CABLE-TV INDUSTRY BLASTS MAJOR STUDIOS : Report Criticizing ‘Hollywood’s Ever-Increasing Grip Over Production, Distribution, Exhibition of Programming’ Latest Event in Ongoing Feud

The nation’s cable-television industry fired a new round of ammunition Tuesday at the major Hollywood studios by releasing a report criticizing the companies’ “ever-increasing grip” over the production, distribution and exhibition of films and television programs.

The report by the National Cable Television Assn. is the latest development in an ongoing, periodically heated feud between the industries over two valued commodities: product and viewers.

“Hollywood’s ever-increasing grip over the production, distribution and exhibition of programming has resulted in an openly anti-competitive environment in the motion picture industry unparalleled since 1948, when the Supreme Court . . . forced the major Hollywood studios to divest the theaters they owned,” the report charged.

It contended that if the studios continue to control the supply of movies and programming, cable’s prospects for achieving its potential “as a medium of abundance and diversity . . . will be dimmed.”

As expected, the findings were immediately disputed by Jack Valenti, president of the Motion Picture Assn. of America, who has been leading the counterattack on cable by charging that the industry is a monopoly that is unsupervised and unmonitored.

“This is the cable industry indulging itself in one of its periodic fits of morality,” Valenti said of the report.

The report also charged that:

--Small, independent movie theater owners “face a dwindling supply of films” and are “being choked by the vertically integrated studios,” which now control a substantial and growing number of movie theaters.

--Independent film makers have “a less than 50-50 chance of seeing their films distributed to neighborhood theaters” because their access to distribution is increasingly being cut off by the studios.

--Hollywood studios have been actively buying television stations, and their broadcast outlets now reach more than 30% of all TV homes, not including “Fox’s network of stations, which reach 80% of all TV homes.”

“If market power to limit program diversity resides anywhere, this power resides in the motion-picture industry,” the report said.

The cable industry said that its four largest operators comprise only 28.9% of the entire cable marketplace, and that TCI, the largest cable system operator, reaches 14% of the nation’s 43 million cable subscribers.

The report, a supplement to another document issued by the cable association in November, was entitled “The Compulsory Cartel: How Hollywood Is Muscling Independent Theaters, Producers and Television Stations.”

“They (cable operators) are trying to hide the fact that cable systems are a natural monopoly,” Valenti said in an interview. “The cable industry is frightened that we are going to go to the Congress about their monopoly, and they are right.”

Valenti said that television viewers who don’t like one TV station can switch to another channel, while moviegoers can choose a different theater. But cable subscribers, he added, “don’t have anyplace to go.”

“What this is all about is that cable is now throwing down smoke in hopes that congressmen stumbling in this obscure smoke screen will not discover the proof of cable’s natural monopoly,” Valenti said.

“They are like magicians with pigeons coming out of their hat, but the pigeons are sick,” he added.

Cable industry officials, who spoke with reporters on the condition that they not be identified, maintained that the report was issued “to answer rhetoric with analysis.” However, they declined to discuss what steps the cable industry will now take.

They insisted that the situation had grown more serious with recent studio acquisitions of theaters and interests in theater chains. According to the report, major studios own or have significant interests in more than 2,000 screens across the country--or 9% of the total 22,384 screens in the United States.

Valenti challenged the statistics, saying that of MPAA’s members, Gulf & Western (which owns Paramount Pictures) owns 2.1% of the total movie screens and that Cineplex-Odeon (of which Universal’s parent company, MCA, owns 50%) has 4.3% of the screens.

The cable industry report also maintained that as a result of Hollywood’s growing control over theaters, “small, independent theater owners, who historically have borne the brunt of Hollywood’s anti-competitive behavior, face a dwindling supply of films as more and more films are diverted to their studio-owned competitors.”

As for independent film makers, the report said that “while independent film makers are turning to Hollywood, the largest Hollywood studios are increasingly cutting off these producers’ access to distribution.”

For the cable industry, the report’s message was simple: “The motion picture industry is in no position to level accusations of market power at the cable industry.”