Heady Days Again for Cable

By Richard Zoglin

Want to follow the ups and downs of cable television? Just watch Ted Turner, Atlanta's brash cable mogul and America's most entertaining businessman. In the go-go years of the 1970s and early '80s, Turner was the cable industry's chief cheerleader, creating the nation's first satellite-beamed superstation, WTBS, and confounding skeptics by successfully launching TV's first 24-hour news channel, the Cable News Network. In the mid-'80s, however, the cable industry hit a slump, and so did Turner. His 1984 attempt to start a music- video channel died after just a month on the air, his much publicized bid to take over CBS was an expensive fizzle, and his acquisition of MGM left the Turner Broadcasting System so debt ridden that it was forced to get a bailout from a group of cable companies.

But hold on to your hats, folks. Turner is back, once again doing what he enjoys most: pushing a big and bold new cable venture. Dubbed, with typical Turner flourish, TNT (Turner Network Television), the new channel will debut on Oct. 3 with a telecast of Turner's favorite movie, Gone With the Wind. After that, it will offer an array of, in Turner's modest description, the "finest programming on this planet," ranging from Charlton Heston in A Man for All Seasons to (Turner hopes) major sports events like the Rose Bowl and the Masters golf tournament. Industry observers are skeptical that Turner can acquire such blockbuster events, but there is a growing sense that his ambitious new network just might succeed. Its very arrival makes a statement: heady days are here again for cable.

Financially, the industry has never been healthier. Cable now reaches 51% of U.S. television homes, and its programming attracts an average 20% of the viewing audience. That compares with a reach of 37% and an audience share of 11% five years ago. The industry's operating profits last year were a rosy $279.4 million, up from a $54 million loss in 1983. Cable systems are being bought and sold for rapidly escalating prices. And advertising revenue in 1987 exceeded $1.1 billion, in contrast to $380 million in 1983. Cable is one of the major competitors cutting into the ratings and revenue of the three broadcast networks. "Cable has certainly grabbed our attention," says David Poltrack, vice president of marketing at CBS. "Their $1 billion ((in ad revenue)) is coming out of our hides."

A few years ago, the cable landscape was littered with expensive flops (CBS Cable; the Satellite News Channel). Today cable networks whose survival once seemed dubious -- from the tony Arts & Entertainment Network to the drony Weather Channel -- have become permanent fixtures. New program services, meanwhile, keep springing up. Among the coming attractions: Show Business Today, a channel of around-the-clock entertainment news, slated to start in January; and a revamped version of Tempo Television, which NBC is planning to buy and reprogram with financial news during the day and sports at night and on weekends.

Much cable programming, to be sure, is still a morass of second-rate reruns, cheesy home-shopping shows and other filler fare. But original programming -- often more adventurous than that of the three networks -- is occupying a growing portion of the cable schedule. Pay services like HBO and Showtime have for years produced made-for-cable movies, comedy concerts and other original fare. Now basic cable services are getting into the act as well. The USA Network, once filled largely with creaky reruns, has increased the number of fresh shows dramatically. Lifetime, with a diet of talk and service shows aimed mostly at women, will turn out 2,000 hours of original programming this year, in contrast to 200 hours in 1983. Among the most innovative is the Nickelodeon children's channel, which will produce eight new series this year, twice as many as last year, including a children's talk show and a courtroom sitcom.

Major creative talents are starting to take notice. Steven Spielberg, Michael Mann (Miami Vice) and John Hughes (The Breakfast Club) were among a group of Hollywood producers who appeared before a convention of cable executives in Los Angeles this month to avow their interest in producing shows for cable. Martin Sheen has formed a production company to develop shows exclusively for cable. So has Shelley Duvall, a cable pioneer with her Faerie Tale Theatre series on Showtime. "In terms of creative freedom, cable television today is where broadcast television was in the 1950s," says Duvall. "Producers have a lot of room to explore new frontiers."

The networks too are beginning to go after cable shows. When Cinemax's Max Headroom became a cult hit last season, ABC spirited the computer-created character away and repackaged him in a prime-time (if short-lived) series. The Fox network has picked up Showtime's critically acclaimed comedy series It's Garry Shandling's Show and has fashioned an adult version of Nickelodeon's children's game show Double Dare. NBC is carrying the cross-pollination one step further, with plans to produce a comedy series, Good Morning, Miss Bliss, for the Disney Channel. The show may also air on NBC, but only after a first run on cable.

