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Marketers Already Feel DBS Pinch

New Orleans— Cable marketers didn't need News Corp. to buy DirecTV Inc. in order to feel threatened by satellite TV. But the ones who attended the Cable & Telecommunications Association for Marketing Digital Conference here last week preferred to use the word "opportunity" instead.

Like when Comcast Corp.'s chief marketer, David Watson, declared on April 9, the first day of the conference: "We have been playing catch-up for about a decade to satellite. Satellite has out-innovated the cable industry. They've beaten us to the punch in terms of advanced products."

But the MSO's executive vice president of sales, marketing and customer service followed that by saying the cable industry's multibillion-dollar upgrades are about to start paying off, and new consumer-friendly services will help cable leapfrog its direct-broadcast satellite rivals. "Now we have the infrastructure to surpass satellite."

The conference's theme was about real products generating real profits now, and panelists and presenters kept on message. But the subtext — the competitive threat and the need to hang onto existing customers and, hopefully, sell more to them — was ever-present.

Time Warner Cable executives kicked things off last Wednesday with an elaborate, highly scripted and entertaining presentation emphasizing how such offerings as digital video recording, VCR-like controls for premium services and high-speed data options would help "demolish the dish," as marketing executives said.

"I don't want to underestimate our competition. They're tough. They're really tough," Charles Ellis, Time Warner Cable's executive vice president and chief marketing officer, said. But he said later: "We're going to win. And you know what? We already are."

Keeping quiet under the cloak of anti-solicitation rules associated with Time Warner Cable's planned initial public offering, Ellis and other marketers at the MSO did disclose some planned innovations. One of them was that Time Warner will soon introduce "destination tiers" of high-definition television.

Ellis did not spell out details, but other marketers at the conference said that likely meant Time Warner would soon offer pay HDTV services, on top of current free offerings.

Bandwidth-consuming HDTV is considered one of cable's possible advantages, as are such interactive services as video-on-demand and, of course, high-speed data.

Cable's business model has problems, though, and marketers didn't avoid talking about them. The impact of spiking prices for programming services — mostly sports networks — prompted discussion of tiering and a la carte packaging.

Andy Heller, president of domestic distribution for AOL Time Warner Inc.-owned Turner Broadcasting, lamented on the same Wednesday panel as Watson that the interests of programmers and operators were no longer aligned.

But he also saw an opportunity. Programmers and distributors need to rework the business model to determine what consumers want, what they will pay for and get it to them. Economic models themselves will have to be reworked, as consumers gain more choice and control over what they watch.

"It gives us an opportunity to realign our interests," he said. "And I for one am hopeful that we'll manage to do that, because I think that's the only way we're going to succeed as an industry."

Conference organizers said the conference drew close to 1,200 attendees.