YOU AIN'T SEEN NOTHIN' YET
The ultimate sports spectator, or junkie, vintage 1981, is a very tall (6'7") pharmacist, age 30. His name is David Squires, and he spectates before a 19-inch Panasonic Quintrix II television set in the front room of his brown bungalow at 229 Glacier Drive, Lolo, Mont. Lolo? Yes, Lolo (pop. 4,000), a drab hamlet 10 miles outside Missoula in the farthest western reaches of the state. Here the land is raw and beautiful, most of it nearly as virginal today as it was 176 years ago when Lewis and Clark trekked through. Lolo is not virginal, however.
It's full of small tract houses and trailer parks. Lolo's biggest business is Don Tripp's Truck Stop. This section of Montana is sparsely settled for miles in all directions beyond the Missoula-Lolo population knot, and there is heavy truck traffic east-west on Interstate 90 and north-south on 93. "Truck stops are a very important part of the local economy," says Squires. "That and timber. But the timber business has gone to hell."
On a brief tour of Lolo (there is no other kind) Squires points out the sights: the truck stop, the barbershop, the dry cleaners, the bingo parlor and Hardware Hank's. He gestures toward a couple of taverns and says, "Montana has about the highest alcoholism rate in the country. Even when the economy is in good shape, there's nothing much to do in winter except drink. Or watch TV."
Squires does a little of one and a lot of the other. He insists he isn't addicted to television any more than he is to alcohol, which is not at all. He says, "If there's a choice of going fishing or watching TV, I'll fish." Then he adds with a wry shrug, "Of course, I'll always do a quick channel check to see what's on so I don't miss something big."
Something big? In Lolo? You bet. Obviously, 229 Glacier Drive is situated in a section of the U.S. that is about as far off, barefoot and bush league as one can imagine. The nearest city with any kind of a big league look to it is Seattle, and it's 400 miles away. But that doesn't matter, for every day—no, every hour—Squires is served a veritable glutton's feast of major league sports. Thanks to the cable connection for which he pays M&M Cable Co. of Lolo $11 a month, his TV set might pick up as many as four different major league baseball games. Or he might switch back and forth from big-time tennis in Monte Carlo to big-time soccer in Frankfurt to big-time arm wrestling in Petaluma.
Squires receives the three commercial networks out of Spokane; the 24-hour, never-ending stream of sports from the Entertainment and Sports Programming Network (ESPN) in far-off Bristol, Conn.; and the three superstations: WTBS in Atlanta, which carries nearly all the Braves and Hawks games; WGN in Chicago, which does the White Sox and the Cubs; and WOR in New York City, which sends him the Mets.
Squires' face reflects something between ecstasy and euphoria when he speaks of the cornucopia of TV sports. "I grew up in San Diego and I am a Padres fan," he says, "but I've gotten to know the Atlanta Braves very well, thanks to WTBS. I had never seen lacrosse before, but I saw a Maryland-Navy game on ESPN, and now I keep hoping for more lacrosse. I see all kinds of things I never saw before. Everybody does. I watched the NFL draft for four hours this spring. I watched 33 NCAA tournament basketball games. My mother-in-law watches car races. Would you believe that? Hell, I know a guy in Lolo who gets up in the middle of the night to watch polo on ESPN!"
Polo in Lolo? Let's stop right there for a moment. The cultural extremes represented in that short rolling phrase are almost enough to overwhelm the imagination. And yet those five absurd, yet absurdly lovely syllables beautifully reflect what is happening in the vast world of television sport in the U.S. Polo in Lolo echoes an onrushing fragmentation of televised sport and of sporting tastes. Polo in Lolo signals an assault on what for three decades has been a commercial network monopoly of the choicest sports events. If big-time TV couldn't find the time of day for the NHL and could only sneak the NBA playoffs in through the back door at 11:30 p.m. as a kind of delayed-tape leper-orphan, the audience to be found in 10,000 Lolos clearly could bring about change—grand and volatile change.
