CABLE TV OFFICIAL SEES 1987 AS ‘WATERSHED’ YEAR

Cable television is just beginning to shed the mindset of a construction industry. We are just beginning to think of ourselves as a programming medium. --James P. Mooney, president, Natonal Cable Television Assn.

One day last week, as several hundred guests polished off yet another business lunch of chicken, James Mooney stepped up to the speaker’s podium to deliver his view of the state of cable television and did an unusual thing.

The president of the National Cable Television Assn. gave a 15-page speech without attacking the motion-picture and TV production studios in Hollywood or their chief Washington spokesman, Jack Valenti.

That’s a rare occurrence around here these days.

For the cable-television industry and the Hollywood studios appear engaged in a feud that threatens to become increasingly bitter as the cable industry enters a new phase of its deregulated existence in the video marketplace.

The battlefield is the television set and its channels. Potentially at stake are millions of dollars in programming and distribution rights.

There seems to be no dispute about one thing: Cable has come a long way since its infancy in the late 1940s, growing into a sophisticated service with satellite-delivered programming that reaches 42 million subscribers and is seen in 48% of all television households. Cable revenues are now $12 billion, compared to $2.6 billion in 1980.

And Mooney says 1987 will prove to be a “watershed” year for cable: 50% of all television homes will have cable; there will be a shift away from construction of cable systems toward programming, and the 1984 Cable Communications Policy Act will have its most powerful deregulatory impact.

“I can’t imagine being better positioned than the cable industry is now,” Mooney said recently.

But it is exactly that position that has Hollywood and cable at odds with each other over a wide spectrum of issues, ranging from ownership to signal carriage to original programming.

“Our anxieties stem from the fact that the Congress has put us and everybody else at a great disadvantage dealing with cable,” Valenti said in an interview.

Valenti, president of the Motion Picture Assn. of America, calls cable the great unregulated monopoly, dominated by a few large cable operators whose grip on the industry is increasing and dangerous.

“The whole aspect of an unregulated monopoly is menacing to the public,” he added.

Valenti wants the government to limit the number of cable systems that can be owned, just as it has done with commercial television stations.

Another nagging issue concerns the compulsory license fee. Since 1976, when federal copyright law was amended, cable operators have been allowed to pick up broadcast signals from far outside their service area. Instead of licensing the programs from their owners, as broadcasters must do, the cable operator simply pays a fee established by the Copyright Royalty Tribunal.

Last year, a major cable system brought a lawsuit challenging that policy. A federal district court judge ruled in favor of the cable industry, and as a result the annual fees paid by cable were reduced by about 40%. As one cable industry official said of the ruling, “It put the issue firmly back on the front burner.”

Valenti said that the compulsory license fee should be abolished and that cable operators should be required to negotiate with producers in an open market for the rights to carry their programs.

“Today, a cable system pays twice as much for postage stamps (that) it uses to mail out its subscriber invoices as it pays for all its distant-signal program importation,” he said.

Valenti is not alone in his criticism of cable. Bruce Christensen, president of the Public Broadcasting Service, also called cable a monopoly recently and complained about cable operators who have dropped public-broadcasting stations from their systems as a result of new federal rules that give them more freedom to choose what TV channels they carry.

Last July, Valenti sent a six-page memo to each commissioner at the Federal Communications Commission urging them to examine the danger of concentration of power within the cable industry, saying that “cable-concentrated power is larger, more muscular, than network power.”

The cable industry countered in November with its own white paper entitled “the compulsory cartel,” which complained that the motion-picture studios were stepping up their attempts to control programming delivery. “Theaters, broadcast television, VCR manufacturers, cable programmers have all felt the effects of Hollywood’s predatory practices,” the study said.

This argument was reiterated by Mooney during an interview in his office recently. He denied that cable is a monopoly and said that calls to restrain cable’s growth are really only diversions from the real issue, which is Hollywood’s concern that cable is on the verge of becoming a major distributor of original television programming.

According to Mooney, the major motion-picture studios want Congress and the Federal Communications Commission to impose constraints on cable to prevent that from happening, and it is there that the next cable-Hollywood battles could come.

Hollywood’s instinct “when they encounter a potential new distributor,” he said, “is to try to strangle them. They seem to have a habitual attitude toward these things which puts a premium on controlling the supply rather than expanding it.”

“One of the messages we are trying to transmit here is that we are aware of that and we don’t intend to roll over so easily as the broadcast networks (did),” he said.

This new frontal attack on Hollywood has put Mooney and his trade association in a new public role and brought him face-to-face with Valenti, one of the top lobbyists here.

Mooney appears ready and eager for the fight.

A 43-year-old lawyer, he came to the National Cable Television Assn. in January, 1981, as vice president of government relations after eight years working for former Rep. John Brademas (D-Ind.).

Those who know Mooney describe him as a “superb trade-association president” who is smart, thorough and methodical in his work, and who has a wry sense of humor mixed with an astute sense of politics and a desire “to get down and fight as hard as he can.”

“He is bright, analytical and very confident that he knows what he is doing,” says one cable industry official.

“I think he’s very effective,” added close friend William Lilley III, a former CBS executive who now heads the American Business Conference.

Mooney is described by those who know him as reserved and low-key--some say a stuffed shirt--but someone who also can be merciless in negotiations and, occasionally, in his treatment of people, including his staff.

Armed with a number of regulatory successes in recent years, including the legislation that deregulated local cable rates this month, Mooney is looking ahead to the time when cable increases its role as a distributor of original programming.

“We’re going to have a lot more money available to put into program creation,” Mooney said.

At the same time, he said that cable must provide programming sufficiently different than that of the broadcast networks in order to compete with them. “I don’t think in the long term we can successfully compete with broadcast networks by doing their thing,” he said.

In the process, he expects new programming ideas to impact on the way Hollywood functions. “As opportunity beckons, creative people will respond and the natural forces implicit in such a process are likely to diminish the proportionate share of the overall pie held by the studios, unless the studios get on top of the opportunity themselves real quick,” he said.

“I don’t portend to be a creative person,” he added. “But I have a fairly sharp sense of history and I know that people always tend to regard the social and technologial environment they live in at the moment as having exhausted all the possibilities.

“If I were capable myself of figuring out what new formats might prove to be commercially successfully, I would go out and do it myself,” he said with a laugh.

Asked when that might be, he said, “Maybe in my next life.”