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When you're the boss

Take a good, long look at your television set. In the very near future, it will be an entirely different beast. Oh, the set itself -- picture tube, channel changer, on-off button, etc. -- will stay pretty much the same (though perhaps the screen will be larger), but by 1985 it will have more new features than a politician has promises.

A smorgasbord of new technologies will overtake the familiar boob tube by then and, along with them, a demand for new programming ideas that promise to turn the TV industry on its ear. There is a distinct possibility that the three major networks will see the lion's share of power -- and the sort of programming that goes with it -- spread over a much broader field.

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If present trends continue, the $10 billion a year television industry will soon see an explosive expansion. The TV set, already woven into the fabric of the American home, will become even more important. And the viewer will have a lot more choices -- and a lot more say -- in what he watches.

The revolution of the air waves, in fact, is already well underway:

* In Columbus, Ohio, TV viewers can bring town meetings into their living rooms and, with special terminals attached to their sets, register their approval or disapproval on agenda items such as the quality of this year's snow removal. They can also take college courses for credit, and before long will be able to see and place orders from department store catalogs by using their TV sets. The 38-channel system even offers a game show with home audience participation.

* Some five million viewers now take in first-run movies from the comfort of an easy chair -- and in close proximity to the refrigerator.

* Owners of a variety of video machines can watch, at will, anything from "The Godfather" to lessons on how to play the stock market or swim the Australian crawl.

Cable, video discs, and video tape cassettes are the key words for television of the 1980s, and they promise to make TV's first 30 years equivalent to transportation's horse and buggy era. If television can be compared to cake, the batter is just going into the oven.

The strongest candidate for loosening the grip of ABC, CBS, and NBC on the air waves is cable television (CATV). Some 15 million American homes now can receive CATV, 20 percent more than the year before. Growth this year is expected to produce another 20 percent increase. By 1985, says John Reidy, a financial analyst with the prestigious New York firm Drexel, Burnham, Lambert, the number of cable homes will have doubled to 30 million, representing 35 percent of the homes with television. (Currently between 75 million and 80 million homes have TV sets, and the number is expected to grow about 8 percent annually during this decade.)

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These figures are actually fairly conservative compared to the predictions of some members of the industry. Nonetheless, they represent a phenomenal expansion, and some of America's largest companies have anteed up hundreds of millions of dollars to break in on the expected cable boom.

Video tape recorders (VTRs) and video disc machines will also change the TV picture. Both offer viewers the same product -- pre-recorded features. The video disc player feeds them to a TV set from something resembling a phonograph record, the VTR from a tape cassette player. Discs, however, sell for at most one-quarter the price of tape cassettes, and the machines cost half as much as video cassette players. Unlike VTRs, though, they cannot record shows off the TV.

RCA's Herbert Schlosser expects there will be about 40 million video disc machines in American homes by 1990. Mr. Reidy predicts 10 million of them by 1985. Industry guesses for VTRs hover around 8 million for the end of the decade.

While new TV technology dangles the prospect of big bucks in front of industry executives, it also offers viewers unprecedented say in what they watch and when they watch it.

The prerecorded disc and tape markets could offer glittering prizes to companies like MCA, the entertainment conglomerate, which recently joined Magnavox and IBM in a video disc venture called Disco Vision. MCA supplies the programs, Magnavox the machines, and IBM the money. The DicoVision catalog lists 202 features ranging from Julia Child preparing quiche lorraine at $5.95 to "Jaws" and "Saturday Night Fever" at $24.95 each. In between lies a healthy sprinkling of Disney, sports, educational, religious, science (e.g. Jacques Cousteau), and arts features.

Parents may soon be able to switch off the Saturday morning ads for sugar-coated cereals and tune into a library of "Sesame Street" video discs.

The appeal of these new technologies to consumers goes deeper still. ". . . Our research is showing us that what people want most out of their televisions is control. They don't want to be forced to watch, say, a TV movie only at 8 o'clock Tuesday night. They want to decide when to watch it," says Frank Biandi , vice president of programming for Home Box Office (HBO), a Time, Inc., subsidiary that offers a movie/sports/entertainment service to CATV subscribers.

HBO and similar services offer viewers that control by repeating their programs several times each month at different times of the day. Video discs and tapes, obviously, make that control virtually complete.

However, since they will be able to select programs from a variety of sources rather than from just the three commercial networks, viewers will have a profound impact on what typesm of programs are available.

The new technologies will bring "a fragmentation of what was formerly a mass taste," comments Ellen Metcalf, TV specialist with Arthur D. Little (ADL), the Massachusetts- based consulting firm. "Until now, television has basically been a choiceless medium. You could only watch what the networks offered, and the programs they put on were designed to appeal to the greatest mass of people. That's no longer going to be true."

