Drop-Kick Me, Cable, Through the Goal Posts of Life

Cable World, August 25, 2003

Byline: W. F. GLOEDE

Alas, summer is on the wane, even if the weather here on the East Coast has just turned summerlike, and for fanatics like me, that means football season is upon us. This year, there's a new twist in football, and for fanatics like me, that means it's time to fire up the hi-def set and the surround-sound system and get ready for the best NFL season since they introduced color back in the '60s. Or is it?

Certainly the games will be on. CBS, ABC and ESPN will produce three hi-def games per week among them, including every Sunday and Monday night game and most if not all of the playoff games that appear on those networks. Fox, which earlier made an ill-conceived decision to do digital on the cheap in the 480p format, will be on the sidelines this year. But it has realized the error of its ways and now plans to be up and running in full hi-def next year.

The problem is that these hi-def games will not be available to many, if not most, digital cable subscribers. Operators, with some degree of righteousness, have resisted efforts by the networks to exact significant license fees for their digital hi-def signals. Until now, this was the prudent course of action, because broadcasters could someday split those signals five ways, thereby overloading and perhaps even competing directly with cable systems. There would be no sense in paying them to do so, especially since in a mere three and a half years, the broadcasters will have to rely on cable systems to carry their digital signals to most of their viewers as they phase out their analog channels.

With the number of hi-def sets in use expected to pass 10 million by the end of this year, the time for dithering has passed. Add to that the urgency of the upcoming NFL season, during which DirecTV will be running cut-rate promotions on hi-def gear and offering the CBS hi-def game every Sunday afternoon and the ESPN HD game every Sunday night.

This leads me to Rule of Thumb No. 1, or thumb1 for wags, which is never underestimate the power of the NFL. No other sport or combination of sports - or even most other TV programming - can match the quality and consistency of the NFL audience, particularly when out-of-home viewing is taken into account. A bit of history here: It was the NFL Sunday Ticket package that drove DirecTV from an also-ran, mostly rural satellite service into enough homes for word of mouth and sight of eye to make it a viable national distribution service. Fans gather with friends to watch games, and when they see pro football in hi-def, they will be running down to the local Best Buy to buy the set and, unfortunately for cable, very likely lease or buy the satellite box and dishes.

Cable has had an advantage over satellite of late with offerings of digital tiers, VOD and high-speed data Internet service. That advantage could easily be nullified by the greater availability of hi-def fare on satellite, because, I submit, hi-def is more compelling than VOD or HSD. In other words, once those customers are lost, they may never be back.

I'm certainly not suggesting that operators should cave to broadcaster demands and start paying protection money to Mel Karmazin. Still, I suspect there is much jockeying afoot in Washington over digital must-carry and retransmission consent, with real negotiation over rights and carriage relegated to the back burner while the political maneuvering plays out. Why not get down to serious negotiations now, perhaps offering some of the ample commercial inventory held by every cable system to broadcasters in exchange for their hi-def feeds? Heaven knows, broadcasters could certainly benefit from the increased promotional exposure on cable as cable networks continue their inexorable march to ratings supremacy.

To turn the popular business lesson on its head, operators should understand that they are still very much in the railroad business (OK, TV business). Without a compelling video entertainment offering, all the HSD and telephony the industry can offer will only add up to make them competitors in cluttered marketplaces. With hi-def, VOD, HSD and telephony, the bundle rules, and only cable can offer that bundle.

In the new world of hi-def TV, it's first and 10 at the 20. This is no time to punt.