Tiniest Ops Thinking Bigger for Ad Sales

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When it comes to getting more local avails, everyone from
the industry giants to the "little people" -- the smallest rural systems --
wants to get in on the current ad-sales boom.

Scores of operators have found ways to boost their local
avails by using digital ad-insertion technology to increase the number of insertable
networks that they have to sell to local clients.

The small operators that belong to the National Cable
Television Cooperative can't afford the pricey digital insertion technology. But NCTC
president Michael Pandzik feels that the group may have found a way to give those systems
entree for the first time.

The NCTC -- although best known for negotiating master
affiliation deals with programmers on behalf of its small-town members -- has been trying
for the past two or three years to build support for what Pandzik calls "the
ad-avails project," for lack of a catchier name.

Its 1,000 members represent perhaps 6,000 systems with a
combined 9 million subscribers. Of those, Pandzik estimated, 5,000 "do nothing with
avails" because they serve rural, small-town communities. The No. 3,000 system in its
membership reaches a mere 350 or so subscribers, he noted.

That scenario, he explained, would involve the NCTC having
to "get permission from six to 12 basic-cable networks" to downlink their
satellite signals to Kansas City, strip out their local avail slots and strip in these
operators' spots. Those newly embedded spots would then be retransmitted up to a
different satellite transponder, and that signal would be received only by the
participating operators, he added.

There's been "some interest" expressed by a
half-dozen of the networks, Pandzik said, although he stressed that those preliminary
discussions are still very much in the "test-drive talk stage."

It's much too early to disclose the names of the
interested networks, he emphasized. Much remains to be done, he said, so this idea is
"not ready to roll out" in finished form.

Small operators, with entire headends that might cost
$20,000, can't afford to pay $12,000 to $15,000 per headend for digital insertion
gear, or even to hire ad-sales managers, he said, so they feel that this plan is "a
great idea."

Pandzik said he has talked with the various digital
insertion vendors and, although the NCTC "has not necessarily rejected them," he
felt that "the best horse" currently is one that'll keep these
systems' costs close to zero.

Pandzik said he intends to spend the rest of the year
talking up this idea with still more major networks, as well as with teleports and
satellite companies. Serious discussions with those in the technical and uplink/downlink
sectors will have to wait until the NCTC garners enough networks' permission to
proceed, he added.

The networks routinely tout the local ad-sales value of
their programming to affiliates, Pandzik said, "but those opportunities have been
valueless for the smallest operators." He described his proposal to beam commercials
to members' headends variously as "a mini-version of HITS [Headend in the Sky,
Tele-Communications Inc.'s digital-cable service]" and "our version of the
national interconnect" now being explored by at least five of the top six MSOs -- but
on a smaller scale.

Network officials were unavailable for comment at press
time, but Pandzik conceded that some programmers have expressed reservations. Their
reluctance is inspired by their perception that the NCTC's plan may represent
competition for ad sales -- at least, he said, until they realize that these systems
actually represent "the bottom 4 million subscribers in a 65 million [subscriber]
industry."

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