Optimism Rules at Cable Expo : Industry Is Seen to Be Depression-Proof
Not even predictions of a looming recession could dim the optimism among cable programmers and operators hawking their programs and new technology at the Western Cable Show in Anaheim this week.
Most cable executives attending the annual convention insisted that even if the country experiences an economic slide in the next few years--as some economists are predicting in the wake of the Oct. 19 stock market crash--families will look at basic cable and the pay channels as entertainment bargains rather than luxuries.
“In a major economic downturn, I don’t think families will make a decision against inexpensive home entertainment,” said John F. Cooke, president of the Disney Channel. “I think that having and watching the Disney Channel in the home will be done in lieu of three-day weekends and trips to the lake.”
A spokesman for Home Box Office agreed that a recession would probably help his pay-TV channel significantly. During the country’s last recession in 1979-80, a time of skyrocketing cable growth, HBO picked up new subscribers at an “extraordinary rate,” said David Pritchard, HBO’s director of corporate affairs.
“Entertainment spending is counter-cyclic,” Pritchard said, pointing out that the movie industry boomed during the Great Depression of the 1930s. “In depressed times, people have a tendency to look for an entertainment opportunity with a modest price attached to it. And at $10-$12 a month, movie channels are probably the best form of home entertainment.”
Pritchard and Cooke were among about 8,000 people in attendance at the 19th annual cable conference at the Anaheim Convention Center, sponsored by the California Cable Television Assn. and the Arizona Cable Television Assn. The three-day meeting ends today.
Cooke suggested that while specialty programming services such as the Disney Channel, priced at about $8 a month, would thrive during recessionary times, other, more expensive pay channels, whose programming duplicates what may also be found in movie theaters and on videocassette, might not fare as well.
Indeed, every year after Christmas, as people find new VCR’s under their trees, subscriptions to pay movie channels decline, said John Malone, chairman of Tele-Communications Inc., a huge cable conglomerate.
Renting movies on cassette for a buck a shot seems at first like an attractive alternative to paying $12 for a movie channel each month, Malone said. But after a few months, Malone said, many of these new VCR owners tire of the hassles of going out to the video store and frequently not finding the movie they want, and they reorder their pay channels. Representatives of the pay channels expressed confidence that in a recession, especially if the cost of gasoline rises, cable will once again beat back its VCR competition.
Optimism about the future of cable no matter the state of the American economy was so high at the convention that Ted Turner, chairman of Turner Broadcasting, declared that everyone else in the news and entertainment business was running scared. He boasted that cable would soon steal billions of dollars in ad revenue from the three networks.
Turner said that the three major networks built their audience monopoly by enticing people to watch their favorite show week after week. But network audiences have been declining steadily over the past few years, Turner gloated, because cable has helped break those old network habits.
“And once you break those habits and people go for the event of choice each evening,” Turner continued, “they’re playing into our hands.”
In celebration of such bold predictions and to highlight their newest innovations, many of the cable networks’ convention exhibits rivaled the actual programming they put on the air.
The Disney Channel had Mickey Mouse posing for pictures with conventioneers. The Playboy Channel hired Miss July to autograph revealing pictures of herself. The Fashion Channel put on a fashion show. The Christian Broadcasting Network featured Christmas carolers and Santa Claus distributing gifts. Galavision, the Spanish-language pay-TV channel, served up tacos. And the Travel Channel constructed its exhibit in the shape of a jumbo jet, complete with several rows of plush first-class seats.
It was enough to make visitors expect the Weather Channel to whip up a hurricane--or at least a few wispy clouds overhead.
But amid all the showmanship, the backslapping and the party jokes, there was one serious word on everyone’s mind: “penetration.”
At present, about 50% of the nation’s households subscribe to cable. The cable industry is determined to drive that figure up to 70% in the next few years.
The way to do that, many executives said, is to avoid the broad-based programs found on traditional television networks and to encourage the growth and promotion of specialty channels such as Arts & Entertainment, Discovery and Nickelodeon.
Most representatives of these basic cable channels suggested that the big cable networks such as CNN, ESPN, HBO and MTV have done all they can to bring the industry to its current level of success. Now, they said, the smaller networks must position themselves to lure infrequent television viewers over to cable.
Tom Freston, president of MTV Networks, said that the public still perceives cable as the great purveyor of broadcast reruns and that only aggressive leadership in developing original cable programming will help shed that image. As an example of that kind of creative programming, Freston pointed to Nickelodeon’s game show for children, “Double Dare,” whose syndication rights the network recently sold to Viacom.
While some cable operators balked at that idea, fearing that the availability of original cable shows on broadcast television would be counterproductive in cable’s drive for new subscribers, Freston argued that “it is a good statement about the creative leadership of cable to have its older programming move to broadcast.”