In short, Polo in Lolo symbolizes the new clout of cable TV, of satellite broadcasts and of all sorts of dazzling systems of transmission and communication that soon will fill American living rooms with more hours of more sports than even the most channel-dazzled, game-crazed, ESPN-stoned junkie could have imagined. It also could forecast the end of most "free" television sport and the onset of a time when Americans will be charged admission to their own living rooms—perhaps as much as $25 for the Super Bowl, $100 for the World Series, $250 for an entire Olympics. The fact that a man in Lolo, Mont. can regularly indulge himself in what can only be described as the unnatural act of watching polo on his television set spells r-e-v-o-1-u-t-i-o-n for TV sport in America.
Twelve years ago this magazine published a series of articles detailing the impact of TV on sport—and vice versa—since the early 1940s, when television was but an experimental glimmer in fewer than 2,000 U.S. homes. We declared that America had entered an era in which all major sport had come under the operative control and philosophical influence of the commercial networks.
That control and that influence still exist and have never been stronger. In 1969 the NCAA championship basketball game attracted 8.2 million viewers. This year 16.5 million watched the game. The TV audience was 60 million for the 1970 Super Bowl. This year's game drew 100 million viewers. In 1969 the NFL TV package with the three networks was worth $40 million annually, which was split equally among the 26 teams. This summer, Commissioner Pete Rozelle will negotiate a $1 billion contract over four years that will guarantee each of 28 clubs something like $8 million a season. In 1969 the TV rights to the Rose Bowl cost NBC $1.5 million. This year NBC held on to the Granddaddy of Them All in the face of a determined CBS assault, but only by paying $7.2 million for the 1982 game. Last week ABC and CBS each signed a four-year, $132 million contract with the NCAA to televise its football games. The agreement represents an increase of more than 110% over the current one-year deal of $31 million paid by ABC. And so on.
So comfortable and so dependable is the largess forked over by advertisers that many network and sports establishment types assumed things would never change. Of course, they were wrong. Don Ohlmeyer, executive producer of NBC Sports, speaks with disarming candor about the attitude of a number of his peers. "Cable television and pay television are here," he says. "They are real. But the reaction of the network people has been the same as radio people had toward television in its embryonic days. They just hoped it would go away."
Well, as we know, radio people of the '30s and '40s were desperately wrong about the new medium. Though the revolution we are about to witness will likely not be as upsetting as commercial TV was to radio, there's no doubt that cable and pay TV will drastically alter television viewing as we know it today. Not everyone agrees on precisely what form this upheaval will take, but everyone agrees it's coming:
•Ohlmeyer: "The structure of sports on TV will change so radically it will hardly be recognizable. The networks have been enormously successful as monopolies, but that's all over. In the future the networks will have only a few of the really big events like the Super Bowl or the World Series. But these events will be economically useless. They will be carried as loss leaders to keep the public happy. They will only be on so-called 'free' TV for political reasons."
•Gustave Hauser, co-chairman of Warner Cable: "There is more demand to see more events in the home now, and that has created an entirely new marketplace. Ultimately, it will disturb all the existing patterns involved in broadcasting sport. Whereas sports have been concentrated in the stadium, they will now become concentrated in the home."
•Ted Turner, owner of the Cable News Network, the baseball Braves, the NBA Hawks, the NASL Chiefs and WTBS, the so-called superstation that has a potential reach of 16.7 million: "Nothing in TV sport will be the same once cable and pay TV begin to bid seriously for rights. By 1983 27.7 million viewers will have access to WTBS. I'm going to bid for the 1988 Olympics. I'm going to bid on the new NFL contract. I might not get it this time, but I'll be back. My kind of operation is going to be around longer than the networks if they don't change their habits. By the time you realize what's happening, the only events to be continued on over-the-air TV will be the World Series and the Super Bowl."
•Harry Glickman, executive vice-president and general manager of the Portland Trail Blazers: "Over a 20-year haul, practically every sport will move from the networks to cable or pay TV. There will be a decline in attendance but an increase in revenues. If the law allows it, I think franchises will move in bunches to bigger population centers to take advantage of larger potential TV audiences."
•Mike Lynn, general manager and vice-president of the Minnesota Vikings: "Cable TV will take a long time before the NFL can use it. But I think NFL revenues from cable and pay TV eventually will be frightening. Suppose you get $5 a week from, say, 50 million homes with pay TV? It's not all to the good. Pro football will be like the movie industry, and players, like movie stars, will become so powerful that they will demand—and get—whatever they want."
