Cable System Programming

The Job of the Cable System Programmer

Select from over 200 satellite delivered networks

Schedule the networks Evaluate the program services

Decisions that the cable programmer makes Which networks to add or delete Which networks to piggyback Which syndicated services to

subscribe to Whether or not there will be any

local origination programming, or access channels, or leased channels

Tiering strategies

The problem of Audience Evaluation

The number of subscribers is known What is difficult to assess is the

number of individual viewers in your market of channels and programs on those channels.

Cable viewing doesn’t fare well when compared to the broadcast networks.

Cable has a very segmented audience.

The problem of Churn

Churn refers to the number of connects and disconnects that a system experiences.

30% Churn per year spells disaster The number of disconnects divided by

the number of new connects multiplied by 100 = %churn

The programmer is held responsible for the churn level.

The differences in broadcast and cable programming The broadcast programmer selects

programs, produces programs, or buys programs for an individual channel

The cable programmer buys entire satellite delivered networks and then tiers the networks and services.

More differences. . .

A station makes revenue or advertising sales or time sales. A cable system makes money from subscriber fees, spot sales, and kickbacks from shopping channels.

A station is connected to a single network and a cable system is connected to many networks and services.

Factors that influence the programmer’s decisions

legal responsibilities technological capabilities economic factors local market considerations

Legal Responsibilities

Cable Act of 1984 provides for PEG channels

1995 Federal courts ruled that cable operators can censor indecent content on leased and access channels-being challenged under free speech rules in the courts

Syndex rules Franchise requirements

Technological Capabilities

Channel capacity of the system? Digital compression algorithms Is the system addressable? (send

customized packages of channels to subscribers)

Broad enough band width to be interactive

Carry high speed data networks and internet capability

Economic Factors Affecting Program Decisions

How many local avails on basic networks are available to the system?

What are the copyright royalty fees for sports presentations?

How much in subscriber fees is kickbacked to the system from the premium nets?

How much in subscriber buys is kickbacked from the shopping channels?

How much free promotional support?

Marketing Considerations minimize disconnects, maximize connects

content clusters that fit your demographics

broad appeal (USA) and narrowcast services

theme networks (golf, romance, food, car networks

design something for lift

Steps in Programming the System

Schedule the must carries Schedule the local channels Select the premium channels Select a balance of narrow and

broad appeal channels Plan for lift

Tiering Strategies

tier local stations, must carries, and access channels below 13

tier family content next tier news and information culture religion tier movie channels tier specialty channels tier premium channels tier adult fare

Local Origination

local cable company productions, regional sports, news, syndicated off network programs, first run series, links with networks (UPN, Warner) not on system)

PEG channels public educational government

News Inserts (5 minutes of local news at the the top of the hour before CNN)

Basic Cable Network Programming –Tiered content

sportsnews, informationmusicarts/cultureadultreligiousforeign language/ ethniceducational/ instructionalshopping

Basic Cable Channels include

150+ nationwide advertising supported channels

superstations promotional guides and interactive

services text only services regional services

Types of Basic Networks

Foundation Networks: established, popular, (ESPN, CNN, TBS)

Niche or Theme Networks: single program content (shopping, MTV, Comedy Channel)

Subniche networks: sub offerings from the niche nets (Latino MTV from MTV or Animal Planet from The Discovery Channel )

Microniche services: target a population subgroup (Asian American Satellite TV, America’s Disability Channel

The Future of Cable

500 channels digital compression algorithms cafeteria plans of selection extreme narrowcasting focus of continuing and credit learning Will we put a nation of mouse potatoes?

What changes in regulation will we see?

Prior regulation was based on the “scarcity of the airwaves” phenomena.

Scarcity regulation will crumble with the emergence of digital

New forms of regulation for content and advertising will emerge

How do the basic nets make money? What are the problems?

carriage fees (paid by systems to individual nets-usually 10-40 cents per household subscriber)

advertising revenue Problems:

low penetration for the newcomer credit crunch at the banks the industry is cannibalizing itself

How do you launch a new cable network?

Start up costs can be from 40-100 million and monthly satellite fees for transponder space can be 100-200 thousand

Pay the MSO to carry you instead of taking carriage fees from them

Allow a generous amount of ad time for the MSO to sell

A Successful Launch Requires:

distribution of signals stable regulatory environment money good business model clear niche programming aggressive marketing plan for expansion Best bet: MSO support

Before and After Market Strategies

Marketers provide before market services: web pages, home videos, dbs rights, MSO carries, ad sales, and marketing plans

Cable nets pay lower residuals and cable has become a prime aftermarket for series, movies, and programs.

