Source
Automatically imported from: http://commons.somewhere.com:80/rre/1995/Cable.Regulation.Digest.html
Content
This web service brought to you by Somewhere.Com, LLC.
Cable Regulation Digest
```
Date: Fri, 1 Sep 1995 14:11:10 -0700
From:
---
CABLE REGULATION DIGEST Summary of regulatory news from Multichannel News 9/4/1995. Vol.2, No.36 Copyright 1995 Multichannel News. Reproduction/distribution is permitted so long as this document is left fully intact. NO CHANGES are to be made to this document without the written consent of Multichannel News. Listserver, Gopher, FTP info attached at bottom. Refer questions to John Higgins (higgins@dorsai.dorsai.org or 212-887-8390) For Multichannel News subscription information: 800-247-8080. A bargain at $78/year. Multichannel e-mail contacts: Marianne Paskowski, editor: Mpcable@aol.com Andy Grossman, news editor andyg474@aol.com John M. Higgins, finance editor: higgins@dorsai.dorsai.org Kent Gibbons, new media editor: kentmg@aol.com Leslie Ellis, technology editor: Ellis299@aol.com- TIME WARNER CLOSE TO TBS DEAL- COX LAUNCHES FREE CABLE AGAINST U.S. WEST IN OMAHA- IT'S WAR: U S WEST READY IN OMAHA- CONTINENTAL, SPRINT FILE FOR LOCAL PHONES IN CALIFORNIA- FREE TVs FROM PACTEL- FTC INQUIRY CENTERS ON ELECTRONIC GUIDES
"I can't imagine that's a viable competitive structure in the long-run." Charles Lillis, president and CEO, U S West Media Group, on Cox Communications decision to offer free basic cable in Omaha, where the telco is launching video dialtone.
TIME WARNER CLOSE TO TBS DEAL New York-- Time Warner Inc. chairman Gerald Levin appears likely to nail down a deal to take over Atlanta-based Turner Broadcasting System Inc., pulling off a stunning turnabout that would make Time Warner the world's largest media company. The surprise $8 billion offer abruptly reversed the churlish political battles over TBS among Time Warner, TBS chairman Ted Turner and 21 percent- shareholder Tele-Communications Inc. that have consistently snarled Turner's sweeping expansion plans. Turner's inability to lay hands on a broadcast network -- and the rejection of a proposal three weeks ago to Westinghouse Electric Corp. chairman Michael Jordan that they should run CBS Inc. together -- turned him from media mogul into a frustrated seller. After scrounging for cash from sources as unlikely as Microsoft Corp. and French media conglomerate Havas SA to buy Time Warner out of his company and chase CBS, Turner speedily acquiesced to his second-largest shareholder's approach to swallow TBS whole. But shadows loom over the deal, ranging from the danger that News Corp.'s Rupert Murdoch or General Electric Co.'s Jack Welch would wrest TBS away now that Turner has put the company in play, to threats that regulators or legislators, wary of the concentration of ownership in media, would step in. Still, the biggest hazard Levin was trying to carefully blunt last week could come from within -- the threat of having Turner and TCI president and CEO John Malone as large shareholders could be far more dangerous to the oft-criticized chairman than pesky 15 percent-owner Seagram Corp. ever was. Sources involved in the deal said that by last Friday,Ted Turner and TCI had agreed to a stock swap giving them a slight premium over other investors holding shares carrying less voting power. But lawyers and investment bankers were expected to squabble through this week over the details and a basketful of side issues brought up by Malone, who is exploiting his leverage to secure special deals for his networks with Time Warner. "This is proceeding to a conclusion," said one Time Warner executive, who added that lawyers and investment bankers would be haggling over the weekend, but most of the heavy negotiations will be put off until next week. "I just hope I don't get stuck working all weekend." TBS and TCI insiders agreed that the negotiations are on track and moving fairly smoothly. "Generally, these things don't improve with age," said one TCI dealmaker.
