Leo in Lions Den as Cable Braves NAB

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Las Vegas -- Cable braved the lion's den last week,
sending some key executives to the National Association of Broadcasters Convention here to
preach peace in the era of digital convergence.

Industry heavyweights Leo J. Hindery Jr., president of
AT&T Broadband & Internet Services, and Ted Turner, vice chairman of Time Warner
Inc., braved partisan NAB crowds to offer their views to broadcasters, who are usually on
the other side of the argument.

"You, on the other hand, are probably looking at me
and wondering how a Trojan horse from the evil empire slipped past you at the door,"
Hindery joked during an address to NAB marketers.

Hindery nevertheless proposed replacing "simmering
tensions" with partnerships aimed at breaking the print media's hold on local
and national advertisers.

Turner, meanwhile, delivered a 15-minute comedy routine
that still managed to warn against the proliferation of new channels that is expected when
broadcasters begin using digital technology to create up to six new shows airing in the
same space currently occupied by a single program.

Hindery said a total of $80 billion per year is spent on
local and national newspaper and direct-mail advertising, compared with a combined $25
billion on cable and broadcasters. But in the past two years, digital, two-way,
interactive technology has positioned cable to "lead the delivery of entertainment,
information and communications."

"And at the end of the day, that's what every
advertiser in America wants," he said. "They don't want to count eyeballs
anymore: They want greater access to more eyeballs."

By aligning themselves with cable, he added, broadcasters
will be to deliver community-specific television, while collecting a piece from every
transaction involving local advertisers that are willing to pay a premium for the
immediate sales resulting from two-way interactivity.

"I want us to leverage new opportunities to
participate in an evolving advertising market -- a market that is predicated on the
success and wide use of the new technologies that cable offers," Hindery said.

Turner, meanwhile, cautioned that broadband's
capabilities are not infinite. A handful of broadcasters using digital could produce 40
new channels in a single market, he said.

"Another 40 channels we need like a hole in the
head," he added.

Predictably, Turner managed to combine a pitch for cable
with a few well-aimed barbs at fellow media mogul Rupert Murdoch, chairman of News Corp.

Noting that the Fox Network recently pulled 20 local ad
spots from its network affiliates, he joked, "[Murdoch] has got to pay [Los Angeles
Dodgers pitcher] Kevin Brown's salary from somewhere. He figured that he'd get
it from his affiliates -- the easiest place to get a few bucks today if you're a
network." (News Corp. owns Major League Baseball's Dodgers.)

"We will not do that at Time Warner," Turner
said. "We will not screw you and lie to you."

Meanwhile, the recurring themes on the show floor were the
transition to digital broadcasting and the new applications that broadcasters will use to
generate revenues from it.

But at the same time, the phrase repeatedly heard from a
variety of exhibitors regarding digital high-definition television was "the chicken
and the egg."

Broadcasters, as well as satellite and cable operators, are
not generating big demand for HDTV solutions yet because of a lack of HDTV programming,
which, in turn, is not being produced because a big market of televisions and networks to
support it does not yet exist.

Among new applications, solutions for interactivity were
drawing most of the attention. One of the strongest indications of interest in new
interactive applications may have been the crowds attending sessions dealing with the
topic, which frequently spilled out into convention-center hallways.

"Broadcasters are in sore need of a revenue stream,
and e-commerce is it," Paul Kagan Associates Inc. senior analyst Leslie Ellis said.
"HDTV is still not here the way that everyone thought it would be, so this kind of
fills the vacuum."

Oracle Corp. chairman Larry Ellison drew a full house to
the convention's Multimedia World session when he outlined the success of British
Interactive Broadcasting.

The venture -- offered free-of-charge with News
Corp.'s British Sky Broadcasting Group plc's digital-satellite network -- draws
100,000 subscribers per month for interactive services that include banking and digital
VCR-like features.

Other vendors such as OpenTV Inc., developer of the
set-top-box operating system used by BIB, and SkyStream Corp., with a solution for
integrating Internet data into broadcast-video streams, educated broadcasters about
e-commerce, individualized advertising and value-added services enabled by digital
video/data transmissions.

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