NOTEBOOKS

Television Digest with Consumer Electronics, May 3, 1999

Rejecting judge's finding that doing so would be illegal, Brunswick, O., April 27 denied Cablevision Systems' request for franchise renewal. Move follows years of battling between MSO and city over whether Cablevision met franchise requirements, particularly for public, educational and govt. (PEG) access facilities and institutional network (I-Net) construction.

"I'm outraged," said Sheila Mahony, Cablevision senior vp-communications, govt. and public affairs. Cablevision will appeal, she said, and "there's no question we'll be vindicated in federal court." Appellate case could be "very important," industry lawyer told us, because it could clarify precedent set by case in Sturgis, Ky. Cablevision Ohio spokeswoman said case will set example for "other communities that are asking for goodies that exceed what we believe the community needs are." Cities' lawyer Frederick Ellrod said there are "so few cases on renewal" that decision could have "influence out of proportion to its size." Brunswick has 7,200 subscribers. ------ ESPN for 2nd straight year has increased carriage rate about 20%, citing cost of $4.8-billion, 8-year NFL package and other sports rights. In return, network said it will give operators more local ad time. On average, operators will have to pay nearly $1 per subscriber monthly to carry ESPN in coming year. Increase comes at time when some MSOs have vowed to keep cable rate increases at about 5% annually so as not to disrupt recent rate deregulation. ------ Senate Commerce Committee will have markup May 5 for bill that includes international satellite reorganization (S-376). Meeting will be 9:30 a.m., Rm. 253, Russell Bldg. Late Fri., AT&T, MCI Worldcom and Sprint sent joint letter to Senate Communications Subcommittee Chmn. Burns (R-Mont.) along with statement that they, as satellite users, weren't given opportunity to testify at hearing. Companies, speaking as Satellite Users Coalition, want legislation to provide for direct access to Intelsat by U.S. carriers, and said that shouldn't have to wait until Intelsat is completely privatized. They said 94 countries have some form of direct access now, and new policy could lead to cost savings. ------ CBS agreed to buy KEYE-TV (Ch. 42, CBS) Austin from Granite Bcstg. for $160 million. If deal, along with previously announced purchase of KTVT (Ch. 11, CBS) Ft. Worth-Dallas, is completed, CBS would own stations reaching 34% of U.S. households, up from 32%. It already owns one AM and 3 FM stations in Austin. CEO Mel Karmazin said Austin market is 2nd fastest growing in U.S. ------ Library of Congress (LoC) didn't meet April 28 deadline for submitting to Congress recommendations for aiding distant learning, staffer said. She said recommendations are likely to be available this week. LoC was required by Digital Millennium Copyright Act to study how to promote distance education through digital technologies while balancing rights of copyright owners. ------ Gemstar International acquired Electronic TV Host, Web-based electronic programming guide service, from TVH Inc., it said, terms not announced. TVH Inc. produces print cable TV guides, and will market Gemstar's electronic offerings to its cable clients. ------ Despite steady decline in number of direct-to-home (DTH) subscribers, C-band remains viable alternative for delivering video services via satellite, analysts and operators said. Case in point is GE Americom's $400 million investment in 2 new C-band-only satellites, GE-7 and GE-8. Each will carry twenty-four 36 MHz, 20 w C-band transponders and will deliver analog and digital video services and cable program distribution, in addition to providing backup capacity for other spacecraft, company said. "It's no secret that the number of C-band users has been shrinking since DBS took off, but C-band is still a thriving business," Douglas Lindquist, senior vp-satellite markets, Playboy Entertainment Group, said. Although June 1994 launch of DirecTV was touted by some observers as "beginning of the end" for use of C-band for satellite TV, many cable and radio broadcasters and some telecom companies continue to rely heavily on frequencies in that band, he said. Although Lindquist said "doomsayers" predict C-band business will be gone in 5 years, more likely result is that number of DTH subscribers will drop from current 1.8 million to "somewhere between 1.2 and 1.5 million and stay in that range for the foreseeable future." Satellite Industry Assn. Dir. Clayton Mowry said industry's ability to retain more than one million DTH subscribers in C-band would be sufficient to dissuade FCC from heeding calls by some terrestrial wireless users that frequencies should be allocated to them. ------ Intel is making push to serve ISPs, with products and services that would allow them to move from offering only Internet access to becoming providers of value-added