A war for the hearts, minds and pocketbooks of the cable television industry begins today.
The war is over news and is being waged across the country between Atlanta's Ted Turner, the brash billboard, sports and television magnate, and ABC and Westinghouse, who today launch Satellite News Channel, a 24-hour-a-day, seven-day-a-week cable news service in competition with Turner's 2-year-old Cable News Network.
On the surface, the fight is over slots on local cable systems. But more importantly, the fight is over future control of the cable business and whether it ultimately is run by the people who have dominated television--the major networks.
"ABC is trying to get a foothold in cable and the industry is going to reject it," said Terry McGuirk, Turner's top aide. "There isn't room for both our companies to exist. They are intending to put us out of business, but Ted is an awfully good battle commander. We are a company made up of people who like a good fight."
Many in the cable business have not forgotten that ABC aggressively fought cable's development. "The resentment is so deep among many cable operators that they make statements like 'over my dead body' " when the ABC Westinghouse sales force shows up, said Brian Lamb, president of the Cable Satellite Public Affairs Network. CSPAN provides congressional and other Washington coverage to cable systems across the country.
The people here who run SNC deny that their aim is to put CNN out of business. "I'd like to see all the people make it that are trying to make cable succeed," said Jonathan Hayes, president of Group W Satellite Corp.
Why is one of cable's potentially most bloody battles being fought over dominance of the news market?
"Cable and news are made for each other," said Hayes. "Obviously you can't do a 24-hour service for the broadcast media. But somebody will do a terrific news service on cable and it will become the preeminent source of news for this society. The question is whether you can put together something that is good enough."
But deep pockets are also needed in the crapshoot that the cable business has become."Let's say they drive us to the wall and we have to sell out," McGuirk said. "The biggest bidder for CNN is going to be CBS. And then the networks will own all the news in the cable industry. That's what the smart guys in the industry really fear."
Those associated with Satellite News Channels say there is room for many in the field and that CBS officials have little interest for now in CNN. "They CNN don't fill the need we'll fill," said S. William Scott, SNC's president and a former all-news radio manager.
Many people in the industry wonder quietly whether Turner's costly, critically well-received news operation can continue much longer without new financing. Turner Broadcasting, which includes Atlanta's Channel 17, fed by satellite to 4,000 cable systems across the country, lost $13.4 million last year and a tidy $5.3 million in just the first quarter of 1982.
ABC and Westinghouse are prepared to keep losing money on their venture through 1985, when they project making their first profit in that year's fourth quarter, according to industry sources. Company officials won't discuss their own projections or financing although industry observers suggest the companies are prepared to invest $300 million to get the service going.
Unlike broadcast television, however, the game is not for conventional ratings. "This is not going to be a mass medium," said Lloyd Werner, SNC senior vice president for sales and affiliate relations. "People are not going to look at us like they look at 'Three's Company.' "
Recent Nielsen ratings indicate that although 38 percent of CNN's audience watch it at least once a week, the audience is only a 2.3 share at peak times, bringing in an average audience of about 152,000 homes.
But cable sales representatives sell these services on a cumulative basis, selling ads to be shown 18 times a week, for example. Werner said that if CNN, even with those figures, could sell out its ad time, that would bring in revenues of more than $100 million.
Although there is dispute within the industry about the value of the numbers, with Westinghouse having relatively quick access to its own Group W Cable subscriber base of close to 2 million homes, SNC has announced that it will have no fewer than 2.6 million subscribers for its start-up. SNC also says it expects to add another 5 million subscribers by the end of 1983.
To do so, SNC is paying cable operators up to $1.50 a subscriber to sign up for what it hopes are five-year contracts. For Turner's service, on the other hand, cable operators pay as much as 20 cents a subscriber.
"They're giving away money but in the end that's not going to be a decision maker," countered McGuirk. "The service will make the difference."
"The networks can do news and information quite well in competition with anyone," said Herbert Granath, president of ABC Video Enterprises. Since ABC can own its news products, and not its series, "we can also control our costs a lot better."
ABC News management is also keenly interested in a second SNC service, which won't be launched until next year. That service is slated to offer more in-depth coverage--congressional hearings,, roundtable discussions and other lengthier programming.
The first SNC news channel promises: "Give us 18 minutes and we'll give you the news." It is television's answer to the constant chatter of all-news radio, and the ABC-Westinghouse answer to Turner's CNN2, a headline service now offered to about 1.5 million subscribers compared to the 14 million subscriber audience that gets the slower paced Cable News Network.
SNC's emphasis clearly will be on Washington, where it has its only full-time staff outside the 130,000-sq.-ft. facility here that houses its studios and offices on the shores of Long Island Sound.
The Washington operation is being run by SNC's only nationally known on-the-air figure, Lou Cioffi. Cioffi will be running a staff of about 50 people, dividing his time between managing the operation and reporting. He was a reporter for ABC News for 21 years.
"Washington is very special," said Tom Capra, SNC's managing editor and a former senior producer for ABC News, where he worked for nine years.
Cioffi's operation, with six reporters, cannot match the scope of the ABC network news operation in Washington, although he has access to the tapes and some of the reporting done by the large ABC bureau. The advantage his staff will have is the ability to get on the air quickly.
"They peak for the evening news or for 'Good Morning America,' " Cioffi said of the network correspondents. "We file immediately and then start up again. While Sam Donaldson is polishing his thing, our guy has his out of the way and is hungry looking for more. We'll advance the story, not just repeat it."
"In the 1980s, people will have less and less time and television will be a serivce," said Group W's Michael Lape, director of training and education.
But CSPAN's Lamb, a veteran of efforts to bring news to cable viewers, wonders with others how big an audience is really out there to fight over, with ratings services suggesting that the news audience is miniscule. "Think of all-news radio," Lamb said. "The history of all-news radio is the audience comes only in crisis periods. Someone has to get tired of losing money."