Lessons from Ted Turner
At last week's Western Show, cable pioneer Ted Turner — a man who lost his own empire to AOL Time Warner Inc. — predicted that consolidation could soon result in two super MSOs and perhaps four or five programming companies.
Turner said that if AOL Time Warner did indeed wind up with AT&T Broadband, that marriage would force Cox Communications Inc. and Comcast Corp. to march to the altar as well, leading to the creation of two MSO superpowers.
That, in turn, would either directly or indirectly force programmers to merge in order to bolster their clout when striking carriage deals with the two MSO behemoths.
Most striking in his hour-long, colorful address — peppered with shots at his old boss, AOL Time Warner CEO Gerry Levin — was his story about why he launched the Cable Music Channel in 1984, only to kill it a month later.
Maybe this tale has twinges of revisionist history, but it sure sounds like vintage Turner — and an industry that was very different back then.
Turner said he launched the Cable Music Channel to give cable operators some leverage against MTV: Music Television, which at that time was raising its rates. He said he did that as a favor to operators, and in the end, MTV did actually lower its rates.
Turner said this little charade, if you will, built up "a lot of good will on the part of people like [then Tele-Communications Inc. chairman John] Malone and the other big cable operators that felt they were being screwed by MTV."
It's an interesting story that should not be forgotten, especially in times when programmers and operators need to find new ways to repair their faltering relationship.
What Turner did back in 1984 in the music sector was a clever ploy, and, like any good negotiation, everyone — except perhaps MTV — walked away leaving the bargaining table feeling like they had won something.
Contrast that to The Walt Disney Co.'s present struggle to relaunch Fox Family Channel, which it acquired for $5.2 billion, as ABC Family. Disney — which has suffered some pretty nasty and public brushes with operators over retransmission consent and high fee increases for ESPN — may find its going with ABC Family to be extremely rocky.
Already, Time Warner Cable in Orlando has sent ABC Family a "warning" — it moved the network from analog to digital. Both parties claim it was a one-shot deal, not a warning shot. But no one is buying the spin.
Disney no longer has the retransmission-consent card to play, and when it bought Fox Family from News Corp. and Saban Entertainment, many of the acquisition's carriage agreements with MSOs had expired.
Presumably, Disney is going to look for rate increases to help pay the Fox Family tab. Operators are not likely to take well to that, given their nasty history with the Mouse House over retransmission consent — and especially over ESPN.
That's a tough spot for Disney to be in, especially because it plans to use its new cable network to repurpose some programming from the ABC television network, which would make a lot of economic sense for the company.
Clearly, launching a network in 2001 is more difficult than when Turner was wheeling and dealing in 1984. But there's a lesson here that should not be lost on a new crop of MSO chieftains.
Three of the top MSOs — AT&T Broadband, Charter Communications Inc. and Time Warner Cable — have all replaced their top executives in the past few months. It's time for the new blood to be more creative in working with programmers.
They may find — as their predecessors did in 1984 — that a programmer like Ted Turner can become a trusted ally, rather than an opponent.
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