•Ballard Smith, president of the San Diego Padres: "One good thing I see is that sport will return to the days when it dictated how games are played. Today we alter schedules for national TV. We adjust time-outs in basketball and starting times and time-outs in football—all for network television. Pay TV would allow our games to be played by the ground rules we prefer."
•Bill Fisher, vice-president of Advansers, a division of Gardiner Inc., the St. Louis advertising agency that produces the TV and radio shows for the baseball Cardinals: "I have no doubt pay TV will take over nearly all major sports programming. And why not? If the Cards got a chance to make a million bucks for just one game on pay TV, they'd be crazy not to do it. But, I do disagree with those who believe pay TV is going to make this big takeover within a few years. I think we'll be into the early 1990s before it takes full effect."
Why is all this talk of change and turbulence suddenly in the air? To put it simply, what has happened is that a whole new array of so-called "delivery systems" is available to bring a whole new variety of television programs into the American home. Since the beginning, the principal method of transmitting TV programs has been the over-the-air broadcast. This is just about what it sounds like—the throwing of signals through the air from a sending source (a network or local station) via a transmitter to a receiving source (the viewer's home antenna).
Much of the technology for the new delivery systems has been around for some time. What is happening now is merely an explosive conjunction of elements that will make it all work. The proliferation of cable systems across the country, though still spotty, is part of it. So is the perfecting of means to charge—and collect—fees from TV homes. So is the growing capacity to create ad hoc "networks" for individual super sports events via satellite systems or cable systems or God knows what combination of systems. So is the growing dissatisfaction among advertisers with the messy demographic sprawl commercial-network audiences represent.
What it all means, says John A. Ledingham, assistant professor of journalism and media at San Diego State, is, "We're going into a completely new world of television. The processing is just now catching up with the dream and the technology. The systems to come could be beyond anything you can imagine."
The revolution has its roots in an Appalachian town in Pennsylvania called Mahanoy City. There, in 1948, an electrical-appliance store owner named John Walson was having trouble selling his television sets. The reception of stations broadcasting from Philadelphia, 86 miles away, was awful because of the mountains that loomed over the town. Walson got the idea of putting up a large antenna on a nearby mountain. He then ran a wire from it to his store, hooking up houses along the way. The antenna snagged the weak signals from Philadelphia, brought them down to an amplifier and ushered them into the feeds to his customers' houses. Walson charged a $100 installation fee and $2 a month for the service. His customers got bright, clear signals from all three channels in Philadelphia, and Walson's TV sets at last began to move.
The system in Mahanoy came to be known by a most prosaic, though perfectly accurate, name: Community Antenna Television (CATV). It spread slowly through the U.S. in the 1950s, mainly in rural and deep-valley areas. By 1962 there were 800 such systems in the country, reaching a total of 850,000 homes. CATV was very small electronic potatoes, indeed, but it attracted attention. Advances in technology gave cable systems the capacity to pick up ever more distant TV signals, and soon these systems could offer as many as 12 channels of programming.
This all produced a brief boom in the business, and starry-eyed visionaries predicted that by 1970 a good half of American television homes—30 million—would be served by cable. There was talk of "the wired nation," of a Tomorrow-land of cable TV services. Hookups with computerized libraries would allow a viewer to order any book ever printed for transmission into his home. One would be able to take courses from foreign universities and play interstate TV games of Monopoly or chess or Chinese checkers. Subscribers would dial-a-movie—any movie—any time of day or night, hold business conferences with participants scattered across the country, pay bills, shop and go banking—all without leaving the front parlor.
A number of these futuristic predictions are the same ones we hear about cable today—and most of them have yet to be realized. There are two reasons. First, many cable operators were hoist by their own business ineptitude. They were plagued by lack of imagination in programming, marketing ignorance and an inability to make their product attractive to enough customers. Despite the big-time future that everyone saw for cable TV, it was still being run largely by small-town, small-time businessmen. Second, in the late 1960s the cable business suddenly found itself under attack by the Federal Communications Commission, which had been egged on by the commercial networks and their local affiliates. The weapon used against cable at this point was a constricting set of FCC regulations that went into effect in 1968.
