CURRENT ONLINE

Stations hold talks with TCI; Duggan smells a fox

Originally published in Current, April 22, 1996

By Karen Everhart Bedford

Cable-TV giant Tele-Communications Inc. and its offshoots have gotten a rebuff from PBS but encountered interest elsewhere in possible programming deals. Station leaders participating in the talks see a potential deal as a "win-win" situation, bringing them additional programming and maybe even underwriting revenue.

Others, particularly those opposed to a congressional proposal to allow stations to air paid programming, see aggressive intentions behind TCI's overtures.

Attending a media conference in Colorado on April 9 [1996], PBS President Ervin Duggan and Peter Barton, c.e.o. of TCI's Liberty Media, confirmed in the Denver Post that TCI had approached PBS about working out a deal when its was under threat of having its federal dollars "zeroed out."

"We were not interested," said Duggan in the Post. He came up with a parable to explain why: "When the fox said to the gingerbread boy, 'I'll help you get across the river,' what did the fox really want?' " In the fable, the fox eats the gingerbread boy.

Barton dismissed talk of a potential merger, according to the Post, but said he had tried to come up with a "financing plan for PBS." He added that Liberty now is "in talks with a lot of PBS stations" about sharing programming.

Barton, who is a keynote speaker at the Pacific Mountain Network conference May 24, was not available for comment last week.

TCI approached PBS back when Sen. Larry Pressler was advocating corporate acquisition of public broadcasting, according to Bob Ottenhoff, PBS executive v.p. Companies such as Bell Atlantic and Jones Intercable expressed interest in buying remnants of public TV.

"What was going on was a lot of companies thought the collapse of public TV meant there was going to be a fire sale of assets," said Ottenhoff. "In that context, TCI approached us. We said, 'No, that's kind of preposterous.' "

The discussions are one of several ways that TCI and its affiliates have sought alliances with public TV over the past year:

Members of the Earned Income Group of public TV stations who have participated in these talks saw a tie between the early meeting with TCI, which was held in Denver last summer, and a subsequent meeting in October at Discovery's headquarters in Bethesda.

Hal Bouton, president of WTVI, Charlotte, attended both meetings. He recalled that during the Denver gathering, Barton expressed a concern that his boss, John Malone, not be accused of trying to take over PBS, as Rupert Murdoch had been in early 1995.

"Peter didn't want to do anything to damage his boss," said Bouton. "He thought it was an opportunity to do some partnering. Everybody in the telecom business is doing partnerships."

Bouton sees the talks as a "tremendous opportunity to grow and develop major new sources of programs and develop underwriting ... . The idea of a grand plan to take over public television is ridiculous."

It's now up to Discovery and the American Program Service to work out a program-sharing arrangement, according to Bouton and Ric Breitenfeld, president of WHYY, Philadelphia, who asked APS to discuss the possibilities with Discovery.

APS is the "very likely mechanism" to distribute Discovery's productions to public TV, said Breitenfeld. He said he and fellow EIC member George Dooley, president of Miami station WPBT, brought together APS President John Porter and Discovery Chief Executive Officer John Hendricks.

"They met and nothing came of it, thus far," Breitenfeld added.

Controversy over the congressional proposal to allow stations to air paid programming appears to have stalled the deal, at least temporarily. Rep. Jack Fields (R-Tex.) included this provision in H.R. 2979, and it initially divided public television stations. At latest report last week, most stations were favoring a provision permitting the paid programming, but with restrictions including a ban on infomercials, says David Brugger, president of America's Public Television Stations.

The PBS Board's Executive Committee last month passed a resolution opposing paid programming, which it said jeopardizes public television's noncommerical nature and is "no substitute" for the federal funding the field stands to lose.

"A rather delicious thing to think about"

To participants in the Discovery talks, the economic benefits of any deal that may emerge are clear and compelling: their stations would have a new stream of programming coming to them free, possibly with underwriting dollars already attached.

Breitenfeld described a scenario under which Discovery's marketers would offer an advertiser the option of public TV distribution of the program it sponsors on Discovery. For $50,000, its advertising presence around a program that cost $2 million would be replaced with underwriting spots. The advertiser gets "wider distribution." Public TV stations get "good programming and underwriting money."

"If the deal stops there, then I don't see any harm, and it's a rather delicious thing to think about," said Breitenfeld. He sees more reason for caution if the arrangement is "longlasting and becomes tied to contracts. It's much too early to say whether we should be frightened or not."

It's not clear either how much economic benefit such a deal would hold for Discovery, which is accustomed to having cable operators pay it for programming and has proposed that PBS pay for second-run of its programs.

National cable programmers recognize that cable penetration has "hit a wall" at 60 percent of the TV universe, explained Mike Collins, president of WNED, Buffalo. They're competing for advertising dollars against broadcasters who reach 100 percent of the universe. "It might work very well for a program supplier to package this," and offer advertisers "guaranteed carriage in x-number of broadcast markets." If the cable provider boosts a program's reach to 75 or 80 percent, that "automatically gives them an edge."

At the meeting at Discovery headquarters, Hendricks "talked about how an awful lot of their money is coming from advertising these days, and how they have to listen to advertisers," said Collins. Cable companies now are putting money into "big production" and the "money is not coming from cable operators, there is no growth."

Collins and other EIC members said they pursued the program-sharing deal for the same reasons that that they look to many sources to fill their schedules.

"What I find troubling is when people say you shouldn't take money for carrying programming," he said. "It seems like they're saying, 'You don't have the programming judgment to decide.' "

 

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