Cable television growth hampered, experts say

Kevin Rademacher

Wednesday, Jan. 26, 2005 | 10:53 a.m.

A study released this week in Las Vegas makes the claim that television programming alone will no longer be sufficient to grow the number of customers for U.S. cable companies.

The study, released at the National Association of Television Programming Executives convention, said that "after two decades of robust growth, the U.S. cable (television) industry is facing significant challenges to future growth."

Among those challenges citied in the study was the more than 300 existing channels. So many choices have fragmented audiences, leaving little opportunity to increase revenue by introducing new channels.

The industry also is facing persistent challenges from satellite providers and emerging competition from telecommunications companies.

Peter Winkler, managing partner of global marketing for the study's author, PricewaterhouseCoopers, outlined the study results on Tuesday.

"The best bets for near-term growth will come from nonvideo services," he said, pointing to high-speed data and Internet-based telephone service as potential money makers.

A panel of experts, speaking at the convention unanimously pointed to that "triple play" of products -- high-speed Internet, video and telephone service -- as the key to profitability.

Cox Communications, the dominant cable provider in the Las Vegas Valley, recently pointed to the need for a similar triple play when it named its new local general manager.

Leo Brennan was moved from the company's Orange County, Calif., system to take over in Las Vegas, Cox's largest cable system.

In Orange County, Brennan was in charge of the first Cox system to roll out the complete package of high-speed Internet service, video service and telephone service. For years, local Cox executives have said they plan to offer telephone service in Las Vegas. Steve Schorr, a spokesman for Cox in Las Vegas, said Brennan's experience should bolster those plans.

"We have made it clear that we believe that the technology will be there in the future to allow us to roll out telephone service here," Schorr said when the announcement was made on Jan. 12. "Having a background like his is a good one to have."

Also speaking on Tuesday was media mogul Ted Turner, who founded an Atlanta-based media empire that included CNN and TBS.

Turner sold his media company to Time Warner, becoming the largest shareholder with about 9 percent of the new company. That share, however, was diluted when Time Warner merged with America Online, and he was soon forced out.

While saying he had a "responsibility" not to be too critical of his old company, Turner used the stage to take some potshots anyway.

Turner said merging with Time Warner triggered the law of unintended consequences that eventually forced him out.

"(Having 9 percent ownership) got me some respect," he said. "They didn't give me a pink slip when I had 9 percent. They waited until after the AOL merger."

He said the media deregulation and the subsequent consolidation has made it impossible for anyone to build the type of company he assembled.

"I was one of the first media consolidators, but all I was doing was playing by the rules," Turner said. "I was against the formation of huge media conglomerates."

He said such large companies become "propaganda voices" for the government that regulates them. The result is news that is "dumbed down," Turner added.

"Their bosses want them to not be too critical of the government or they will get into trouble," he said.