Hello, Baby Bells? Hollywood Calling
If you listened very carefully when U.S. District Judge T.S. Ellis III freed the Baby Bells to offer video services over their own phone lines, you could just make out Ethel Merman singing, “There’s No Business Like Show Business.”
The only folks more thrilled with the ruling than the seven Baby Bells are the peddlers and packagers at CAA, ICM and the William Morris Agency--and so they should be. With the stroke of a judicial pen, there are now seven aspiring multimedia giants with checkbooks bigger than their brains, hungry for content to pipe down their phone lines.
They’ll need the tender ministrations of experienced software Sherpas to guide them through the wilds of Wilshire Boulevard. They know Hollywood is littered with corporate carcasses of big spenders who tried to buy their way to power and influence. Presumably, that’s why the Baby Bells will be delighted to hook into the sort of network that requires no investment in copper wire, fiber optics or cellular frequencies--you know, the sort of network that eats at Spago.
Or maybe these telephonic Thalberg wanna-bes will take their dollars and participate in limited partnerships for multimedia and video software development, just like Ma Bell, aka AT&T;, has been doing: a few million here, a few million there and pretty soon it adds up to real money.
Perhaps the Baby Bells will mimic sibling U.S. West’s recent multibillion-dollar stake in Time Warner. A possible Pac Bell and Paramount? Ameritech and the Tribune Co.? Bell South and Walt Disney? Nynex and Wheel of Fortune/Jeopardy syndicator Kingworld? How about Bell Atlantic and Sony?
Indeed, if the ruling is affirmed, there’s no regulatory reason why a Baby Bell shouldn’t want to buy a piece of NBC or CBS or Capital Cities/ABC. Sometimes it takes a network to make a network.
While this decision would free the Baby Bells to compete directly with the local cable companies, it’s shortsighted to think that this is a story about who gets to pipe “Roseanne,” “Tales From the Crypt” and the Home Shopping Network into your home.
That’s important, but it doesn’t go far enough. This ruling is more about content, characters and intellectual property than copper wires, cable and fiber optics.
The ruling--which effectively strikes down as unconstitutional a 1984 Cable Act provision barring telephone companies from providing video services to their customers--isn’t merely about turning the local monopoly telephone company into a local cable company as well. It’s about software, it’s about programming, it’s about who gets to own the information/entertainment that appears on your TV/PC screens.
Judge Ellis’ ruling not only permits the Baby Bells to distribute video programming, it allows them to actually own what they transmit. You may recall that such cross-ownership of content and distribution has always been a legally volatile mixture: The movie studios were forced to divest their theater chains and rules were imposed on the three TV networks to prevent them from owning the programs they broadcast.
The Baby Bells have a direct financial incentive to own the programs they can now legally distribute on their networks--just as Time Warner does with HBO, Viacom does with the MTV Networks and Tele-Communications Inc. does with Barry Diller’s QVC. In other words, the court has made each and every Baby Bell a player. Wouldn’t you want to own the rights to Mickey Mouse?
So if TCI, Time Warner and Viacom say they want to offer more than 500 channels of programming, well, so will Bell Atlantic, Pac Bell and Nynex. Let the bidding wars begin! Does Time Warner want to put HBO on the local cable franchise? Or on the local Baby Bell loop? Doesn’t Bell South’s negotiating position get stronger if it happens to own the rights to all the Hanna-Barbera cartoons? Just how long do you think it will be before one of the Baby Bells is funding--and then distributing--an interactive video games channel?
Just as Sony and Matsushita felt driven into making multibillion-dollar software investments--in the form of Columbia Pictures and MCA--to complement their hardware portfolios, the Baby Bells will now feel the same imperatives to make software investments to complement liberated local networks.
That’s why Hollywood agents, studio execs and independent producers--not to mention the multimedia jocks in Silicon Valley--are all trying to keep from drooling.
Wasn’t it just the other week that these same Baby Bells were clamoring to enter the long-distance market to compete against AT&T; and MCI? So many choices. Gee, do you think the folks at CAA, ICM and William Morris might have any suggestions?