COX LAUNCHES FREE CABLE AGAINST U.S. WEST IN OMAHA In a surprise move given mixed reviews, Cox Communications Inc. last week began offering free basic service in Omaha, Neb., where the No. 3 MSO faces direct competition from Baby Bell U S West Inc. Atlanta-based Cox rolled out a 21-channel tier that includes the four national broadcast network affiliates as well as C-SPAN, CSPAN 2, The Learning Channel, Mind Extension University and local sports and entertainment programming. Cox created its free LocaLink service by stripping three channels -- QVC and superstations TBS and WGN -- from an existing 24-channel basic tier that sells for $10.28 a month. The current basic tier has only about 2,500 subscribers. The overwhelming majority of Cox's 100,000 Omaha subscribers pay either $13.59 for a 31- channel package or $21.56 for a 58-channel package. LocaLink is apparently the first cable service of its kind since the passage of the 1992 Cable Act. Subscribers pay only a one-time installation fee of $19.95 or a downgrading charge of $8.03, said Cox vice president of public affairs David Andersen. Cox is aiming LocaLink at Omaha residents that are not subscribers. The MSO does not expect many paying subscribers to shift to the free service. "It's our feeling, based on market research, that we are not going to experience a lot of migration," Andersen said. Cox has about 64 percent penetration in Omaha. Two days after LocaLink became available, about 150 Omaha residents took the service. One-half were new customers, and one-half were subscribers that opted to downgrade, said Cox spokeswoman Ellen East. Andersen denied that LocaLink was developed to undercut U S West, which is invading the market with a 12-channel broadcast basic tier costing $5.95. "This is something Omaha came up with, and Atlanta staff worked with them to refine this approach," Andersen said. Andersen said although the free tier was being offered indefinitely, "If there is no response, there would be no reason to market it." Cox is not planning to offer LocaLink in all of its territories, "because we don't take a cookie-cutter approach to running our business," Andersen said. Cox's plan was announced just a few days before U S West won final federal approval to conduct a one-year video dialtone trial aimed at 50,000 Omaha households. Although Andersen called the advent of LocaLink and U S West's trial "a coincidence," U S West didn't agree. "It's pretty obvious to us that it is a response to the TeleChoice market trial," said Dave Banks, corporate spokesman for U S West. TeleChoice is the brand name for the telco's Omaha VDT trial.
IT'S WAR: U S WEST READY IN OMAHA If U S West Inc.'s Omaha, Neb., offering is a guide, competition may be very good for cable subscribers. U S West's market trial of video dialtone in the Cornhusker state kicked off last week with the final approval the telco needed from the Federal Communications Commission. The initial analog-only package, assembled and priced by a company called Interface Communications Inc., is one that many cable customers across the country would enjoy. Digital services, such as movies-on-demand and interactive shopping, will be added "over the next few months," spokesman David Banks said. The trial is scheduled to last a year, using a hybrid fiber-coaxial network passing 50,000 homes. The FCC approved a tariff of fees U S West will charge programmers to use the network, with 77 analog channels and up to 800 digital channels. There are already a few paying customers, and more are scheduling hookups, a spokesman said. The "TeleChoice" service contains a broad array of basic and premium networks and a variety of genre-based tiers at relatively low rates. Most are also offered by Cox Communications Inc., the incumbent cable operator. But there are some differences, including multiplexed movie channels, The Sega Channel and Digital Music Express on U S West. Cox has its own local- sports channel, called O2TV. TeleChoice includes four $5.95 tiers called Sports (eight channels), News (11 channels), Family (12 channels) and Variety (12 channels). The designations are loose: "News" includes home shopping and the Prevue Guide. TeleChoice also offers $9.95 multiplexed offerings of three Home Box Office feeds, three Showtime feeds, two Cinemax feeds, or The Movie Channel. Showtime Inc.'s Flix is sold for $5.95. Cox, which last week started offering a free, 21-channel lifeline service, denied that was a response to U S West (which offers a 12-channel lifeline service for $5.95). Interface, of Boulder, Colo., made deals with programmers and is leasing channels from U S West. The telco will market the service for Interface. Interface president Jeff Morgan said Cox has offered to install A/B switches for subscribers who switch to U S West. He said the cable operator offered to continue cable free to those customers, letting them watch both services side by side. "Which, by the way, we're tickled with, because we think we'll kill them with picture quality," Morgan said.
CONTINENTAL, SPRINT FILE FOR LOCAL PHONES IN CALIFORNIA Continental Cablevision Inc. and the Sprint Telecom Venture are among the cable entities that filed with the California state Public Utilities Commission last week to begin providing telephony services in 1996. Notably, Time Warner Inc., which formed Time Warner AxS of California L.P. as its future telephony arm in the state, did not file to be among the first wave of cable companies moving into the telephone business. Michael Luftman, Time Warner's vice president, corporate communications, noted that the MSO may focus on states where it has higher system concentrations including New York, North Carolina, Florida, Texas and Ohio, all of which have also opened competitive doors. Sprint Corp.'s partners in Sprint Telecom include Cox Communications Inc., Comcast Corp. and Tele-Communications Inc. California's two largest telephone companies, GTE of California and Pacific Bell, also filed petitions to launch service competitively in one another's service areas, as did other telephone service providers such as AT&T Corp. and MCI Communications Corp. Several other companies, including cable operators, were expected to file for permission to compete by the 5 p.m. Sept. 1 deadline set by the PUC. The state board refused to identify any of the early filers, noting that it would release all names of potential competitors only after the deadline closed. The Sprint venture intends to launch competitive service throughout the state, said a spokesman. Continental's filing said it will roll out telephony in 10 counties in which it has cable operations, including Los Angeles, Orange and Riverside. Continental intends to offer residential and commercial intra-LATA services including dialtone, lifeline and PBX trunks; local exchange usage services; Centrex services; and switched long-distance carrier-access services. Although the state intends to open the local market to facilities-based competition by Jan. 1, 1996, and to resale competition by March 1, several key issues are unresolved, including interconnection charges, unbundling and number portability. Hearings on those issues will track parallel to hearings into the qualifications of potential new entrants.
