Cable Executive


The Academy of Television Arts & Sciences Foundation Presents

02:26

Tabs

About

CABLE NETWORKS

History

The first cable network was Home Box Office (HBO). This service was established in 1972 by Time, Inc. as a movie/special service for Time's local cable system in New York City. The company then decided to expand the service to other cable systems and set up a traditional broadcast-style microwave link to a cable system in Wilkes-Barre, Pennsylvania. In November of 1972, HBO sent its first programming from New York to Wilkes-Barre. During the next several years HBO expanded its microwave system to include about fourteen cable companies The venture was not overly successful, nor was it profitable for Time.

In 1975, however, shortly after domestic satellites were launched, Time used satellite transmission from Manila to program the Muhammad Ali-Joe Frazier heavyweight championship match for two of its U.S. cable systems. The experiment was technically and financially successful and HBO decided to distribute all its programming by satellite. The satellite distribution system was easier and cheaper than the microwave system. It also made it possible for HBO signals to be received throughout the country by any cable system willing and able to buy an earth station satellite receiving dish.

HBO began marketing its service to cable systems nationwide, but initially was not very successful. Few local systems were willing to pay the almost $150,000 required for the technology required to receive the signal. But satellite technology changed quickly, and by 1977 dishes sold for less than $10,000. Other pricing and programming problems had to be overcome as well. But once the service reached consumers, it was readily accepted. Viewers were willing to pay to watch uncut movies without commercial interruptions. By October of 1977, Time was able to announce that HBO had turned its first profit.

Shortly after HBO beamed onto the satellite, Ted Turner, who owned WTBS, a low-rated UHF station in Atlanta, Georgia, decided to put his station's signal on the same satellite as HBO. Cable operators who had installed a receiving dish for HBO could now also place Turner's station, complete with network reruns and the Atlanta Braves baseball games, on one of their channels. This placement created the first superstation. A company transmitting the station charged cable operators ten cents a month per subscriber for the signal, but the systems provided WTBS free to their subscribers. The rationale for presenting the superstation in this manner was that the extra program service would entice more subscribers. The charge to the cable companies did not cover the WTBS's own costs, but the station was now able to set higher advertising rates because its audience was spread over the entire country.

With two successful programming services on the satellite, the floodgates opened and many other companies set up cable networks. Viacom launched a pay-cable service, Showtime, to compete with HBO. Like Time, Viacom owned various cable systems throughout the country and had been feeding them movies and special events through a network that involved shipping the tapes by mail for microwave relay. Following the launching of Showtime, Warner Amex began The Movie Channel, a pay service that provided movies 24 hours a day. Not to be outdone, Time established a second network, Cinemax, a service that consisted mostly of movies programmed at times complementary to HBO. Other pay services that sprung up were Galavision, a Spanish-language movie service; Spotlight, a Times-Mirror movie service; Bravo and The Entertainment Channel, both cultural programming services; and Playboy, an adult service that entered the cable business by joining forces with an already established network, Escapade.

Services that accepted commercials (later to be known as basic services) also exploded in number. ESPN was an early entry, and its sports programming was much in demand. Other basic services that appeared by the early 1980s were CNN (also owned by Turner), the Christian Broadcasting Network (CBN), USA, MTV, and C-SPAN. Two basic cultural services were formed. One, owned by ABC, was called ARTS. The other was CBS Cable, a service very expensive for its broadcast network owner because it featured a great deal of originally-produced material. Satellite News Channel (SNC), a twenty-four hour news joint venture between Westinghouse and ABC was established to compete with CNN. Daytime was a service geared toward women, and Cable Health Network programmed material dealing with physical and mental health. The number of superstations also grew as WGN in Chicago and WWOR in New York joined WTBS.

For several years in the early 1980s, both new pay and basic networks were announced at a rapid rate--sometimes several in one day. Some of these never materialized, some existed only for short periods, but many showed signs of longevity. The entire cable TV industry was growing. Revenues and profits increased over 100% a year.

