Tele-Communications Plans All-Movie Cable Channel

Cable giant Tele-Communications Inc. said Wednesday that it would launch a new all-movie cable channel next year in an effort to revive the slumping pay-TV business.

The new channel, to be called Encore, will show “quality” movies produced from 1960 to 1980 and will be meant to supplement existing pay-TV channels such as HBO and Showtime. Encore has been “created to arrest pay-TV erosion, revitalize the pay category and increase (local) cable system cash flow,” said John J. Sie, senior vice president of TCI, who will head the new channel.

Growth in the pay-television business, once the drawing card for cable TV, has slowed to a trickle. Subscription levels at HBO and Showtime were up marginally last year and were flat or down at sister pay-TV networks Cinemax and the Movie Channel.

TCI said it would begin testing Encore at four of its local systems beginning next April and launch a national rollout in June. Denver-based TCI is the country’s largest owner of local cable-TV systems.

Sie will resign his post as one of TCI’s small cadre of top executives and form JJS Communications Inc., with backing from his former employer. Encore will be a joint venture between JJS and Liberty Media Corp., a newly created company being spun off by TCI.

Marc Nathanson, president of Los Angeles-based Falcon Cable TV, the largest independent cable operator in California, said he thought the introduction of Encore might drive down the cost of HBO and Showtime.

Most cable TV subscribers pay about $10 per month for their first pay channel. “The consumer is going to get the benefit of lower pricing,” he predicted.

But Encore may face a tough time persuading local cable TV systems to carry its programming. Consumers, already angry at rising cable TV costs, have been reluctant to shell out more money for premium channels in the current recession and many are canceling their pay-TV subscriptions.

Sie said Encore will be priced “significantly below” the $4 to $5 per subscriber that local cable systems pay for HBO or Showtime. Encore would break even when it attracts 2 million subscribers, which Sie projected would be a year after launch.