FREE TVs FROM PACTEL In San Jose, Calif., the 500-pound gorilla is coming to town, and it's armed with free TVs. Pacific Video Services, a Pacific Telesis company, has begun soliciting participants in the technical trial of its video dialtone network in the upscale community. Not only will these homes (25 for now, ultimately 200) gain access to the latest video provider in the marketplace, but the telco is offering an extra lure -- a free 13-inch color television set. PacTel anticipates spending $16 billion by the end of the century to upgrade its network to provide video, data and other services. And although executives stress they will not be entering every competitive market armed with TVs, the program in San Jose is raising a public buzz and getting people to think of the telco as a potential video provider. A spokesman for the telco said the television giveaway will not be a launch strategy beyond the analog technical trial, which will deliver 70 channels from programming sources the telco has yet to identify publicly. PacTel says it's not a marketing ploy, but compensation for the home- owners. The market testers will be expected to grant unprecedented access to their homes for technicians, fill out diaries, flip through channels on request and allow the telco to decide what programming the homeowners will receive. PacTel is looking for a range of customers for the test, from current subscribers of TCI of California, the local operator, to home-owners who have never paid for television. The TV giveaway is one of the most aggressive lures being used by a telephone company to attract system testers. Trials in other areas, such as Bell Atlantic Corp.'s 1,000-home video- on-demand test in northern Virginia, rely on programming giveaways and consumer curiosity to get homeowners to join the sample.
FTC INQUIRY CENTERS ON ELECTRONIC GUIDES Even though the business is barely off the ground, The Federal Trade Commission is investigating whether Tele-Communications Inc.'s planned deal with United Video Satellite Group Inc. will stunt competition among program guides. UVSG said the FTC has made extensive requests for information from both companies regarding TCI's deal to acquire a 36 percent equity stake in UVSG from chairman Lawrence Flinn Jr. Because TCI is buying supervoting Class B shares, the MSO would control 83 percent of UVSG's shareholder votes. While UVSG is in several lines of business, the company's most lucrative overlap with TCI is in the program guide arena. UVSG has developed an interactive version of its passive, scrolling Prevue Guide product. TCI has been backing a similar 50-50 venture with News Corp.'s TV Guide. But the TV Guide On Screen venture hasn't gotten very far, and executives on both sides have acknowledged that TCI will likely back Prevue's product with heavy distribution. That could involve abandoning TV Guide On Screen or merging it into Prevue. But UVSG said no discussions on TV Guide On Screen have taken place, and company executives are worried about competition from other directions as well. Even if the FTC does not derail the UVSG deal, it's likely to delay it. The FTC has targeted several recent TCI deals for lengthy review, including its acquisition of MSO TeleCable Corp. and its partnership with Comcast Corp. to take over shopping networks company QVC Inc. In the QVC case, TCI president and CEO John Malone grew so frustrated that he essentially dared FTC investigators to try to block the deal -- a showdown that Malone won. "We don't want this one to go like QVC," said one executive involved in the deal. The FTC would not comment on the investigation.
-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=...And Finally=-=-=-=-=-=-=-=-=-=-=-=-=- TCI is making some pretty outlandish demands on cable modem vendors. Deep inside the RFP detailing TCI's specs for the highspeed data boxes is a requirement that the modems be able to hold up while people are swearing at them. The RFP insists that the modems "shall withstand verbal attacks in the form of voiceband abuse," including but not limited to "shouting, obscenities and stressed-out anxiety speech patterns as tested on various composite voice frequencies comprising adult and adolescent male and female voice prints." In fact, the modems must still function while computer users are shouting at them up to 115 db, the "threshold of pain." Huh? Look more closely and the document continues that the requirement is included to ensure that vendors have actually read the document all the way through. "I haven't seen the responses," said Bruce Ravenel, COO of TCI Technology Ventures, who's especially looking forward to any tapes vendors send along.
Porn net Spice has an unusually candid description for its CyberSpice "adult" service, scheduled to launch next month. The network's Web page describes the service as "a madcap, all-out, no-holds-barred, pedal-to-the- metal attempt to make a killing as an Internet sex merchant before the Republicans sweep the elections!" So many net-porn geeks are stopping in to pant even before the site is ready to launch that "we're giving away a free picture of a naked chick" to keep everyone happy. The apparent slogan: "All naked. All the time." Classy, very classy.
---
HOW TO GET THE CABLE REGULATION DIGEST: E-MAIL - To: listserv@netcom.com Subject: Ignored Body: subscribe cablereg-l FTP - ftp.vortex.com/tv-film-video/cable-reg GOPHER - gopher.vortex.com/ TV/Film/Video WWW - http://www.vortex.com/pn/cable1.html
--30-- ```
This web service brought to you by Somewhere.Com, LLC.