Among other things, the rules required cable systems to include among their channel offerings all local over-the-air stations, prohibited cable systems from duplicating programs on the same day they were carried by local over-the-air stations and forbade them to bring any signals from more than 75 miles away into any major TV market without first getting the FCC's permission. By 1971 there were a bare five million cable subscribers—one-sixth the number anticipated by the optimists 10 years earlier.
In sports, the networks' clout extended to every event they wished to control—with the single exception of certain especially attractive championship fights, for which they were outbid by theater TV. Cable wasn't a significant factor in any major sport. As recently as 1978, if you had amalgamated every cable company in existence into a single corporation, the firm would have ranked no better than 257th on the FORTUNE 500. In contrast, RCA, NBC's parent company, was 30th, CBS 91st and ABC 152nd. That year 13 million U.S. homes were wired for cable, about 18% of the TV homes in the country.
But a dizzying turnabout occurred at the FCC in the mid-1970s. For a number of reasons (including crushing legal setbacks to some of its toughest cable-restrictive regulations) the commission suddenly got an entirely different kind of religion. From its traditionally devout defense of the status quo—meaning protection of the commercial networks and local over-the-air stations—the FCC began dropping regulations left and right, eventually opening the field of broadcasting to unfettered competition from every conceivable source.
Willard Nichols, former chief of the cable bureau at the FCC and now administrative assistant to the chairman of the commission, says, "It took us 4½ years of economic study and econometric modeling to conclude that the premise that local broadcasters would be hurt by cable was wrong. Sure, they're going to lose viewers. But what we were never able to work into the equation was the fact that every year they were increasing their profits in the face of increased cable competition. So in July of last year we got rid of all the limitations designed to protect local stations."
The broadcast establishment complained, but it wasn't the only group involved in the battle to curtail cable growth. "Commissioners of baseball, the NFL—all of them—have been fighting our deregulatory efforts," says Nichols. "They have argued that the impact is on the live gate. But we've found that people won't stay home just because a game is on the tube. They stay home if it's 12 below zero or if a poor team is in town."
Whatever the objections and obstacles of the past, cable TV is now pretty much free to grow as it pleases. How big will it get? The most optimistic observer is Robert Ross, who, as senior vice-president of the National Cable Television Association, an industry watchdog and clearinghouse, is paid to be optimistic about such things. "Right now cable is in about 25% of the 80 million TV homes," says Ross. "And we're adding subscribers at the rate of 250,000 a month. That's a fairly significant growth rate."
Last November, J. Walter Thompson, the nation's second-largest advertising agency, projected that "by late 1985, 36% of the nation's households would be wired, and by the end of the decade we should have half the country hooked up. In 1979, half the homes in the country could receive nine or more channels. By 1989, half the country may well have more than 50 channels to pick and choose from!"
Nichols is less sanguine. "Our best estimates are that only about 40% of urban viewers will ever have cable," he says. "In round numbers, that means a little more than 48% of the entire country will have cable at any time in the next 10 or 12 years. But it's hard to project. Who would have guessed the boom in cable resulting from satellite delivery of pay services? And that, I say, is the real key to the recent explosion."
Yes, the satellites—the key to the immediate past and to the far future, the key to ESPN, the superstations and, of course, to polo in Lolo.
Satellite TV communication dates back no farther than the mid-1960s, when the Communications Satellite Corporation (COMSAT) sent into orbit the famed Early Bird. It carried the first live transoceanic telecast in 1965. In the intervening years, 11 U.S. communications satellites of various kinds (of which 10 are still functioning) have been sent up to shower signals down to earth. But the one that ultimately revolutionized the industry was RCA SATCOM I, which was launched in 1975. Having leased two transponders on SATCOM I, Home Box Office, a division of TIME INC., the publisher of SPORTS ILLUSTRATED, began that year to bounce its programming off the satellite. HBO was the pioneer, and it gave U.S. cable operators, for the first time, high-quality programming that was different from network shows.