For example, says Mort Zarcoff, chairman of the television department at the University of Southern California (USC), "If you and I were to go to the networks with a proposal for a piece about ballet or opera that had a potential audience of 500,000 people, we'd get thrown out. Half a million people is no audience at all to a network. But, if we put that ballet program on a video disc and sell it at $5 per disc, to 500,000 people we would make a nice profit."

One-third of the people who watch television do two-thirds of the watching, which means that the vast majority of TV viewers account for only one-third of the 6.5 hours per day that the average television set is on. This is the audience targeted by the video disc and cassette makers.

"Suddenly there is an audience for people who want to watch Einstein talking, " says David Sishman of ADL. "If nothing else, there are 2,000 college libraries who would buy a video disc about Einstein.Segmenting the audience has been the name of the game in marketing for a long time. These new technologies will allow TV to play that game."

They will also change the way TV advertisers spend their money, industry analysts speculate. Currently, the only companies that stand to gain by shelling out the hundreds of thousands of dollars required for prime-time commercials are those that want to sell to upwards of 50 million people. This eliminates a lot of others -- those who, for example, sell sophisticated stereo equipment or paintings or Rolls Royces. So, in the future, we may see a video disc ballet feature sponsored by Mobil in its effort to reach a well-educated audience.

Video promises a boon in the '80s for small, independent producers like David Hubert of Gateway Productions in New York. Gateway is the largest independent producer of TV journalism in the US with several critically acclaimed documentaries for the Public Broadcasting Service (PBS).

"But there is just no money in public television," says Mr. Hubert. "That's going to change. We see unbelievable opportunities to service audiences that have never been serviced before by television.

"For instance, right now there's no weekly business news show (on commercial TV), yet there must be an audience of 8 or 9 million people who would watch such a show. Now those numbers mean nothing to a network, but that's a huge audience. What we see is a kind of video disc magazine (in the next five to six years) for business news, for children's stories, for documentaries - basically everything that the publishing industry has done, except in video.

"There has never been a way for small producers such as ourselves to reach audiences directly. Now, suddenly, the technology is there to do it. . . . The possibilities are limited only by imagination. . . . The people who are not now watching 'Laverne and Shirley' are the new audience."

Experts also predict a new demand for non-network-produced dramatic and entertainment shows. HBO's Mr. Biandi estimates that by 1982 50 percent of HBO's shows will be produced specifically by or for the company. It already produces some of its own programs, such as a recent and immensely popular Barry Manilow concert. HBO has at times outdrawn the networks for ratings during prime time.

Predictably, Time, Inc., HBO's parent company, plans to enter the video disc field in a big way, says Bruce Barnett of Time-Life Video, marketing its own discs in much the same way that it sells Time-Life books.

The impact of all this on the networks is, basically, anybody's guess.

Mr. Reidy of Drexell, Burnham, Lambert, expects ABC, CBS, and NBC to lose only a small percentage of their audiences. ADL's Metcalf and Sishman predict that "the networks are going to get kicked in the shins. Ms. Metcalf adds, "My suspicion is that people will not be watching more TV, because I think the trend towards interests and activities outside the family and home is going to continue."

Network executives follow the Reidy line of reasoning, and they certainly don't intend to take the challenge lying down. During a recent TV movie on ABC the message "Another quality movie from free commercial TV" appeared in the lower left-hand corner of the TV screen. Most critics of network programming also tend to disregard that the great majority of people who watch prime-time TV say they like it.

David Wolper, who produced the hit series "Roots" for ABC and has two other multi-chaptered TV productions in the works, thinks network programming will improve over the next two or three years on its own, regardless of competition from cable and the home video systems.

"I think that, as television becomes less and less popular, one of the networks will decide to shoot for second place in the ratings with quality programming. They're going to find advertisers who want to reach that audience and are willing to pay for a second-place share of the ratings."

He adds that he welcomes these technologies believing that they will provide additional outlets for new productions but doubts they will offer the networks any serious competition for the next seven to eight years.

Dr. George Gerbner of the Annenberg School of Communication at the University of Pennsylvania, a specialist on the sociological effect of television, believes network programming will degenerate considerably.

"The coming of the new technologies provides a way to individualize what has been a mass medium. They are an extension of the book culture and will appeal to what I call the information-rich audience, people who are already selective about the quality of programming they watch.

"They will not be a substitute for the mass ritual of television, but will siphon off what good programming there is now. The information-rich readers and viewers will become richer. Those who are now monopolized by the mass ritual will be more impoverished."

ADL's Ms. Metcalf echoes that sentiment when speaking of that highly controversial subject -- children's television.

