Time Warner Unveils Digital AthenaTV

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Time Warner Cable made its "AthenaTV"
digital-video service official last week, while adding some technical and programming
details to the story.

As reported last week in Multichannel News, Time
Warner is launching a digital-video service, branded "AthenaTV," which will
eventually offer up to 100 channels.

Time Warner will start out carrying 30 video networks on
its AthenaTV digital feed, which is now being beamed to the MSO's digital test site
in Austin, Texas -- where several-hundred set-tops are deployed in "friendly"
homes, meaning those of employees -- said Kevin Leddy, Time Warner's senior vice
president of marketing.

Time Warner is adding networks to AthenaTV each day and, by
the end of the year, it expects the total to be up to 40. AthenaTV has the potential to
carry up to 100 services in time, officials said.

AthenaTV's initial program lineup includes CNN/SI,
CNNfn, The Golf Channel, Ovation-The Arts Network, Eye on People, Discovery Kids,
Discovery Science, BET on Jazz and Game Show Network. Time Warner will use three
transponders to transport these and other services, executives said, while maintaining
options for two additional transponders.

Time Warner is using Austin as its test site for its
digital "Pegasus" set-tops and digital video. Once that technical trial is over,
the MSO will offer AthenaTV to subscribers in Austin, and then roll it out commercially
across the country, most likely later next year, sources familiar with the matter said.

Leddy declined to put a timetable on the test period and
rollout.

Time Warner will offer AthenaTV to other MSOs, but it
doesn't really view the service as a direct competitor to Tele-Communications
Inc.'s Headend in the Sky service, since HITS and AthenaTV are aimed at different
markets.

While HITS was designed for smaller systems that
haven't been upgraded and that have limited channel capacity, Time Warner created
AthenaTV for upgraded systems with 750-megahertz capacity, Leddy said. Time Warner expects
to strike a deal to use HITS for some of its smaller systems.

Time Warner is also in discussions with Comcast Corp. and
MediaOne about taking co-ownership in AthenaTV, Leddy confirmed.

"We're still talking to potential joint-venture
partners," he said.

A spokesman for MediaOne declined to comment, and Comcast
couldn't be reached for comment.

On the satellite side, Time Warner will launch AthenaTV on
Loral Skynet's Telstar 5 bird. For the digital tests in Austin, Time Warner will
combine the Loral payload with a new digital pay-per-view feed from Viewer's Choice,
and then blend in digital-multiplex feeds from Home Box Office/Cinemax and Showtime/The
Movie Channel. Multiple digital-music feeds will also be included in the service.

The AthenaTV programming will eventually shift over to
Telstar 7, which is scheduled to be in service by the second quarter of next year, Loral
executives said.

Several programmers had said that Time Warner planned to
move channels that were part of new-product tiers over to AthenaTV's digital feed and
off analog totally. But Leddy said this wasn't true, and that NPT channels won't
lose their analog berths.

That's because for an unspecified time period, Time
Warner also plans to simulcast some of the AthenaTV channels in both analog and digital
formats, executives said. The simulcast is largely a migration plan, enabled by the large
amounts of 750-MHz bandwidth that Time Warner has put in place via network upgrades.

Plus, said Michael Hayashi, vice president of advanced
services for the MSO, simulcasting in analog eliminates the need for Time Warner to have
to buy digital boxes that include analog descramblers, which simply adds to the cost of
going digital.

"Putting an analog descrambler in a digital box
doesn't have good retail implications," Hayashi said. "Simulcasting has
everything to do with breaking away from legacy analog scrambling techniques."

As reported last week, Time Warner settled on
Scientific-Atlanta Inc. for the digital-headend equipment that it needs for AthenaTV. In
the arrangement, Time Warner will use S-A's "PowerVu" digital-video system
to deliver up to 100 channels of AthenaTV programming.

Perry Tanner, president of S-A's Satellite Television
Networks business unit, said the PowerVu system -- with built-in statistical-multiplexing
capabilities, as well as the ability to use the full bandwidth of the satellite --
"provides a more efficient way for programmers and cable operators to deliver
services to the set-top."

PowerVu lets Time Warner use either the 256 or 64 QAM
(quadrature amplitude modulation) format, executives said. The use of 256 QAM affords up
to 40 percent more digital capacity, which can either be applied to more channels or to
improved picture quality, said Jim Chiddix, chief technical officer for the MSO.

Time Warner and S-A will also create a National Addressable
Center to centralize subscriber management of the digital set-tops, which will allow
operators the choice of either national or local control of the set-tops that they use.

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