HBO is one of several pay-cable services for which subscribers are charged a monthly fee in addition to their basic cable package. It's hard to overestimate the impact HBO had on the American television industry. Alex Best, an engineer at Scientific Atlanta, which supplies just about everything for cable systems, from earth stations to set-top terminals, says, "Five years ago, just before HBO and satellite transmission became feasible and affordable, cable took a downturn. We had wired the rural areas almost to saturation and were moving more into the cities. But no one is going to pay $10 a month to get the same television you can get with a pair of rabbit ears. Satellite transmission of recently released movies, sports and other HBO-type programming changed all that. It opened up the cable market."
The advantages of satellite communication are many. Weather and sunspots rarely affect it, and transmitting television signals via satellites is cheaper than transmitting by undersea cable, microwave, coaxial cable or overland wires. They are called "geostationary satellites" because they remain in "stationary" rotation precisely 22,300 miles above the earth.
To pick up the signal from a satellite, a cable operator needs a dish-shaped antenna called an earth station. At first, the FCC insisted that all antennas be at least 10 meters in diameter. Early earth stations cost more than $100,000, which was yet another obstacle to the growth of cable systems. The newly enlightened FCC dropped the 10 meter antenna rule, too, and business boomed. In 1977 there were only 300 earth stations in the U.S. Within 12 months there were 600. Today there are about 1,500, and the cost has dropped to $10,000.
And here, in this proliferating multitude of satellite ground receivers, may lie the true future of TV sport—the ad hoc network. "All a promoter has to do is get his production together, and then put up a signal to a satellite that reaches any given number of earth stations, and he has an instant network," says Gus Hauser of Warner Cable. "You could create a network for any one-of-a-kind event—the Masters, the NCAA basketball final, the Super Bowl. You could make an ad hoc network to broadcast anything. Instead of three big networks, we can have 40 or 50 satellite networks. They can serve every freaky appetite in the country."
Exactly! Of course, satellite and/or cable systems that establish networks beyond the Big Three have already been created. There is the Christian Broadcast Network, which has access to more than nine million households. There is-the USA Network, owned by UA-Columbia Cablevision and Madison Square Garden. USA beams its programming coast to coast to some eight million potential viewers by means of 1,400 systems. It includes everything from Black Entertainment Television to a children's show called Calliope to professional sports. Sport makes up 70% of USA's programming, most of it, unlike ESPN's, of big league caliber.
And yes, what about ESPN, certainly one of the strangest creations in the history of mass communications? In the fall of 1979, when ESPN, owned by Getty Oil, began sending out its signal from Transponder No. 7 on SATCOM I, the network's executive vice-president, Scott Rasmussen, said lightly, "This is a service for sports junkies." Today there are those—wives mostly—who think he was absolutely right: full-contact karate at 12:30 a.m., weightlifting at 5:30 a.m., Australian rules football at 8 a.m., "superstar volleyball" at 11 a.m., rodeo at 2 p.m. Nonstop sports around the clock, 24 hours a day, 8,760 hours a year. And who is out there to see all of it? Who cares?
ESPN gets letters from those who care. A man from Kearny, N.J. wrote: "I work nights 4 p.m. to 12:30 a.m. and have been viewing your station for almost a year." From Lincoln, Neb.: "With a baby boy we aren't able to attend as many sporting events as before, but with ESPN we can enjoy our boy and our sports together." From Burns, Ore.: "I am an old woman living alone, and I love baseball, football, boxing and rodeo. I watch a lot of Canadian football games. Thank you." And from a certain spectator in Lolo, Mont.: "Keep up the fine work. I know I can always watch a good game after work. Hooray for the SATCOM I."
Almost 11 million households can pick up ESPN without extra charge via some 2,200 cable systems. The network itself figures it will have a potential reach of 12 million by the end of this year and a truly amazing 30 to 35 million by 1985. ESPN relies on advertising for its basic revenue, but commercial time goes for a relative pittance. Whereas the Big Three networks charge up to $110,000 for a 30-second spot, the most ESPN gets for a 30-second ad is $1,200. ESPN also charges its cable systems 4¬¨¬®¬¨¢ a month for each subscriber, which isn't much—and may not be enough. It has lost an enormous amount of money in the 23 months it has been in business, perhaps as much as $75 million.
