Time Warner Relents; Will Air Video Ads


A Fayetteville, N.C., cable system will accept local ads
from a video retailer after initially rejecting them to protect its pay-per-view business.

The 10-store Video Hut chain will run its ads on Time
Warner's system after complaining to city officials that the nearly 75,000-subscriber
operation was practicing "preferential or discriminatory practices" in violation
of its local franchising agreement.

Video Hut representatives met with Cable AdNet, Time
Warner's regional advertising division, in May 1997 to discuss advertising on cable
TV, said Tom Warren, the chain's owner. But soon afterward, Cable AdNet informed him
that Time Warner policy states that it "cannot have any video stores on the air
because of PPV." The system offers eight channels of PPV as part of a system upgrade
which will be completed later this year.

Surprised by the message, Warren took his complaint to the
local city council, and argued that the move was contradictory to the system's
franchise with the city, which prohibited "preferential or discriminatory

But it was a letter last May to the city attorney's
office that apparently influenced Time Warner to change its decision, said sources close
to the situation. Late last month -- two months after Warren sent the letter -- Time
Warner had decided to run the video chain's ads.

"We asked the city to notify Time Warner that, if they
didn't allow us to advertise, we would ask the city to revoke their franchise because
they were in violation of their agreement," Warren said. "Thank goodness it
didn't get to that point, because the only ones who would have come out on top would
be the lawyers."

Michael Luftman, vice president of corporate communications
for Time Warner, said that while no corporate policy exists that would prevent the
company's local cable provider from accepting ads from video retailers, such
decisions are left to the discretion of the individual systems.

Wendy Wilson is a reporter for Video Business, a
sister publication of
Multichannel News.