Cable Programmers Ponder the Digital Life

Although every cable system in the country is full to the brim with channels, many existing programmers are spinning off new networks to exploit their established brands in anticipation of digital technology that will vastly expand channel capacity.

As system operators at the annual cable convention in Los Angeles this week talked about when digital boxes would transform television--compressing six or eight, sometimes even more channels into the space taken up by one analog channel--programmers were preoccupied by just what services would sell in this expanded universe and how to bundle services for sale.

The consensus among one panel of cable programmers was that general entertainment channels such as USA Network would be harder to sell and that studios trying to develop networks with only home-grown shows were probably flawed.

Walt Disney Co., for one, is said to be mulling a Miramax channel, which would compete against the Sundance and Independent Film channels. And some studios, like Fox’s Twentieth Television, have been criticized for channeling reruns of top network programs to sister cable companies regardless of their fit.

“The trend is to have studio-branded networks,” said Kay Koplovitz, chairwoman and chief executive of USA Network, whose owners Viacom and MCA have fed the network shows from their studios. “I’m not sure that will result in the best viewership or service for consumers.” She added that USA “buys from all studios.”

John Sie, chairman and chief executive of Encore Media, already has been pushing the idea of using analog brands to create digital tiers on satellite TV. For instance, Encore’s premium first-run movie service, Starz!, announced the launch on digital of Starz!2, which will present the most popular movies from its parent as a double feature that will run continuously through the day for a week.

Once digital boxes become available in some markets later this year, transforming cable to digital, the services will be sold as a pair and cross-promoted. Encore, which shows older films, has done something similar with a new service called Plex, which will draw from its parent’s six themed movie channels, with a new theme each day (westerns on Tuesday, for example, love stories on Wednesday, etc.).

He said digital satellite services such as DirecTv, which has 175 channels, have given the industry a taste of what cable television might look like once digital boxes are fully rolled out, with channels bundled in tiers.

Cable News Network seems to be going in that direction. In the last three months, it has announced three new channels, which will largely be carried by satellite: Spanish-language news, sports news and financial news. It is said to be mulling an entertainment news network as well.

While the digital universe will expand channel capacity, cable executives cautioned that there will still be limits, particularly since most operators are apt to devote substantial space to lucrative pay-per-view.

CNN President Thomas Johnson doubts that more than two or three cable news channels can survive. “Quality is going to count most going forward,” he said.