SET: DBS, Wrestling Paced PPV in 98

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The direct-broadcast satellite industry continued to make
major inroads on cable's pay-per-view business in 1998, but the continued rollout of
digital-cable boxes will eventually help operators to stem DBS' momentum, according to
Showtime Event Television's annual PPV report.

While professional wrestling performed admirably in 1998,
it wasn't enough to keep PPV-event revenue from recording its lowest level in two years,
due to the lack of stellar boxing events. Nevertheless, a strong showing from the adult
and movie categories propelled total PPV revenues to a record $1.3 billion, according to
SET.

"We still had a fairly robust year, despite the lack
of boxing events," said Mark Greenberg, executive vice president, corporate strategy
and communications for Showtime Networks Inc.

Much of PPV's revenue increase was due to the rise in
addressable households, mostly from new DBS users, Greenberg said. The total number of
homes able to access PPV grew by approximately 8 percent from last year, to 38.1 million.

However, total DBS households increased by 32 percent in
1998, to 8.3 million homes, while cable addressable households climbed by just 1 million,
to 28 million -- mostly from digital rollouts, Greenberg said.

"The industry has had a pregnant pause in terms of
rolling out addressability, and the direct-to-home business has taken advantage of
that," Greenberg said. "But at the end of 1999, we believe that one-third of the
universe will be digital [between cable and DBS]."

DBS significantly increased its PPV-revenue take, as well.
The technology generated an estimated $410 million in movie revenues in 1998, 36 percent
above its $283 million take in 1997. DBS' 1998 movie revenues also dwarfed those earned by
cable: Operators grossed $344 million, up 22 percent from last year's $283 million.

Greenberg said much of DBS' success was due to the
predisposition of its early users to buy premium and PPV programming. As its universe
continues to expand, however, Greenberg said annual increases in revenue per DBS
subscriber should level off, while cash flow from multichannel-PPV digital-cable
households should rise.

But even DBS couldn't help the snakebit event category in
1998. While the wrestling category is expected to draw a record $178 million in revenue
this year, event revenues overall declined by 40 percent, earning only $241 million,
compared with $400 million in 1997. Greenberg attributed most of the loss to the lack of
major events.

With boxer Mike Tyson suspended for most of 1998 for biting
Evander Holyfield's ear, and with a number of scheduled fights throughout the year having
been postponed, boxing will only generate an estimated $40 million in revenue. Last year,
paced by the record-breaking Holyfield-Tyson fight, the genre raked in $232 million.

Boxing also accounted for a drop in PPV-event transactions
from 12.2 million in 1997 to 8.5 million in 1998. Greenberg estimated that the
postponements of the Holyfield-Henry Akinwande fight and two Oscar De La Hoya PPV events
-- as well as the September Holyfield-Vaughn Bean bout going to Showtime, instead of to
PPV -- cost the industry about 5.5 million buys and upward of $250 million.

Greenberg also lamented the loss of midrange boxing
matches, which generally earn money for the industry. Fights such as Holyfield-Bean, which
would have appeared on PPV, are no longer economically viable for PPV distribution, and
they end up on the premium services.

He suggested that the industry set up a
research-and-development fund to determine how to create successful PPV-event genres
beyond ring sports.

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