Of course, this could not last forever. In the mid-1980's cable growth began to decline and the entire cable industry went through a period of retrenchment. Many cable networks consolidated or went out of business. Both Galavision and Bravo converted from pay services to basic services. Spotlight went out of business. The Entertainment Channel turned its pay programming over to the basic network ARTS, which then became Arts and Entertainment. The Playboy Channel shifted programming between hard-core and soft pornography, caught between angry citizens who objected to televised nudity and a small but loyal group of viewers who wanted access to it. This shifting strategy angered its partner, Escapade, and the two parted company with Playboy paying Escapade $3 million dollars. MTV's ownership changed from Warner-Amex to Viacom, as did Nickelodeon's. Getty Oil, which owned ESPN, was purchased by Texaco. The new owner had no interest in the sports network and sold it to ABC. CBN changed from a strictly religious format to a broader, family-oriented format, and became The Family Channel. Daytime and Cable Health Network joined to form Lifetime.

The most highly touted failure was that of the CBS-owned cultural channel, CBS Cable, which ended programming in 1983 after losing $50 million. The service did not receive sufficient financial support from either subscribers or advertisers. Its demise was almost applauded by some cable companies who resented the encroachment of the broadcast networks into their business. Another well-publicized coup occurred when Ted Turner's Cable News Network bought out the Westinghouse/ABC Satellite News Channel. This meant less competition for CNN, which proceeded on less tenuous financial footing. The Turner organization then established CNN2, a headline service that used the same writers and reporters as the original CNN.

Very few new cable networks were introduced in the mid to late 1980s, in part because many cable systems had filled all their channels and had no room for newcomers. One notable exception was The Discovery Channel, launched in 1985, which became quite successful.

The cable network landscape changed somewhat in the 1990s. The downsizing of the late 1980s allowed for moderate growth in the next decade. In addition, in 1992, Congress passed a bill requiring cable networks to sell their programming to services in competition with cable, such as direct broadcast satellite (DBS) and multichannel multipoint distribution services (MMDS). Prior to this time, cable systems had tried to keep cable network programming to themselves. In fact, many cable system owners also owned all or part of cable networks, making it convenient and financially rewarding to make sure their cable networks provided content for their own cable systems. For example, TCI (Telecommunications, Inc.), the largest cable system owner, had a financial stake in American Movie Classics, Black Entertainment Television, CNN, The Discovery Channel, The Family Channel, QVC Home Shopping, Turner Network TV, and WTBS.

Probably the greatest threats to the cable system structure (but not necessarily the cable networks) are Congressional actions of the 1990s that have opened the door for telephone companies to enter the cable TV business. Phone companies hope to become the "one wire into the home." If this happens, cable systems will suffer, or perhaps disappear. But the phone companies will have to turn somewhere for programming, no doubt to entities that closely resemble the present cable networks.

Technology also improved in the 1990s, and the prospect of digital signals delivered over fiber optic lines meant cable systems (or phone companies) would be able to deliver more than 500 channels to the home. All these channels would need programming.

With new markets and new technologies in mind, a number of companies launched new networks. NBC started Consumer News and Business Channel (CNBC) in 1991, and was followed by Courtroom TV and two new Turner services, TNT (Turner Network Television) and the Cartoon Channel. Several comedy channels started and eventually merged into Comedy Central. A science fiction network, a game show network, a history network, and many others appeared.

The proposed change in programming most likely to affect cable networks is video-on-demand (VOD). This type of distribution allows consumers to select and view a program or movie at any time. Now in the experimental stage, this process will probably involve a system that can receive and store an entire movie in a device in or on the TV set and play it from there at the viewer's convenience. Closer to reality is near-video-on demand (NVOD). A cable system with 500 channels could easily devote twelve channels to one two-hour movie and start the movie on a different channel every ten minutes. In this way any viewer could have the movie within ten minutes of when he or she wanted it. Twenty or thirty movies could be running this way at the same time. The present pay-per-view services engage in a limited version of near-video-on-demand, but true VOD might very well change the nature of both pay and pay-per-view services.