services, Senior Vp Sean Maloney said at ISPCon in Baltimore. At same conference, AT&T Internet Services Pres. Kathleen Earley announced addition of wholesale Digital Subscriber Line (DSL) to Internet Private Label portfolio for ISPs. Earley declined to answer questions about AT&T's counteroffer for MediaOne. Cable modems and DSL have different broadband niches and AT&T is offering both for ISPs, she said. DSL is good for businesses and telecommuters, while cable modems are more consumer oriented, Earley said: "Cable only passes 25% of businesses." ------ It's "impossible to reconcile" broadcaster claims, in Satellite Home Viewer Act proceedings, that TV antennas can provide good TV reception to most households with claim in DTV must-carry case that antennas aren't acceptable substitute for cable carriage, Time Warner said in FCC filing: "NAB never claimed in its digital must-carry pleadings, nor is there such evidence, that digital broadcast transmissions pose any greater technical barriers to reception than analog broadcasts." Improvements in DTV receivers and antennas also will mean that antennas are "less intrusive on the core free speech rights of cable operators" than DTV must-carry, Time Warner lawyer Arthur Harding said. ------ British govt. wants to set date as soon as possible to complete transition to digital TV from analog, Bcstg. Minister Janet Anderson said. She told Media Trust conference in London that fixed date would "give industry and consumers confidence in making their investment and purchasing decisions." However, Anderson said, "this can only be done on the basis of a properly considered strategy set against the background of actual digital services winning public acceptance." Ministry expects to make announcement on transition before summer, she said. ------ House Telecom Subcommittee postponed scheduled May 4 hearing on broadcast ownership. New date hasn't been announced. ------ U.S. Satellite Bcstg. (USSB), in final earnings report as independent company, said it lost $9.1 million in first quarter, same as year ago, on 20% gain in revenues. USSB took $5.7 million in charges related to pending merger with Hughes' DirecTV. It added 164,000 subscribers, to end quarter with 2.1 million. USSB also set May 20 for shareholder vote on proposed merger. In proxy, it said Hughes first proposed merger May 28, 1998, when Chmn. Michael Smith sent letter outlining $12.50-per-share offer. USSB board rejected price as not reflecting "adequate valuation" for company, but negotiations continued. Hughes raised bid to $18 in Nov. and companies reached accord following month. As part of merger, USSB CEO Stanley Hubbard and Exec. Vp Robert Hubbard signed 4-year noncompete agreements and will receive $100,000 annual fee to serve on DirecTV advisory board. DirecTV also agreed to carry 2 channels of DBS programming that Hubbard Bcstg. is to develop in next 7 years. DirecTV also will continue distribution of USSB's All News Channel for 7 years, proxy said, paying $2 million first year, increasing to $5 million in 5th. ------ Hughes Electronics said it completed long-awaited acquisition of Primestar's medium-power business. DBS operator said closing of deal immediately adds $126.5 million revenue from 2.3 million Primestar subscribers (Primestar reported revenue of $55 per subscriber). DirecTV now has 7 million subscribers while sole remaining DBS competitor EchoStar has 2.1 million. Deal, announced in Jan., was delayed by Primestar bondholders' objection to terms of debt repurchasing. More than 870 Primestar employees accepted jobs with DirecTV, which will maintain Denver hq for 2 years as it moves Primestar customers to its DBS service. DirecTV also said it will acquire Boise call center from TCI. ------ Internet Ventures Inc. (IVI) took its leased access campaign to Washington, requesting capacity from AT&T Broadband & Internet Services' District Cablevision system. IVI has filed several similar applications elsewhere to provide Internet services over leased access capacity, but this is first in city where it isn't ISP already. Company said it will "acquire, build or partner with" area ISP once it obtains capacity. IVI recently relaunched its Web site --- www.perki.net -- as "broadcast portal" composed solely of TV feeds, many from foreign countries. ------ First meeting of congressionally appointed commission on electronic commerce will be June 21-22 in Williamsburg, Va., said spokesman for Va. Gov. James Gilmore (R). Gilmore is likely to be named chmn. of 19-member panel. Way was cleared for commission to meet after Senate Majority Leader Lott (R- Miss.) named Ore. local official to group, leading National Assn. of Counties and other groups to drop their lawsuit challenging makeup of panel. ------ 3Com became 3rd cable modem manufacturer, and first major one, to be certified by CableLabs for interoperability, and can brand its retail modems as such. Thomson and Toshiba, each