Cable Television Industry Facing Growing Competition / Pay-per-View Plans Announced

Article excerpt

NEW YORK - The cable television industry feels under siege. It is facing growing competition for viewer attention from the b oom in video cassette recorders, and as fewer new cable systems are built, it is having trouble wooing and holding on to new subscribers.

Those problems have cable programming networks seeking another way to attract audiences, and some of them think they have found it in pay-per-view television.

Two cable networks, Showtime- The Movie Channel and The Playboy Channel, announced plans last week for pay-per-view operations, and a third company, called The Exchange, is developing a similar offering. Pay-per-view allows cable subscribers to pay a small fee to see a specific movie or other special programming. Subscribers can get pay-per-view instead of, or in addition to, the continuous programming they now receive for a monthly fee from so-called pay-cable networks such as Showtime or Time Inc.'s Home Box Office.

""Of all the new developments emerging in the ever-changing field of pay television, we feel that pay-per-view offers the greatest opportunity for continued expansion and growth,'' said Que Spalding, president of the Playboy Programming Distribution Co.

Not everyone is so optimistic. Cable industry skeptics say that pay-per-view will just draw viewers away from pay cable. Others contend that the necessary technology is not yet widely available, and that getting sufficient high-quality programming will be difficult.

The systems would work like this: The network would advertise its offerings to cable subscribers, and would broadcast the programming via satellite to local cable operators at scheduled times. The cable operator in turn would transmit the programming to those subscribers who had called and requested it.

The viewer would be billed $4 to $5 for a chance to see a movie well before it is shown on pay cable, and probably at about the same time it becomes available on video cassette. Eventually, sporting events, live concerts and other specials might also be offered.

Some industry executives see pay-per-view as a necessary response to the slowdown in cable subscriber growth. In addition, it is a reaction to the emergence of the video cassette recorder as a major factor in home entertainment, and a direct rival to cable for the time and money of viewers.

""It's a hedge against video cassettes,'' said Scott Kurnit, executive vice president in charge of Showtime's pay-per-view operations. ""We can take a real good piece of that revolution and bring it into the cable industry.''

For its part, the video cassette industry believes that it is too early to tell if pay-per-view will emerge as a serious competitor, according to Carol Rogin, director of member services for the National Association of Video Distributors.

Industry analysts agree that the system has potential, but warn that it will not be a panacea. ""It's the electronic version of going down to the tape rental store,'' said Alan J. Gottesman, an analyst at L.F. Rothschild, Unterberg, Towbin. ""There will be the same kind of groundswell, if they market and price it right, as there was with HBO in the early days.''

Proponents of the plan argue that even though a $4 to $5 price is a few dollars more than the cost of renting a tape, consumers will be willing to pay it because they will avoid a trip to the tape rental store, which is often out of the most popular movies.

But, Gottesman warned, the ""novelty factor'' of pay-per-view is likely to wear off, just as it has for cable and VCRs. ""Look what's happening to tape rental,'' he said. ""People aren't willing totake just any old thing anymore. …