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'Fired Up' Cuban Launches HDNet

Billionaire Mark Cuban combined his passions for sports and technology in last week's launch of HDNet. And if the visionary's instincts are as solid this time around as they were when he began selling personal computers in the 1980s and audio over the Internet in the mid-1990s, then high-definition television could very well be the next big thing.

"We're fired up," said Cuban of the new network, which focuses on HD sports programming.

Observers have scoffed at every business he's ever started, Cuban said in an interview last week.

"When I started selling PCs in 1982, everyone said, 'I'll never put one of those on my desk,' " Cuban said. And when he launched in 1995 — before selling it for several billion dollars to Yahoo! Inc. in 1999 — everyone told him that people wouldn't listen to music on the Internet as long as they had radios.

"It's the nature of incumbents to try to protect, not change," Cuban said. "It's the innovator's dilemma."

And if cable fails to convert to HD, Cuban sees a bigger opportunity for HDNet in going after the wealthy television viewer.

DirecTV Inc. launched HDNet last Thursday night with a Major League Baseball game between the Minnesota Twins and Texas Rangers. It's one of 15 MLB games the network plans to broadcast this month. Other sports — including National Hockey League games, National Lacrosse League tournaments and qualifying events for the U.S. Olympic Team — will follow.

Cuban also owns the National Basketball Association's Dallas Mavericks. Select Mavericks games will be shown on HDNet during the upcoming season, but only in the Dallas-Fort Worth area. HDNet is in talks with the NBA about the possibility of gaining rights to more NBA games, Cuban said.

HDNet does not expect to distribute the network through cable operators or EchoStar Communications Corp.

The network was able to piggyback on some of DirecTV's existing deals with various sports organizations to deliver certain sporting events in HD, Cuban said.

DirecTV customers don't need to subscribe to an out-of-market sports package to watch the HD sports programming on HDNet, which will be available free to any DirecTV customer who owns the HD-compatible DirecTV equipment and television set.

The programming will also run in retail electronics showrooms and sports bars, so consumers who don't yet own an HDTV set can experience sports in HD.

Unlike the many naysayers surrounding the HDTV rollout, Cuban is bullish on the market potential.

"If you build any kind of sales momentum at all, the price curve takes over," he said. "We'll get to the point in three or four years where you'll be crazy not to buy an HD-ready TV."

DirecTV and HDNet last week were still working through their plans to promote the network to current DirecTV customers, DirecTV senior vice president of programming Stephanie Campbell said.

"To a large extent, it will be self-promoting," Campbell added.

Consumers who already own HDTV sets tend to congregate in chat rooms, where interest in sports-related content is high.

Watching sports in HD provides an experience that's all new, compared with traditional television. Because the field of vision is wider, it's easier to track a hockey puck or a football in play, and the sharper picture quality also makes the action easier to follow.

"It's true of all sports," Campbell said.

HDNet is partnering with Fox Sports Net regional outlets to produce some of the sports events. In those cases, Fox will share its on-air talent, audio and graphics from its standard-definition production units. HDNet supplies the high-definition production vehicles, and has wired a number of sports stadiums for HD cameras and production equipment.

Today, HDNet has two production vehicles, which could limit the number of live events the network could logistically cover within close periods of time. But Cuban said the network could also rent production vehicles, and will buy more as the demand increases.

Cuban said HDNet would generate revenue by selling advertising. Although the subscriber base is likely to be relatively small in the short term, the viewers are also likely to be among a higher-income demographic and also should be extremely loyal, Cuban predicted.

Campbell declined to say how many DirecTV subscribers have access to HD-ready receivers.

Once satellite television subscribers upgrade to HDTV, Cuban said, their universe of networks shrinks from 200 or more to the few HD channels available to them.

Cuban has owned an HDTV set for about three years, and admits the technology has altered his viewing habits.

"I've watched Touched by an Angel
more than I ever would [have]," Cuban said.

That strong loyalty to HDTV programming could put conventional cable networks in jeopardy, Cuban said, adding that HDTV technology will also impact personal video recorders and video-on-demand.

Besides HDNet, DirecTV carries a Home Box Office feed in HDTV, as well as select pay-per-view movies. Many studios are still reluctant to offer movies in HD until copy-protection standards are finalized, Campbell said.

DirecTV does not have a deal to carry a national CBS Television Network feed in HD, as EchoStar does. Campbell would not comment on how soon DirecTV might add the national CBS HD feed, but added that DirecTV has no plans to carry digital feeds from local broadcasters.

If all of today's cable networks wanted to upgrade their signals to HD, "that would be an awful lot of bandwidth," Campbell conceded, adding, "that would be a high-class problem to have."

There have not been many national programmers knocking down DirecTV's doors with offers of HD channels, Campbell noted.

In making the official announcement last week, HDNet and DirecTV did not hold a splashy press conference.

"We want this to be a slow buildout, rather than a big splash," Cuban said. He said he hopes to model the network on successful cable channels like ESPN and MTV [Music Television], rather than some of the dot-com companies of recent years, which started out strong and went away just as quickly.