NBC, AT&T; Forge New Partnership

Cable customers will be able to watch more Olympics coverage than ever before and see high-definition TV programming without a special TV set under a sweeping agreement Thursday between AT&T; and NBC that could set the stage for other similar pacts between broadcasters and cable operators.

The agreement breaks a yearlong stalemate over digital transmission between the cable and broadcast industries, and it is a giant step forward in broadcasters’ transition from analog to state-of-the-art digital technology, which offers better picture and sound quality.

The eight-year pact also quadruples the amount of Olympics programming on cable, giving AT&T; subscribers more hours of coverage of the top-rated sporting event than they will receive on NBC, underscoring the network’s continued faith in cable as troubles mount in its traditional business.

“It resolves a lot of issues for both sides,” said Tom Wolzien, an analyst at Sanford Bernstein & Co.

AT&T;, the nation’s largest long-distance phone carrier, has undertaken two huge acquisitions that will make it the largest cable operator in the country.

Under the agreement, AT&T;, now the nation’s second-largest cable operator, will pay NBC an undisclosed extra fee for Olympics programming that will run on the network’s two news channels, MSNBC and CNBC. NBC plans to air some 250 hours of live programming on the two cable channels during each of the next five Olympics, beginning next year.

MSNBC will air the Olympics from 10 a.m. to 5 p.m., while CNBC airs the programming from 5 to 9 p.m. The network will continue to air about 165 hours of Olympics programming, including from 10 a.m. to midnight during the event.

“The majority of our viewers today see our programming through cable,” said Tom Rogers, president of NBC’s cable division.

NBC said the cable airings will give the network an outlet for more of the 3,000 hours of live programming it films during the Olympics.

Neither NBC nor AT&T; would disclose terms of the Olympics deal, but sources say AT&T; is paying close to $1 a year per subscriber surcharge for the next eight years. If other cable operators agree to a similar deal, it could significantly defray the record $3.5 billion that NBC paid for rights to those games.

Under the new pact, AT&T; has also agreed to carry the high-definition TV signals transmitted by the 13 broadcast stations owned by NBC, representing the most substantial agreement of its kind between a broadcaster and a cable operator yet. Four of NBC’s 13 stations, including KNBC in Los Angeles, are currently broadcasting a digital signal, and most of the others will switch on the new signal over the next year.

Cable operators, which now carry broadcasters’ analog signals to their customers to comply with federal “must-carry” laws, have argued that doing the same thing for broadcasters’ digital channels would force them to knock off popular existing cable channels to make room on their crowded systems for the higher-quality signal.

AT&T; has agreed to make a channel available to NBC once all its systems are fully upgraded for extra channels and new services, by the end of next year. Under the deal, AT&T; will convert the high-definition signal so that it can be received by a conventional TV set.

Under the first pact regarding digital carriage, Time Warner agreed to carry CBS high-definition signals to its cable customers, but only in a form that can be watched by those with costly new TV sets equipped for HDTV.