NBC, AT&T; Forge New Broadcast Cable Partnership

Cable customers will be able to watch more Olympics coverage than ever before and see high-definition television 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 telephone 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 10 p.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.

While neither NBC nor AT&T; would disclose terms of the deal, sources say the phone giant is paying close to $1 a year for the next eight years for each subscriber it reaches. 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 NBC’s high-definition television signals to its 11 million cable subscribers, becoming the first cable operator to make those signals available.

Cable operators, which now carry broadcasters’ analog signals to their customers to comply with federal “must-carry” laws, say 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 television 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.

“This is a blueprint of how broadcast and cable companies can work together,” Rogers said.

Yet AT&T; lacks the space to do such deals with every broadcast station in the country. Federal regulators had been seeking digital must-carry to protect smaller stations from being left off cable.

More than 60% of the nation’s households get their television over cable.

NBC is shooting “The Tonight Show with Jay Leno” in the higher-resolution format but said the new agreement could encourage the network to put more programming on its digital channel. Under the pact, AT&T; gets the right to retransmit the signals of NBC’s 15 local stations to its cable subscribers for eight more years.