TV’s Turning Points : Technology and legislation will affect what and how we watch in 1992 and beyond

The New Year marks a dramatic pause in the history of television. On one hand, the industry is bursting with promising new technologies ranging from fiber-optic cable systems offering 150 channels to wide-screen, high-definition TV sets to the ultimate marriage of the television, computer and telephone.

On the other hand, the economy is in such a slump that the marketplace is resisting the introduction of these vastly superior products and television delivery systems, each of which would require an expensive overhaul by cable companies, TV stations or product manufacturers.

Meanwhile, the whole concept of broadcasting television programs for free over the airwaves appears to be heading the way of the railroads. The percentage of TV viewers watching the Big Three networks has dropped to an all-time low of 62%, compared to 90% a dozen years ago before cable.

“The networks are sinking because of the weight of their history,” said George Spitzer, a telecommunications marketing consultant. “I would not be surprised if within a few years--less than five--one of the networks disappears. It will become irrelevant as to how people get their signal, via broadcast or cable or fiber optics.”

Congress is caught in the middle of all this, assaulted by lobbying groups from all sides. New bills are piling up on Capitol Hill in an attempt to create legislation that will satisfy the struggling networks while making room for the new technologies. Something has to give.

No matter what happens, though, most TV analysts agree that by the turn of the century television as we know it today will no longer exist. And 1992 promises some early indications of what that future might look like.

The 150-Channel Cable System

On Wednesday, Time Warner Cable in Queens, New York, begins testing the nation’s first 150-channel, fiber-optic cable system. Fiber-optic cables are strands of glass that carry bits of information in the form of human conversations, television pictures or computer data. Roughly the diameter of a human hair, the tiny glass filaments have 30,000 times the capacity of the traditional copper wire used by telephone companies.

In time, all cable television will be carried by fiber-optics, though not before a competitive shakedown occurs. The Federal Communications Commission in October cleared the way for phone companies, which have already replaced the major parts of their cross-country networks with fiber-optics, to carry video signals. In effect, the move put big phone companies into direct competition with the cable TV industry.

These two giants, however, are battling in Washington for a future that may be decades away. The complete nationwide installation of fiber-optics could take up to 20 years and cost anywhere from $100 billion to $1 trillion, according to Henry Geller, a former FCC general counsel now teaching telecommunications policy at Duke University.

But that doesn’t mean you won’t see 150 channels on your cable system soon.

“Video compression” is an immediate technology that the cable industry will test across the country through 1992 and roll out as early as 1993. Video compression, in essence, turns the analog TV signal into digital information represented by binary numbers, requiring less space to transmit. Unlike conventional TV signals that can grow weak and fuzzy traveling over distance, digital signals result in a “perfect” transmission of information.

“Television is an illusion,” said Tom Elliot, vice president of engineering and technology for Tele-Communications Inc. “We’re simply improving on how we deliver the illusion.”

Multiplexing and the Rise of Pay Per View

With increased channel capacity, there will be an immediate demand for programming. Already, the sister pay-cable networks HBO and Cinemax are test-marketing in the West San Fernando Valley and elsewhere a plan to multiplex--stagger their movies on several channels to give viewers more opportunities to see them.

Basic-cable networks, meanwhile, are looking at splitting off into niches. MTV, for example, has announced intentions to break up into different musical genres, and the Family Channel hopes to launch a separate Cowboy Channel. Even broadcasting companies are turning to cable. The Fox network recently raised eyebrows with its test plans to time-shift the network’s over-the-air programming in 1992 so viewers who missed their favorite Fox show at night could watch it on cable the next day.

But, according to industry sources, the real gold mine in this new multichannel universe will be pay-per-view movies and super sporting events. Seismic rumblings could be felt throughout Hollywood in October when Fox Inc. chairman Barry Diller publicly contemplated releasing Fox movies for a one-time showing before their theatrical release on pay per view--for a huge price. He further advised all studios to jump onto the pay-per-view bandwagon and experiment with the medium.

Right now pay-per-view movie channels--where cable viewers dial a phone number to order a movie that shows up later on their cable bill--offer one or two top movie titles a night. “With 20 extra channels devoted just to pay-per-view, you can see repeat showings of the hit movies,” said president Jeffrey C. Reiss of Reiss Media Enterprises, which owns the pay-per-view channels Request TV and Request 2. “So instead of waiting to see a movie every other day, you’ll have a start time every hour, like in the big multiplex cinemas.”

Viewers will get a peek at the future of pay-per-view sports in July. Those who want more than NBC’s basic coverage of the Summer Olympics in Barcelona can, for a subscription fee ranging from $95 to $170, sit at home and flip between three channels of live expanded coverage using a special remote control with red, white and blue buttons. The “triplecast” from NBC and Cablevision will feature 1,080 hours of Olympic events.