More rarely cable is foremarket with a program moving from cable to net TV

Signature Programming

Four types:original movies or series

narrow theme genresniche

audience programscable exclusives

Original Movies or Series

not shown elsewhere TNT’s Avenging Angel USA’s Problem Child expensive to produce highly promoted attract new viewers first run programs build brand image

for the cable network

Narrow theme Genres

a cable channel with vertical programming

repeats a narrow theme all night club comedy, all shopping,

all weather

Niche Audience Programming

narrowly defined demographic target group

USA’s Highlander: The Animated Series

gives a specific brand image for blocks of time

Cable Exclusives

least common form programs that have been shown

once or twice on broadcast networks and then gone to cable

Vignettes

short form programming usually on pay services fill odd times when movies end Comedy Channel’s Pipeline, Topicals attracts surfers because vignettes

usually play when other nets are in commercial time

Marathons

continuous program scheduling of the same series

usually used to counterprogram some blockbuster show on the competition (Superbowl)

promoted heavily, remind viewers of channel image

Cable Content and Audience Appeals

Broad appeal nets: USA (the top rated basic cable network with original programs like Silk Stalkings and broad appeal off network reruns-1/2 of their prime time is original

TBS, TNT, The Family Channel, Arts and Entertainment are other broad appeals networks.

Niche Networks provide a mix of original and off network programs that target a defined audience

Comedy Central-improv, comic series, specials, movies

Lifetime-service for women Nickelodeon -original programs for

children, classic TV at night E!-Talk Soup, about 1/3 off

network reruns

Sports

top sports producers are ESPN I and II original series on ESPN include The

Extreme Games, College Gameday, Up Close, and Outside the Lines

other sports services are : The Golf Channel, Prime Network, TNTN, TBS, the superstations, Car Talk and Sports

Video Music

MTV was the first 24 hour music video service and pushed music off the broadcast nets.

targets younger views, offers games, talk, interviews, news, cinema verite (The Real World), animation (Beavis), and spun off M2

VH1 is an MTV net, competitors: TNN, CMT, BET,

Educational/Informational/ Entertainment

Discovery is a premiere basic net. Covers: science, nature, history exploration, adventure

Weather Channel is all original programming and vertical

News and Public Affairs

CNN is the leader and draws older, upscale demographics. CNN draws about 400,000 viewers worldwide ( a very small audience) during peak hours.

FNN and CNBC are niche services.

Religion

External World TV, Faith and Values , Inspirational Net, Trinity Broadcasting, and the Worship Network

pay lucrative carriage to companies for carriage, run by nonprofit organizations, about 1/4 of the schedule is informercials for inspirational products, 1/4 of the schedule is from shopping

Home Shopping

a 2.5 billion business by 1995 and projected to be a 100 billion business by 2010

Cable operators use their cut to pay for fiber lines, set top boxes, and channel rebuilds.

QVC is the leader with 85 million subscribers and net sales of < 2 billion.

Ethnic/ Foreign Language

BET was the first, has corporate partnerships with Time Warner and TCI, shows music, sports, sitcoms, specials, talk and news, is a full service offering

Univision, Telemundo, Galavision are Spanish language programming (movies, soap operas, talk), delivered to U.S. Mexico and South America

Others: International Channel (22 Asian, European and Middle Eastern languages), The Filipino Channel, TV Asia, TV5 (French), and ANA( Arabic)

Movies and Arts

AMC: uncut movies, movie history, old travel reels, vintage pr releases from the studios, some original programming

Bravo: 24 hour film and arts net, international films, performing arts, interviews, some original programming.

Disney: switching from pay to basic, family oriented, specials, movies,

Children’s Services

Disney Nick at Nite USA’s KidVid blocks

New Micro Niche Channels

Classic Sports -Reruns of great moments

The Hobby Craft Network American Lawyer The Cowboy Network The Automotive Television Network

Program Guides

printed (generic or specific to the channel such as HB0)

electronic text scroll video guide (barker channel) the

most expensive option, Prevue Networks, Sneak Prevue, Interactive Program Data

Basic Audio Services

Basic Audio services include AEI Network, 6 satellite delivered music channels (music for businesses)

Cable Radio Network, ac music, talk, used under cg, as telephone hold music

CPAN I and II

Premium Audio Services

Digital Music Express (DMX) provides 76 channels of CD quality music

Music choice (MC) 30 channels of music

Premium Programming Services

umbrella term for specialized entertainment services that are an add on to basic services

pay cable services (premium entertainment offered for a monthly subscription price)

Pay-per view, PPV, (charges assessed on a program by program basis

Methods of Signal Distribution

cable connection (most common) direct broadcast services (home

satellite) SMATV Microwave distribution (wireless

cable)

The problems of Shelf Space

The cable company’s available channels are its shelf space

Premium services compete for limited shelf space in this pre-digital age.

