MSG and HBO Take Lead in HDTV

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New York -- Two cable networks last week addressed the
chicken-and-egg problem facing high-definition television by announcing plans for their
first regular HDTV broadcasts.

Cablevision Systems Corp.'s Madison Square Garden
Network telecast its first New York Rangers National Hockey League game in HDTV last
Tuesday, and it plans to do the same for the rest of the Rangers' home games.

And Home Box Office set a March 6 launch for consumer
delivery of its first HDTV feeds. U.S. Satellite Broadcasting will offer HBO's East
Coast feed from day one.

MSGN and Cablevision hosted live demonstrations of their
HDTV programming at Madison Square Garden and at a Cablevision-owned Nobody Beats the Wiz
store in Carle Place, N.Y.

The Carle Place store was the first of nearly 40 Wiz
locations in New York, New Jersey and Connecticut that are set to be wired so that they
can simulcast this season's Rangers and New York Knicks National Basketball
Association games in HDTV.

MSGN will telecast New York Yankees Major League Baseball
games in HDTV during the 1999 season, and Fox Sports New York will do the same for New
York Mets MLB games.

Cablevision said it does not plan to charge its subscribers
an additional fee to view the games in HDTV.

According to Wilt Hildenbrand, senior vice president of
engineering and technology for Cablevision, the MSO plans to start rolling out HDTV
service to subscribers in upgraded areas after it has finished wiring the Wiz stores.

About 40 percent to 45 percent of the homes in
Cablevision's New York cluster have been upgraded to fiber, translating into more
than 1 million subscribers.

Cablevision will deliver its HDTV programming over the
600-megahertz to 750-MHz end of its spectrum.

MSGN will transmit its HDTV games using the VSB (vestigial
sideband) modulation scheme, as terrestrial broadcasters do, rather than the QAM
(quadrature amplitude modulation) scheme, which cable operators prefer.

"Next year, we'll make the transition to
QAM," Hildenbrand said, adding that QAM technology is more bandwidth-efficient than
VSB.

Both Cablevision and Time Warner Cable plan to bypass
digital-cable boxes and send VSB signals directly to digital televisions or
digital-broadcast tuners this year, through the use of cable splitters.

"There are no digital TVs today that accept
QAM-modulated signals," Time Warner spokesman Mike Luftman said. "That is a
problem for the cable industry. We want to migrate to a world with QAM."

Bill Mengel, DBS product manager at Thomson Consumer
Electronics, confirmed that its first-generation digital televisions do not process QAM
signals.

"We are not cable-ready because cable is not
ready," he said.

Mengel predicted that the company would include QAM
technology once the cable industry came up with and deployed a modulation standard.

It's possible, too, that digital-cable boxes will be
built directly into future-generation HDTV sets one day, just as Thomson has built DirecTv
Inc.- and USSB-compatible Digital Satellite Systems into its first HDTV models.

Early next year, some cable operators are expected to
deploy digital-cable boxes that can take QAM signals from networks like HBO and convert
them to VSB for delivery to early HDTV sets.

Bob Zitter, senior vice president of technology operations
at HBO, said that while no cable operators have officially announced specific launch dates
for the premium channel's HDTV feed, HBO has seen interest from "all of the
major MSOs," and they are discussing which markets will get HDTV services first.

"While cable says they're going to deliver HDTV,
it's going to be a long time coming," USSB president and chairman Stanley E.
Hubbard said at an HDTV press conference here Wednesday, held jointly with DirecTv, HBO
and Thomson.

Luftman said Time Warner has the bandwidth to carry HDTV
programming from HBO and MSGN in its rebuilt areas here, where about one-half of the homes
have been upgraded to 860 MHz, although the company has not yet announced any programming
deals for HDTV.

"Our position is that if any of our customers go out
and buy HDTV sets, we want to be able to provide them with a feed," Luftman said.
"We think that it's a great product."

A spokeswoman for Tele-Communications Inc. said that MSO is
evaluating in which markets it will introduce digital-broadcast signals on an experimental
basis by the end of the year.

Direct-broadcast satellite companies also face bandwidth
issues when it comes to HDTV. DirecTv is using a satellite at 95 degrees west longitude to
deliver HDTV programming, meaning that DirecTv and USSB subscribers will need larger
dishes and new receiving hardware.

When asked whether the company would like access to the DBS
spectrum at 110 degrees west, which was left vacant when News Corp. broke its deal with
PrimeStar Inc., DirecTv president Eddy Hartenstein said that even with the 110 spectrum,
DirecTv customers would still need somewhat larger dishes for HDTV.

With limited availability and high prices, HDTV sets today
seem best suited for public spaces.

As in the early days of television, consumers will flock to
consumer-electronics stores to catch a glimpse of the new technology. USSB will transmit
an HBO retail demo feed of HDTV movie clips.

In addition to its HDTV displays at the Wiz, Cablevision
will place HDTV sets inside Madison Square Garden.

Hildenbrand said sports programming will help to illustrate
the three primary advantages of HDTV: picture clarity, surround sound and a wide-screen
format.

In a demo last Tuesday, the wide-screen camera caught a
baseball player trying to steal second, also capturing the first baseman, the second
baseman and the pitcher.

"You cannot explain this," Hildenbrand said of
the value of HDTV. "You have to see it."

Both MSGN and HBO will use the 1080i (interlace) HDTV
picture format.

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