Turner Stirs Murdoch Backlash at Gathering

Ted Turner, vice chairman of Time Warner Inc., wasted no time Monday at the annual cable convention meeting to enlist industry support for his ongoing tangle with News Corp. Chairman Rupert Murdoch.

Several cable executives said Turner is using the cable gathering to galvanize rising anti-Murdoch sentiments. Murdoch became the enemy of the cable industry last month when he announced plans to launch a Sky satellite television service that he says will bury cable operators.

The cable operators “are juiced up already,” said Turner, who has kept his efforts behind the scenes. “They don’t need me.”

Although Turner has long sparred with Murdoch, their rivalry escalated in the fall when Time Warner refused to carry the Fox News Channel on its New York cable system in favor of upstart MSNBC, a joint news venture of NBC and Microsoft Corp.

News Corp. filed suit against Time Warner, the nation’s second-largest cable operator, claiming it had reneged on a deal to protect its own news channel, CNN.

Cable operators say Turner is encouraging the backlash toward News Corp. Many cable operators were promising to block Murdoch’s expansion in cable even before the convention by refusing to carry new channels or expand existing ones such as Fox News and fX.

Meanwhile, News Corp. took defensive steps of its own. It announced a special promotion with DirecTV, the leading satellite TV service, under which it will underwrite the cost of a dish and bring consumer costs down to $49 until late April.

The promotion is tied to News Corp.’s efforts to stir up interest in a new regional sports channel, Fox Sports West 2, which is carrying Dodger games. The Sky announcement made cable operators in Southern California more adamant about rejecting the channel. They object to Fox’s attempts to charge them 75 cents per subscriber on top of the $1 they now pay to carry Fox Sports West.

Another hot topic at the cable convention is the outlook for Tele-Communications Inc. The nation’s leading cable company is having a rocky year; its stock fell, bond ratings agencies threatened to downgrade its debt, system upgrades were delayed, co-founder Bob Magness died, and layoffs and a management shake-up roiled the company.

Earlier this year, Chairman John Malone brought in a widely regarded cable operator, Leo Hindery, formerly head of the Intermedia cable group, to become president. Hindery addressed the opening gathering, talking broadly about past mistakes and the promise of new services.

“We’ve made the mistake of over-promising in the past. We’ll deliver this time,” he said, adding that the rate hikes over the last year are a new reality of the business that customers need to be educated about. “We’ve done a miserable job in taking customers through the process. We have to get customers through the cost structure.”

Sources at the convention were also buzzing about a plan TCI is studying to help it rein in the high debt that is depressing its stock. Under one scenario, TCI would break its 14-million subscriber homes nationwide into six or seven regional groups, some of which could then be spun into 50-50 ventures with other cable operators.

One cable executive says such a plan would help solve TCI’s two biggest problems: its heavy debt and its mediocre local management. The ventures would assume TCI debt while also managing the system, allowing the company to further shave its work force.

Cable industry sources say TCI’s reputation for poor customer service stems in part from its tradition of centrally managing its systems from its Denver-area headquarters, giving local operators little power over programming decisions.