they need to survive in today's dog-eat-dog climate.

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