with much smaller market share, also have been certified. More than dozen companies are seeking CableLabs certification, and lab has just completed 2nd of 7 certification "waves" for 1999. ------ General Instrument (GI) and Cisco Systems will offer advanced dual- return cable modem permitting both radio frequency (RF) and telephone return paths, companies said. New system will combine GI's Data Over Cable Service Interface Specification (DOCSIS)-based SB2100D cable modem and Cisco's DOCSIS-qualified cable modem termination system and universal access server. ------ Congressional Internet Caucus plans ambitious schedule for next few months, Caucus Advisory Committee Chmn. Jerry Berman said. He said Caucus planned major programs addressing Internet content, privacy, encryption and broadband issues. ------ Tex. cable open access bill received 7-hour hearing last week and could clear House State Affairs Committee this week. Staffer for sponsor, Rep. Kim Brimer (R), said he still was assessing whether measure (HB-3393) had necessary support. ------ FCC Chmn. Kennard said he's "pleased that the DTV transition is largely on schedule." Comment was reference to airing of DTV programming by 61 stations, well above 40 in top-10 markets that Commission had required to be broadcasting DTV by May 1. "The questions surrounding DTV implementation are no longer whether, or when, but how to best implement DTV and what new opportunities exist for broadcasters in a world of convergence," Kennard said. He said more than 270 stations have filed for DTV CPs, with more than 150 already granted. FCC requires only 120 stations in top-30 markets to be on air by Nov. 1. "The DTV train is rolling out of the station, and broadcasters are climbing aboard," Kennard said. Remaining issues, he said, include DTV set manufacturing, increasing amount of programming, antenna towers, cable compatibility, must-carry, copyright protection. ------ Senate Antitrust Subcommittee May 6 will mark up bill (S-467) by Senate Antitrust Subcommittee Chmn. DeWine (R-O.) and senior Antitrust Subcommittee Democrat Kohl (Wis.) to set time limits on FCC approval of mergers. Markup will be 2 p.m., Rm. 226, Dirksen Bldg. DeWine and Kohl are planning amendment to measure, nicknamed "FCC Shot Clock Bill" because Kohl owns NBA's Milwaukee Bucks, that also would put 90-day limits on smaller mergers (under $15 million) -- change from original bill that would give FCC 180 days for larger ones. Amendment also would give FCC ability to give itself 90 extra days to approve mergers. ------ Discovery Communications will buy into Fanfare, cable classical music network founded by WETA-TV Washington, parties announced April 26. Partnership with Discovery, which is part-owned by Liberty Media, could help WETA-TV secure cable carriage for Fanfare by its Thanksgiving Day launch. WETA-TV CEO Sharon Rockefeller said Discovery's support "is a strong indication of [Fanfare's] potential value to cable television providers." Fanfare Chmn. Jack Clifford said Discovery is first of what he hopes will be 8 cable programmers taking stakes in new network. ------ Worldwide cable modem market will grow to 35 million units in 2005 from one million in 1998, Semico Research Corp. said in study. Study predicted 65.2% compound annual unit growth rate, with revenue at 32.8% annual increase, to $1.877 billion in 2005 from $258 million last year. Report predicted cable operators would have lead in terms of volume over other high-speed Internet providers but must improve technology and marketing "or they run the risk of being eclipsed by more robust solutions" --www.semico.com. ------ As expected, FCC formally approved $4.4 billion merger of Jacor and Clear Channel following Justice Dept. approval of spinoff plan (TVD Oct 12 p4). Clear Channel agreed to divest 18 stations that had raised competitive concerns, many of them to minority-owned groups, including stations in Cleveland, Dayton, Jacksonville, Louisville, Tampa. FCC action includes waiver of one-to-market rule, although conditioned on outcome of Commission's ownership rulemaking. Clear Channel also is allowed to establish temporary trusts to hold stations to be divested. ------ DirecTV said it bought stake in TiVo, making it latter's largest corporate investor, with more than 10% of outstanding shares. Terms weren't disclosed. DBS operator said it will give TiVo bandwidth for creation of broadband data and video channel. DirecTV earlier had announced agreement with TiVo and Phillips to produce DirecTV branded receiver allowing viewers to get satellite programming and personal TV service in one unit. ------ Because it's been more aggressive in production of broadband content, Fox News Online (FNO) was awarded multiyear content agreement by AtHome Network as broadband content service's premier news provider, latter's spokesman said. CNN, which had been premier content provider in year-long trial, will continue in