he cable television industry, trying to increase revenues but meeting resistance by regulators, is slowly moving away from charging its growing audience a flat rate for its programming.
The revenue option most appealing to the industry is "pay-per-view" programming, the distribution of shows that subscribers cannot pick up without paying a specific fee.
"I think we're going to see a movement toward pay-per-view," says Monroe Rifkin, managing partner of Rifkin-Fox Communications, a cable programming venture with 20th Century Fox.
Until recently, Rifkin was chairman of the second-largest cable system operator, American Television and Communications Corp., the Time Inc. subsidiary with close to 2 million subscribers. In that post he had been an advocate of the pay-per-view technology. "It's the American way to compensate creative people," Rifkin added. "As technology comes along, this will be a very hot market."
Another way the industry is considering raising revenue is by producing its own programming. Time Inc.'s Home Box Office, for example, has announced plans to develop 15 to 20 hours a month of original films and drama. Viacom Inc.'s Showtime is even working on a conventional series using the producer who created CBS' successful "Knots Landing."
At the industry's convention here last week, National Cable Television Association President Thomas Wheeler and other officials called for a lobbying effort to urge Congress to limit the powers cities have over cable operators. But even though such issues have a certain gut-level appeal for cable operators, the attention at last week's convention focused on dollars-and-cents concerns.
How quickly the pay television revolution develops or how much techniques like pay-per-view alter so-called "free" television remain to be seen. What appears clear, however, is that no one in the television business--including the major networks and the leaders in film and television production businesses--wants to be left behind.
So far, technological snags have slowed the pay-per-view business, which experts say ultimately will be a major piece of the $600 million pay cable business.
The problem is with "addressable converters," the technology that allows system operators to activate or shut off services without having to dispatch mechanics from the office. The devices are not as reliable as some industry officials would like.
M. Christopher Derick, president of Group W Cable, the Westinghouse Electric Corp. unit formerly known as Teleprompter Corp., reported that one of his operators was notified recently that a subscriber had figured out how to beat a pay-per-view system. "I believe" in pay-per-view, he said, "but I really don't know how far we've come."
Some cable systems have had more success than others in installing pay-per-view boxes, but less than half of the approximately 1.5 million converters in use have been installed in the nation's 24 million cabled homes. The rest are being used by the over-the-air subscription television business, which uses simpler converters because it offers fewer channels.
In the meantime, operators have been installing devices called "disposable traps," which scramble the signals on a given cable channel. They are not as practical as the converters, however, because the user must attach it to the cable for each performance, although the technology is particularly appealing for big events like the upcoming Cooney-Holmes fight.
But systems like Gill Cable Inc. of San Jose, Calif., hail the addressable technology and say it works well. That system has put the addressable boxes in the homes of 33,000 of its 92,000 subscribers, and Bob Hosfeldt, general manager of the system, said it will be in every Gill home by the end of 1984.
Gill brings in even more revenue by charging a rental fee of $25 a year for the addressable box and markets the service, which is ideal for championship boxing matches, by offering discounts at local fast-food restaurants the night of a big prize fight. That plus the $5 for a fight or a movie adds up to big revenues for a cable system.
Six to 7 percent of those Gill subscribers have been turning on a fight, a Rolling Stones concert or a movie fed through the cable before it is shown on more widely distributed pay television services such as Home Box Office or Showtime.
But, according to Group W's Derick and other cable executives, the problem is that there is not yet enough appealing material and too brief a time (or window) before the shows or movies are made available to other pay services and over-the-air television. "We need a nine- to 12-month window," Derick said.
Yet, the vast potential market of cable, expected to reach about half the nation by the end of the decade, promises that more "software"--programming--will be developed. "If the major urban markets are fully addressable, I can't see why people aren't going to produce product for that market," said Colin Watson, president of Rogers Cablevision, the largest Canadian cable television company.
Not to be left out, the three major networks are also hot to play in pay. American Broadcasting Cos. Inc. has announced plans to begin a joint venture with Cox Cable Communications Inc. with the development of pay television high on their agenda. In addition, ABC recently announced plans to offer an over-the-air pay service designed to feed programming to tape machines during the night.
RCA Corp., the parent company of NBC, with Rockefeller Center Inc. is launching The Entertainment Channel next month, a pay cable service that will offer exclusive television Broadway productions, classic movies and, in addition, has first rights to anything produced by the British Broadcasting Co.
CBS, though currently operating a basic, or nonpay, cable service, is also planning, through CBS Cable, a joint venture with 20th Century Fox. A pay cable channel and pay-per-view services are reportedly in the plans.