HBO is usually the first pick and the only pick is shelf space is limited. Competitors: Cinemax, Encore, Showtime, Flix Starz!

Premium services give a system “lift”

Pay Per View Competitors Request Television Viewer’s Choice Cable Video Store Playboy Action Spice Adam and Eve Adultvision

Multipay Environments( paying for additional services above basic) assumptions about how much the

average household were pay for cable proved low

Churn, substitutions, spins (moving from one pay service to another), and downgrades are part of the multipay environment.

Pay services try to differentiate themselves and timeshift their start times.

Revenue Split between the company and the pay services Subscribers pay about $8-12 per

month per channel. 40-50% of the revenue goes to the

cable company. Premium channels offer operators

discounts and incentives

Video on Demand (VOD)

Menu driven rather than schedule driven.

Viewers construct their own programming environment.

Internet will drive VOD further as we enter a server based environment.

Major Program Genres of Pay Channels

Movies Entertainment Specials Sports

Movies are the staple of premium channels rotation schedules (20-100 programs per

month rotated 3-8 times) rotation goal is to maximize the potential

audience for each program Movie channels care less about the rating of

an individual show than the subscriber base for the service (the buy rate).

Movies are balanced by urban/rural, 18-24, 25-49, 50+, gender

first run, theater release, encore presentations balance the schedule

Movies shown unedited and without

commercials feature films are licensed to pay nets by

per subscriber or by flat fee film placement: start film at 8pm, final

showing at 11:30, an evening is 3-5 programs, rounded out by shorts, interviews, promos, about 4 premieres a week, counterprogramming the nets (Monday football), mature themes are later in the evening

Entertainment Specials

original movies, series, Las Vegas acts, night club acts (all uncensored)

pay cable’s flexibility has allowed odd time events to run into the next hour or half hour

Sports

HBO and Showtime schedule national events, boxing, regional college sports, soccer, and equestrian sports in prime time.

The four biggest nets still have a lock on the Super bowl and the biggest events.

Basketball is on PPV.

The Pay Services Cinemax HBO Movie Channel Showtime Disney Encore 8 Flix Starz

Cinemax

debuted 1980 division of Time Warner geared to younger audience more films than any other dovetails its schedule to not conflict

with HBO includes comedy, music and specials

HBO uses theatrical films soon after their

run and some original programming, series, and showcases

created Tri Star studios parent company is Time Warner has 50% of the pay market used to give lift to a cable company new agreement with DreamWorks

studio

The Movie Channel

only feature films no specials, sports, or showcases programs some vintage movies rights to Paramount films from

1998-2004

Showtime

is usually the 2nd or 3rd addition of the pay channels

feature films, dramatic series, comedic series

hopes to enter HDTV with wide screen movie library before HBO

The Disney Channel

launched in 1983, fastest growing pay channel in the 1980’s

does not play the classics like Sleeping Beauty, plays movies, non classic Disney offerings, original series

is moving to basic cable from pay cable

Encore 8

older films target age group of 30+ titles run 12X a month launched 1991, only $1-$5 a

month

Flix

launched by Showtime in 1992 targets multipay households and is

free to subscribers of 3+ services shows movies from the 1970’s and

1980’s may be ripe for a merger with other

more lucrative premium channels

Starz

offspring of Encore created by TCI has claim on Hollywood Pictures

and Touchstone Pictures will become a major competitor

with HBO

Pay per View Networks

Subscribers select from a menu and phone n their selection.

Primary content is movies, then sports, and concerts

Consumers experience ordering difficulty and don’t like the costs.

Pay Per View: Request Television

distributes : 4-6 movies per week and some boxing and wrestling

distribution is to cable operators revenue is split between cable

system and Request

Pay Per View: Viewer’s Choice

offers 50-60 movies a month offers only a few new releases patterned after the broad offerings

of a video rental store

Playboy TV and Spice

instant brand recognition like Disney changed from pay cable to PPV 75% is original programming plays movies and music videos no duplicate programming for a

week Spice I and II, also PPV, offer only

movies

PPV: In house services

Time Warner offers Home Theater in New York City.

Large MSOs negotiate directly with sports promoters and Hollywood studios.

The future of the Premium Channels

Pressure from VOD will move them from pay to basic. Disney, Bravo and AMC have already migrated.

Compression will bring more competition.

Streaming video on the internet will bring huge VOD offerings.