“This is the first time there has been a product designed to give a viewer multiple-channel viewing, the electronic equivalent of a three-ring circus,” said Martin C. Lafferty, vice president of Olympics Pay-Per-View. “Really, this is for the generation of zappers who sit home with their remote controls and watch three different sporting events at once.”

Total U.S. television rights for the 1992 Summer Games cost $401 million, Lafferty said, which left NBC with a $100 million shortfall in advertising revenue. To help subsidize the network broadcast, which will be entirely tape-delayed because Barcelona is nine hours ahead of the United States, NBC is offering 24-hour coverage, live and on tape, of every single summer Olympics event on pay per view.

“This is a vision of the future that we hope evolves,” said Lafferty. (For the “triplecast” to be a success, 2.8 million homes must purchase it. In comparison, April’s top-drawing Evander Holyfield-George Foreman heavyweight fight was sold to about 2 million subscribers.)

“With this model, you have the small minority of enthusiastic sports fans, who are willing to pay a premium, underwriting the free network coverage for the mass audience,” Lafferty said.

The Continued Erosion of Network Television Audiences

ABC Network Entertainment President Bob Iger may have been laying a foundation for the inevitable before last fall’s TV season, when he told reporters at the semi-annual TV press tour that the networks will eventually have to give up some of their programming hours to the affiliate stations because between one-third and one-half of all network shows lose money in this economy.

“You will probably, in a short time, see fewer hours of network programming,” he predicted.

Since then, because of low ratings, ABC temporarily gave up an hour in late-night to its affiliates to program on their own. NBC ceded a morning hour, and there are rumors that CBS will soon follow suit in the morning. So far, prime-time has not been affected, but with weekend viewing levels as low as they are, sources say the time is not far away.

“I think what you’re seeing slowly is the dismantling of the networks as we know them,” said Fred Silverman, one-time network entertainment head of NBC and ABC. “Every time the networks give up a block of time back to their stations, what they’re doing is divesting themselves of what makes a network, which is programming for a group of stations. It’s a serious situation.”

One reason why the networks are giving up those hours is because many affiliates are preempting network programming anyway to air such popular syndicated shows as “The Arsenio Hall Show” and “The Oprah Winfrey Show.” And because there’s more money to be made in syndication, aspiring hosts--ranging from Bill Cosby to Whoopie Goldberg to Dennis Miller--are taking their act to syndication because they can make more money there.

“Syndication is a process whereby the stations can buy directly from the factory and eliminate the middleman,” said Tim Duncan, executive director of the Advertiser Syndicated Television Assn. “The network takes the show from Hollywood, gives it to the station and extracts most of the commercial advertising time in the show. That made sense when ratings were high and network compensation (to stations) was high. But the system is weak now.”

Warner Bros., which has traditionally done business with the networks, has reportedly offered to sell a couple of prime-time series to an independent group of stations. Duncan sees other studios getting involved in similar deals to form their own “mini-networks,” providing exclusive programming for stations one or two nights a week.

The Big Three networks, meanwhile, have remained calm in the eye of a swirling storm, maintaining confidence in the strength of the traditional network system. “This year the three network ratings so far are up over last year, and there is a stability there,” said David Poltrack, senior vice president of research and planning for CBS. “Barring a prolonged economic crisis, which would be devastating to the entire economy, sometime in 1992 there will be an economic turnaround.”

HDTV and Beyond

So round and round it goes, with the technological revolution in telecommunications outpacing the consumer market’s ponderous ability to swallow change and the government’s reluctance to legislate it.

The House Telecommunications Subcommittee and the FCC are currently wrestling with how to best usher in high-definition television (HDTV), which boasts a TV picture twice as sharp and clear as conventional TV. Some broadcasters, however, worried about the millions of dollars they will need to invest in HDTV transmission and production equipment, have called for a two-step approach through enhanced-definition television (EDTV).

The inferior EDTV promises wider screens--similar to a movie theater--and improved sound, but FCC Chairman Alfred Sikes has called EDTV a “technological mouse” compared to HDTV. A two-step approach starting with EDTV might push the installation of HDTV past the turn of the century. By that time, in all likelihood, there will be an entirely new and improved TV system on the horizon.

“The essence of the problem is lobbying by vested interest groups representing the established delivery services, who are hurt by rapid change,” telecommunications consultant Spitzer said. “HDTV, cable compression, fiber-optics--those cutting-edge technologies are a reality. Now what we need is cutting-edge politics.”