"The same mothers who make the extra effort to be selective and buy educational toys for their children will probably make the extra effort to give their children better television. Those mothers who don't make that effort with their children now, probably will not in the future."

Gateway Productions' Mr. Hubert adds that "the new technologies will probably mean the end of public television [PBS] but for all the right reasons."

Comments USC's Mr. Zarcoff: "The introduction of cable, video disc, and video tape will undoubtedly change the nature of network programming. The competition for audiences during prime time is going to be tougher, and the networks may try to compete on the basis of an even stronger appeal to the masses," and air what he terms more R-rated material with a "degeneration of the moral structure that now guides the industry." And so TV, he believes "will become more like motion pictures. It's happening already."

Networks will be particularly hard-pressed in this respect to compete with cable TV services, which already offer uncensored R-rated movies. (Further down the scale, most observers expect more pornography to be aired on cable channels. One cable service in New York City already offers a two-hour late night run of pornographic features. Pornography is already a booming business on video tapes , and the cheaper discs could be expected to increase it.)

Although cable TV has been available in the US for 30 years, it was not until 1975 that the industry's horizons began to expand. Prior to that, cable's main function was to take programs to rural homes and isolated communities that could not receive television signals over the air.

Today the prospect that has the industry heavyweights reaching for their bankrolls is the opportunity to wire the country's major population centers. And today cable is many, many times more popular and profitable than it was before the 1970s because of add-on services, such as Home Box Office, Showtime, Star Channel (Warner-American Express Communications).

These and 16 smaller services offer cable subscribers movies -- first runs as well as classics -- sports events unavailable on regular stations, and concerts, all for $8 to $10 a month. Basic cable service, which usually costs $7 per month, can include from 1 to 78 channels transmitting stock market information, programs from the three major networks, local issues, the hometown high school basketball team's latest exploits, and anything else the cable operator wants to broadcast.

These add-on services became possible in 1975, when RCA American launched its first communications satellite -- Satcom I. It allows companies such as HBO in New York to transmit programs across the country for several hundred dollars an hour, compared to the $3,000 an hour it would cost to send them over telephone lines. Satellite earth stations -- owned by the cable operators who feed HBO and other services to their subscribers -- which pick up the transmissions are cheap and plentiful. A receiving dish costs a mere $25,000, a one-time investment. Neiman Marcus will install one in your backyard for $36,500.

Satcom I was followed in short order by Satcom II and then Satcom III. The inexplicable loss of the fully subscribed Satcom III in space last December pulled the plug on plans for a number of cable ventures. One of the most heralded of these was a 24-hour news broadcast show put together by Ted Turner, the flamboyant owner of the Atlanta Braves and Falcons and WTCG, the cable station that zips their feats and other shows to cable systems all over the US via Satcom II.

Although HBO currently holds down 70 percent of the add-on service market, the most aggressive of all the systems is Qube, the Warner-Amex communications project in Columbus, Ohio, notes Jacob Kuykendall, a financial analyst with Arthur D. Little. Qube offers basic cable service, a movie and sports channel, a children's channel called Nickelodeon, a feast of local access programming, the two-way channel mentioned earlier, and loads more over its 38 channels. Although Qube operates only in Columbus, at the moment, Warner-Amex is considering expansion in Houston, Pittsburgh, and Portland, Oregon, adds Mr. Kuykendall.

Other companies are looking at these and other cities, too. The cost of cabling a city (estimated at $100 million for Boston) is enormous but apparently worth it, judging by the heavy bidding and courting of politicians by companies eager to secure a city's cable franchise.

Pulling up fast on the inside lane is subscription TV, which offers the same movie/sports/entertainment programs as HBO but transmits them to subscribers via radio waves from a nearby station. The drawback to subscription TV, says one industry observer, is that it offers only one channel for an average $18 per month, compared to a number of channels on CATV for the same fee. However, it is also much easier to set up from scratch, and Oak Industries, which runs the On TV service in New York, Phoenix, and Los Angeles, has definite plans for the same cities being eyed by cable companies.

Ms. Metcalf predicts that video tape cassettes and machines such as Sony's Betamax will continue to show up in American homes, as their prices drop from the current $750-$1,000 range to about $400 within the next year "simply because people will want to record shows."

The fact that the Photomat chain now rents video cassette movies for $7 to $8 also makes VTRs more attractive to consumers.

The outlook for video discs is even stronger, but at the moment confused. RCA and Magnavox are the only two makers of video disc players, and the discs for one company's machines can't be played on the other's. The Magnavox version employs a laser, and the RCA uses a phonograph-like stylus. Japanese manufacturers also are expected to jump into the market in a big way within the next two years.


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