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Cable TV showcase for the arts. The A&E network brings high-quality viewing to 30 million homes - and runs in the black

AT no cost beyond their basic cable charges, more than 34.2 million cable subscribers in nearly 2,600 systems are enjoying a surprisingly eclectic mix of around-the-clock entertainment, culture, and information. Now in its fifth year, the Arts & Entertainment Cable Network (A&E) manages to operate in the black, whereas many other high-minded electronic cultural services have folded, deeply in the red.

Just what is A&E, and how did it get to be successful in a field where giants like CBS (with its ill-fated CBS Cable), RCA (with its defunct Entertainment Channel), and ABC (with its ARTS channel) failed, and lost millions of dollars?

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Eventually, ABC, Hearst, and NBC joined forces to create A&E, an advertiser-supported channel, which the owners stipulated would have to pay its own way within a short time.

I visited with Nickolas Davatzes, president and chief executive officer of the Arts & Entertainment Cable Network since 1983, to find the answers.

Under his leadership, A&E is offering a fascinating potpourri of programming - some top-grade, some from the bargain table. The best shows in recent weeks ranged from two Agatha Christie mysteries on ``Suspense'' to a 10-part ``My Family and Other Animals,'' based on the childhood recollections of naturalist Gerald Durrell; from ``An Evening at the Improv,'' with stars like Donna Mills and Cicely Tyson to ``Short Stories,'' a showcase for independent films; from a BBC co-production original drama ``Escape'' to the Kirov Ballet performing ``The Sleeping Beauty'' and the American Ballet Theatre's production of ``Don Quixote.''

August highlights include the drama ``Day After the Fair,'' an A&E/BBC adaptation of the Thomas Hardy novel; ``Hollywood: The Golden Years,'' a six-part series with Ed Asner as host; and documentaries on World War II and the birth of the modern nations of Israel and India.

Several of the aforementioned programs are second-run acquisitions; some are original productions or co-productions. To a great extent the diversity of the programs is maintained through a series of agreements with American and international programming sources, including exclusive first-look agreements with CBS and Britain's BBC. It is, in the words of Mr. Davatzes, ``a rich and varied mix of quality entertainment and information.''

But isn't that exactly how PBS would describe its own programming? So the first question to the shirt-sleeved executive in his crowded Fifth Avenue office has to be: ``Do we really need both PBS and A&E?''

Davatzes is startled, but only for a moment. ``During the last four years, viewership by the intelligent viewer - the enlightened viewer - in America has doubled,'' he says. ``If you take PBS's ratings, add ours and C-SPAN's and Nickelodeon's, where it's applicable, and the Discovery Channel's collectively, we have doubled the audience of people looking at that kind of programming. We're all in the same business - to increase the audience interested in quality programming.

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``Around 80 percent of our programming is entertainment, while probably 65 percent of PBS's schedule is public affairs, science, and nature documentaries,'' Davatzes continues. ``Public Broadcasting has a very important mission to fulfill as well. Because it has public-sector funds, there are certain activities it performs that we don't: for example, the education process, in a formal sense.''

Davatzes doesn't see A&E as a competitor to PBS. ``The real challenge for PBS is not us,'' he says. ``It is to understand its own mission. And then, within that context, to understand the dynamics of what they've done to themselves by having two, three, four, five PBS stations competing for viewers and donations within one market area. I think the real competition for PBS for the past 10 years has been the explosion of PBS stations in markets in which there already were PBS stations.

``I think we are all working, in the long run, to bring additional quality programming to the American viewers, so that they can become their own programmer.''

Reached by phone later, PBS president Bruce Christensen agrees that there are differences between A&E and his own service. ``More than 100 million people a week tune in to PBS,'' he points out. ``That's a much larger number than A&E reaches. We spend a much greater percentage of our money on original programming and co-productions; they have been concentrating on acquisitions. Our mandate is to give universal access to diverse quality programming, and it should not be forgotten that cable is not available in all areas and not affordable to many people.''

