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Small Ops Tackle Big Issues In Texas

It wasn’t all hoedowns, barbecues and kid-friendly fare last week as small and medium-sized cable operators from across the country congregated at The Independent Show here.

Top of mind at the annual small-cable get-together, sponsored by the National Cable Television Cooperative and the American Cable Association, were such issues as authentication, subscriber retention and survival during the worst recession in memory.

At the opening session, a panel of operating executives, Wave Division Holdings chief financial officer Wayne Schattenkerk offered a simple recipe for success in this economic environment: “Earn more, spend less.”

Others were less tongue-in-cheek. Cable One senior vice president, chief sales and marketing officer Jerry McKenna said one way his company is combating subscriber losses is by modifying its marketing message, placing more of a discount on the phone portion of the bundle to reverse telephony-subscriber losses. In other cases, the company is offering a free cable modem to help offset some of the upfront cost of high-speed data service. And in June, the company began implementing a 24-month price guarantee.

“We may lose some revenue in the short term, but in the long term we will be better off,” McKenna said.

The availability of content for free on the Internet was also a big topic of conversation, and Showtime Networks executive vice president of affiliate sales Tom Christie drew cheers from the crowd when he deemed so-called over-the-top programming as “crazy.”

“It reminds me of the dot-com boom. It doesn’t make sense for us,” he said.

Showtime, a premium network, only makes episodes of its original programming available online for promotional purposes, Christie said.

Disney and ESPN Networks affiliate U.S. sales and marketing executive vice president David Preschlack said that his company’s online strategy depends on the property. For instance, at the ABC Television Network, online streaming has been beneficial in allowing viewers to catch up on shows; its Disney Channel has allowed some content for streaming in different windows; and at ESPN, no online video content is offered for free.

“We manage the distribution of our content online very carefully,” Preschlak said. But he also said that the media giant will take a wait-and-see attitude regarding other online initiatives like authentication.

That stance was echoed by Christie, who added that having programmers come up with the solution would be a monumental task.

“Who’s going to build the mousetrap?” Christie asked. “We’re not opposed to customers being able to access Showtime on their PC. But we’re not in the business of building that technology center. It’s a mind-boggling achievement. That’s up to the cable operators.”

At Hallmark Channel parent Crown Media Holdings, executive vice president, network distribution and service Janice Arouh had misgivings about authentication, adding that although Hallmark is participating in some tests, it is taking a cautious approach.

“I don’t think this is something we should be so quick to jump into,” Arouh said.

Preschlack also tried to address the mini-controversy surrounding ESPN’s broadband product, ESPN 360, which some operators have criticized for its inclusion in carriage deals. ESPN has insisted that if an operator carries the broadband service, it be made available to every subscriber, not just those that want it.

Preschlack said that ESPN began its broadband initiative in 2001 with ESPN Broadband amid a similar competitive climate — streaming of content was still an issue. At that time, many small operators were backers of ESPN Broadband and many are behind the ESPN 360 product.

Preschlack said so far, about 70% of high-speed Internet subscribers have access to ESPN 360, and that usage of the service is good — he said the average time spent watching a live sporting event on the service is about 70 minutes. And the product represents an ad opportunity for operators as well.

“You talk about ways we can build the business together, this is one of those ways,” Preschlack said. “For people that don’t like the product, the model, how it looks or how it fits with their customer, they don’t have to buy it.”