NEW ORLEANS — Richard Parsons, the co-chief operating officer of AOL Time Warner, said he has no plans to split AOL off from Time Warner but conceded that Wall Street has “justifiably punished” the company’s stock for “overexuberance” in selling the merits of the merger.
“We hoisted ourselves on our own petard,” Parsons said, speaking during the panel session that officially kicked off the 51st annual National Cable Show here Monday.
But Parsons went on to say that “plain old cable continues to be a good business. We’re steadily adding subscribers and adding more channels and better programming.”
Echoing these optimistic remarks were two other panelists, Brian Roberts, president of Comcast, which will become the biggest cable operator in the U.S. if its merger with AT&T gets Washington approval, and Michael Willner, prexy and CEO of Insight Communications, a top-10 cable operator.
Despite the poor performance of most cable stocks in the last few months, Roberts said the cable industry sold more digital modems, telephone services and other new products during the first quarter than for the same period in 2001.
And Willner said that even though no “killer application” has emerged from what he called “the interactive digital platform,” cable “has resisted the downturn” in the economy and “is cooking on high-test gasoline.”
The upbeat spirit carried over to the issue of the 25% ownership stake in Time Warner Entertainment owned by AT&T. As soon as Comcast takes over AT&T, Roberts said he expects to resolve the matter in a “win/win” agreement with Persons. “We won’t write a big check” to Comcast-AT&T for the 25% stake, Parsons said, adding, with Roberts nodding approval, that “there’s more than one way to skin that cat.”
In a press conference following the panel discussion, Roberts said Comcast will launch a video-on-demand service in its Philadelphia cable system that will start with 750 hours of programming drawn from broadcast networks and basic-cable channels. VOD would allow subscribers to pause or rewind any program, just as though it were a prerecorded cassette in a VCR.
Roberts said the service would be particularly valuable to nets with shows that appear once and may not turn up again. He cited the latenight shows hosted by Jay Leno and David Letterman, the nightly newscasts of the Big Three and some of the news and business shows on CNN, Fox News Channel and MSNBC. “There are 2.5 million digital boxes in homes that could watch ‘The Tonight Show’ if we could make a deal for it,” he said.
Comcast wouldn’t pay the networks license fees for video-on-demand rights to these shows, Roberts said, because cable subscribers would get the service free of charge. But he would keep the commercials in the VOD replays, so the networks would harvest additional advertising revenues from the viewers who watched the extra runs. These shows would be free to the video-on-demand subscribers.
Roberts also touted the potential of two other forms of video-on-demand: the monthly-subscription model, which would apply to pay TV networks like HBO, and the pay-per-view model, which the major studios are exploring with their recent theatrical movies.
“A show like ‘Sex and the City’ has value for HBO,” he said. The network would have to charge a monthly VOD fee because it doesn’t accept advertising.
And Roberts said VOD got an enormous boost last week when 20th Century Fox joined Columbia, Universal, Warner Bros. and DreamWorks in agreeing to make its recent theatricals, as well as some library product, available to In Demand, the dominant PPV distributor in the U.S.