If you've noticed that fewer BBC productions have been aired on PBS lately, perhaps it is due to the fact that A&E has a ``first look'' contract with the BBC that runs until 1991. Davatzes expects it to be renewed. In this past year, A&E was committed to take 200 hours of BBC programming, including a series of co-productions. ``But remember,'' Davatzes adds, ``that BBC1 and BBC2 between them produce about 12,000 hours of programming; so we don't exactly corner the BBC market, although we do have the rights of first refusal in certain categories.''

One of the programs that Davatzes was proudest of last year won an Achievement in Cable Excellence (ACE) award: ``Hotel Du Lac,'' a BBC drama. Another he cites as one of A&E's finest moments was the ``Australian Live Bicentennial Celebration,'' a four-hour ``window on the world.''

Davatzes admits that, despite some co-productions, ``the vast majority of what we do is acquisition. So we have an opportunity to see what programming looks like before we buy it and put it on the air.'' Acquisitions are often also much less expensive than original productions.

Davatzes says he is grateful to the early cable failures ``for going first. CBS Cable was basically managed by broadcast executives, and cable does not follow the same economic models as broadcast.

``From afar it seemed that if you had the best product, you'd find distribution. That's the way it is in broadcasting - you put out the signal, and it's one-way communication. Somebody out there will pick it up.

``Well, cable is not like that. In cable you have to ensure that somebody picks it up and puts it on a wire. We devoted the early part of our business efforts to building distribution before we began to make significant investments in programming. So that in 1984-85 a vast majority of our resources was devoted to marketing activities.

More programming money

``In the past two years we've increased our commitment to programming considerably. And in 1988 it will be up 35 percent from 1987.''

How can a viewer whose cable system is not carrying A&E now, get it?

``He can write the local cable system and tell them of his interest in A&E, sending on a copy of the letter to me. And he can convince others in his area to do the same.'' Davatzes says that A&E responds to every piece of mail it gets from viewers.

He is reluctant to reveal too much about future A&E plans, lest the competition will move in the same direction. But ``one of the things we are kicking around is finding a foundation program for the daytime which will draw audiences daily.''

Newsmagazine coming

``Another thing I want to see is a newsmagazine. Maybe something like `Our World,' a news program with a wonderful but narrow potential audience.

``And we are very interested in expanding our relationship with the new filmmakers of the world. We already have an arrangement with the American Film Institute for the `Short Stories' series. I would like to see us expand that to a larger number of young creative people from all over the country - not just New York and Los Angeles.''

Speaking about the financial side of the A&E operation, Davatzes says, ``We're definitely in the black. We are like the bumblebee that wasn't supposed to be able to fly. But we did, and I think it's because we brought very tough-minded business management to cable. For instance, we don't have fancy offices'' - he points around the not-very-fancy office - ``and we don't eat at `21' and places like that. But there has been a missionary zeal by the people involved.

``And we did have the support of the cable business. When we went out there and told them we wanted them to pay a fee (7 or 8 cents a month per viewer), there was some show-me attitude, but they finally did give us the opportunity to play. We never overpromised, and when we got the chance, we performed.''

A&E, which went on the air in 1984 with only one advertiser, now boasts of 300 - among them American Telephone & Telegraph, Ford, and Toyota - which pay between between $1,200 and $2,000 for a 30-second spot. According to Davatzes, ``The reason these advertisers come to us is because we deliver the demographics they are looking for. And we have a positive, uncluttered environment.''

A mass-audience approach?

Observers of the advertising-supported TV scene wonder, however, if ``too much'' commercial success will eventually force A&E to choose to air more mass-audience programming.

Who are the viewers? ``A significant portion are in the 35-55 category, well educated, with more than 50 percent college graduates,'' says Davatzes. ``They tend to be in the $30,000 to $75,000-plus income category. Slightly more women than men. And one of the most important things - our viewers tend to be involved in community affairs, very activist.''

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