same role on news channel, he said. Terms weren't disclosed. FNO develops programming specifically for broadband platform instead of using HTML-coded content, said Scott Ehrlich, exec. producer, News America Digital, News Corp. affiliate that produces Fox News Online. Because broadband is closed system, content providers know what's on client end and can tailor content to maximize capabilities, he said. FNO also has agreement to provide news content to Road Runner. ------ Sinclair should be disqualified from holding license for KOKH-TV (Ch. 25, Fox) Oklahoma City because of "evasions and deceitful conduct" in bid for approval of acquisition from Glencairn Ltd., Rainbow/Push said in FCC filing. Group said Sinclair has virtually controlled Glencairn, although control wasn't disclosed to FCC, and Commission "has sufficient evidence to place Sinclair's and Glencairn's authorizations in a Sec. 312 revocation hearing now." ------ Group owners representing 415 radio stations requested package of information on in-band, on-channel (IBOC) digital audio broadcasting system in first week it was available, said proponent USA Digital Radio. CEO Robert Struble said number "exceeded our expectations." ------ Rep. Markey (D-Mass.) will keynote annual conference on Children & TV June 28 at National Press Club, sponsored by Annenberg Center. Other speakers include Bruce Friend of MTV, Kathy Quattrone of PBS, Robin Schwartz of NBC, Christopher Keenan of WB TV -- 202-879-6700. ------ DirecTV distributor Galaxy Latin America received exclusive contract to provide HBO premium satellite programming in Latin America and in Greater Buenos Aires, companies said. ------ Speakers at Bcst. Cable Financial Management conference May 17-20 in Las Vegas are to include Paxson Chmn. Lowell Paxson, CNBC Pres. William Bolster, BET Chmn. Robert Johnson, Susquehanna Radio CEO David Kennedy, Broadcast.com Pres. Mark Cuban, Hearst Bcstg. CFO Ronald Doerfler, Intervox Communications Pres. Peggy Miles, ICTV Pres. Wes Hoffman, Washington Post- Newsweek Interactive CFO Eric Koefoot -- 847-296-0200. ------ Liberty Media should recover its 1997 $15-million investment in Ascent Entertainment Group's Pepsi Center sports complex in Denver, Ascent said, as part of Ascent's sale of Center and sports teams Denver Nuggets and Colo. Avalanche. Ascent said it's selling properties to William and Nancy Laurie of Columbia, Mo., for $260 million cash and $140 million financing, pending approval of NBA and NHL. ------ Microsoft created Streaming Media Div. combining existing Consumer Windows and Business and Enterprise Divs. It said reorganization will allow it to focus on development of streaming media technology. Anthony Bay was named gen. mgr., with Senior Vp James Allchin in charge of Div. ------ AT&T Broadband & Internet Services bought 28,000-subscriber cable system from Cable Communications Co-op of Palo Alto. AT&T said it will upgrade system for advanced services in "near future." System serves Atherton, E. Palo Alto, Menlo Park, Palo Alto and parts of Santa Clara and San Mateo counties. Terms weren't disclosed. ------ Steeplechase Media will integrate Big Entertainment (BigE) link in its interactive and broadband projects allowing customers to purchase entertainment-related merchandise online, companies said. Agreement gives consumers access to interactive TV systems based on Advanced TV Enhancement Forum (ATVEF) standards. ------ Snap.com claims to be fastest growing Web site, based on March ratings by Media Matrix. Company, owned by NBC and CNET, said reach had increased 43.6% and unique visitors 51.7% since Jan. Hotbox.com was distant 2nd in both, at 6.1% and 11.6%, respectively. ------ United International Holdings bought remaining 60% of VTR Hipercable S.A. that it didn't own for $258 million, giving it Chile's largest cable TV and competitive LEC, with network passing 1.6 million homes. ------ Shaw Communications said it agreed to purchase Fundy Communications and its 192,000 subscribers in New Brunswick, Canada, for $460 million (Canadian), $150 million of which will be financed by issuing new Class B Shaw shares. ------ Moody's confirmed Baa2 rating for Cox following its purchase of Media General's 260,000 customers in Fairfax County, Va., for $1.4 billion, at $5,385 per subscriber. ------ Owners of WLEX-TV (Ch. 18, NBC) Lexington, Ky., agreed to sell station to Cordillera Communications for $99.1 million, broker Patrick Communications said. ------ Cable hardware manufacturer Blonder Tongue Labs said income plunged to $443,000 (5 cents per share) in quarter ended March 31 from $1.005 million (12 cents) in same period last year. Sales declined to $13.8 million from $15.1 million. ------ America Online (AOL) and Chancellor Media declined April 30 to comment on speculation that former is considering equity investment in exchange for exclusive rights to broadcast programming from Chancellor's radio stations over Internet.