These changes in both technology and policy will continue to keep cable television services at the center of issues surrounding television. Just as early cable networks transformed the meaning and experience of television programming and viewing, the newer practices will undoubtedly continue to alter our understanding and use of the medium.

-Lynn Schafer Gross

FURTHER READING

Adler, Richard, editor. The Electronic Box Office: Humanities and Arts on the Cable. New York: Praeger, 1974.

Flower, Joe. Prince of the Magic Kingdom: Michael Eisner and the Re-Making of Disney. New York: Wiley, 1991.

Goldberg, Robert and Gerald Jay Goldberg. Citizen Turner: The Wild Rise of an American Tycoon. New York: Harcourt Brace, 1995.

Jones, Felecia G. "The Black Audience and the BET Channel." Journal of Broadcasting and Electronic Media (Washington, D.C.), Fall 1990.

Lamb, Brian and the Staff of C-Span. C-SPAN: America's Town Hall. Washington, D.C.: Acropolis, 1988.

Liska, A. James. "Is There Any Such Thing As Black Programming? Hollywood Producers and Actors Speak on Black's Image and Hiring On Web TV." Television-Radio Age (New York), 26 October 1987.

Mair, George. Inside HBO: The Billion Dollar War Between HBO, Hollywood and the Home Video Revolution. New York: Dodd, Mead, 1988.

Straub, Gerard Thomas. Salvation For Sale: An Insider's View of Pat Robertson. Buffalo, New York: Prometheus, 1988.

Tyler, Ralph. "The Network That 'Listens' To Children Marks Decade As Kidvid Leader." Variety (Los Angeles), 5 April 1989.

Whitmore, Hank. CNN, The Inside Story. Boston: Little, Brown, 1990.

Highlights
Kay Koplovitz on her advice to aspiring media executives
00:54
Robert Johnson on his advice to an entrepreneur interested in starting a network
01:41
George Bodenheimer on his strategy as President of ESPN
01:13
Ted Turner on the birth of CNN
05:20
Sheila Nevins on telling Michael Fuchs she wanted to return to HBO as a Vice-President
03:46
Doug Herzog on the business of programming Comedy Central, learning as he goes along, and on Emerson College
08:34
Who talked about this profession

George Bodenheimer

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George Bodenheimer on cable TV during its early years
01:15
George Bodenheimer on ESPN's business model
02:04
George Bodenheimer on the culture of ESPN
01:03
George Bodenheimer on becoming VP of National Affiliate Sales at ESPN
01:13
George Bodenheimer on becoming Senior VP of Sales and Marketing at ESPN
04:46
George Bodenheimer on becoming President of ESPN
07:18
George Bodenheimer on his time as President of ESPN (since 1998)
02:07
George Bodenheimer on his strategy as President of ESPN
01:13
George Bodenheimer on advice to aspiring sports executives
00:35

Doug Herzog with Emerson College

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Doug Herzog on the business of programming Comedy Central, learning as he goes along, and on Emerson College
08:34

Michael Fuchs

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Michael Fuchs on advice to aspiring executives
05:09

Robert Johnson

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Robert Johnson on his advice to an entrepreneur interested in starting a network
01:41

Kay Koplovitz

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Kay Koplovitz on the business model for cable's Madison Square Garden Sports Network, the first cable network
02:24
Kay Koplovitz on her management style at USA
00:55

Sheila Nevins

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Sheila Nevins on the process of making a documentary for HBO
06:40
Sheila Nevins on telling Michael Fuchs she wanted to return to HBO as a Vice-President
03:46
Sheila Nevins on what makes a perfect documentary
00:43

Sumner M. Redstone

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Sumner Redstone on purchasing Viacaom
02:56

Ted Turner

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Ted Turner on the birth of CNN
05:20