Meanwhile, cable networks are bidding aggressively against their broadcast rivals for programming. Syndicated reruns of such current network hits as Miami Vice, Cagney & Lacey and Murder, She Wrote have been sold to cable rather than broadcast stations, as would have been the case five or ten years ago. Cable has also been on the offensive in the sports arena. ESPN last year brought National Football League games to cable for the first time, buying a package of 39 contests over three years. ESPN's eight regular-season NFL telecasts last fall garnered the all-sports network its highest ratings ever. Ted Turner is negotiating with NBC to pick up a selection of Olympics events for his Atlanta-based superstation during the Summer Games in Seoul. With its growing financial clout, cable could one day bid for the rights to major events like the World Series -- though whether it could successfully take such events away from "free TV" is doubtful. "It will snow in July before you see the World Series or the Super Bowl on cable," says Herbert Granath, president of ABC's cable division. "Congress would intervene to prevent that."

Indeed, Congress and federal regulators are already taking some hard looks at cable's newfound muscle. During the 1970s and early '80s, a number of regulatory benefits were given to cable in an effort to encourage the fledgling industry. Now competitors complain that cable enjoys several unfair advantages in the marketplace. One of them was removed last week, when the Federal Communications Commission voted to reimpose the so-called syndicated exclusivity rules. Broadcasters have long argued that local stations that buy exclusive rights to syndicated programming are being hurt by cable channels airing the same shows (typically, reruns of old network series like Bewitched and M*A*S*H). Under the new regulations -- which will go into effect twelve months from now -- cable operators will be required to black out such duplicative cable shows or offer alternate programming.

Critics charge that cable is getting a number of other unfair breaks. Since the Cable Communications Policy Act was enacted in 1984, most local communities can no longer regulate the rates cable systems charge subscribers. With the elimination of the "must carry" rule (struck down as unconstitutional by a federal appeals court), cable operators are not even required to carry all the broadcast stations in their local area. As a result, some small stations have been dropped; others have been shifted from desirable low-channel positions near the networks to the less watched numbers at the high end of the dial -- "cable Siberia," as some call it. Viewers have little recourse against such moves because in most communities there is only one cable company to choose from. "There is only one funnel to the TV home," Jack Valenti, president of the Motion Picture Association of America, told a House telecommunications subcommittee hearing. "If you are unhappy with your cable system, you have no forum where your grievance can be addressed . . . You either pay up or you get off."

Cable opponents have other beefs as well. Hollywood is unhappy that cable superstations are able to retransmit syndicated shows for a nominal, Government-imposed fee instead of negotiating such fees directly with distributors. Also drawing fire is the industry's growing "vertical integration": cable systems that have a financial interest in program services. The largest owner of cable systems, Tele-Communications, Inc., for example, is a part owner of the Turner Broadcasting System, as well as an investor in Black Entertainment Television, the Discovery Channel and several other cable networks. Time Inc., the parent of the second largest cable operator, American Television & Communications Corp., also has a piece of Turner's company and owns two of the largest pay-cable networks, HBO and Cinemax. Critics charge that cable operators give preferential treatment to networks in which they have a financial stake, at the expense of other, equally deserving channels.

Cable operators deny the charges of favoritism, pointing out that they have invested in programming to ensure the survival of financially shaky networks and foster diversity and quality. "If systems operators didn't take their money and invest it in ((programming)) like Black Entertainment Television and CNN," says John Malone, president of TCI, "they wouldn't exist, because no one else wanted to put up the money." Cable operators, they add, seek the best mix of programming to attract the largest number of subscribers. "We won't carry junk just because we have an interest in it," says ATC Chairman Trygve Myhren.

Although both the Senate and the House have held hearings on cable TV in recent months, no new regulatory laws appear imminent. But even in the free market, cable is facing competitive threats. The burgeoning videocassette market is challenging cable for viewers. Local telephone companies yearn for a piece of the action; they are fighting to remove restrictions that prevent them from entering the cable business. As cable booms, the biggest threat to programmers may come from the industry's expansion. With channels and programs proliferating, the multitude of choices will make it harder for any but the best programmers to attract a big enough audience to prosper. Ted Turner is betting that he can make TNT into one of the winners.

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CREDIT: TIME Chart by Cynthia Davis

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DESCRIPTION: Share of total television viewing held by basic cable television and pay cable channels, October 1983-April 1984 and October 1987- April 1988; advertising revenues of cable industry, 1980-1987, estimate for 1988; cable penetration into total United States television household market at several intervals, 1980-1988; color illustration of man in chair watching television.

With reporting by Thomas McCarroll/New York