ESPN's biggest ad-revenue-producing deal to date was much ballyhooed last fall, when Anheuser-Busch came on board with a $25 million, five-year contract. Anheuser was—and still is—the network's only beer advertiser. A major problem advertisers have with ESPN is that it has no precise rating system to define its audience. Chet Simmons, the former president of NBC Sports who is now top man at ESPN, says, "We need some kind of a measurement technique. Advertisers are sold by demographics. We should have the problem solved by early next year. For now, about the best we can say is that we deliver almost exclusively a male audience. Beer drinkers? That we can guarantee. Women? Nope. We're trying to get into more women-oriented shows."
Women? Nope is right. The wife of Dave Squires is a tiny (5'3"), pretty woman, also age 30. Sandy Squires is a vocational rehabilitation counselor and a sports fan—up to a point. "Yes, I like sports," she says, "but...but...well, you know, there's so much of it, and, well, we have another TV set in the bedroom, and I like to go to bed early anyway and...." Dave Squires says without equivocation, "My limiting factor in how much I watch sports is my wife."
Simmons might like to bring Sandy Squires into the fold, but he refuses to do it by diluting the network's total commitment to sports. "That is our trademark and, in that sense, we have no competition," says Simmons. "The commercial networks and USA Network do horizontal programming. We do vertical programming, no movies, no news documentaries. This gives us the flexibility to do so many more things than any other network. It's important to us that the public recognizes us as the place where you can always find sports."
But what sports? Is ESPN really the network of the future? Can a sports network flourish indefinitely on a full-time menu of offbeat and minor league events? Simmons is concerned. "We're in a credibility situation," he says. "We have to prove sometime soon that we have the money and the outlets to do major league stuff. If we do nothing but county soft-ball championships, then we might as well pack up and forget it."
Simmons says ESPN was approached this season by the Yankees, Cardinals and Angels to take on a 57-game schedule, but "the deal dried up." He has been dickering with the NCAA for some kind of a major-college football package besides the 50 to 60 delayed games ESPN now televises. "We could do football games in prime time on Saturday nights, which is something the networks would never think of doing," says Simmons. "This wouldn't conflict with ABC's Saturday afternoon package. We could do events at the Olympics that ABC doesn't want. We could do reruns of NFL games all week long. We could take an hour to dissect each play if we wanted to. There are so many things we can do with all the hours we have."
Maybe the world at large wasn't aware of all the hours ESPN devoted to the 1981 NCAA basketball competition, but a certain citizen of good old Lolo certainly was, and it is with shy pride that Squire tells of what happened. "My friend Marty lives in Reno," he says, "and he called in February to suggest that we go to Salt Lake City to see the Western Regionals. I said, 'They only have three games there. Come on to Lolo; we've got 36 of them here!' We both took vacations, and we sent the wives off on vacations of their own.
"Marty arrived on March 12, a Thursday, and we watched every game on Thursday, Friday, Saturday and Sunday. They'd start about 5 p.m., and then there'd be reruns starting at 1 a.m. There were four games a night at first. We were in a daze, a real happy daze. We'd only go out to the liquor store to get Crown Royal Whiskey and 7 UP. One time we went put for a drive. I was going to show Marty where Lewis and Clark came through. We got about halfway, and he said, 'Let's go back. We might be missing a game,' and we did. Marty was really impressed with TV in Lolo. He told me, 'If we had this in Reno, my wife would've divorced me years ago.' "
Can ESPN last? All-sports, all the time, seems like a concept with a future. Yet it appears likely that ESPN will remain an upstart unless it can obtain the rights to more major events. And as long as it relies so heavily on advertiser support, that seems impossible. Some form of pay TV—charging the viewer as well as the cable system for programming—seems essential to produce the megabucks ESPN needs to buy into big-time sports, because prices for the rights to major events are about to soar out of sight.
Whatever else may be changing in the structure of TV sport, one thing has remained the same from the beginning: Sports entrepreneurs have an abiding love of cold, hard cash in hand. And there could well be a lot available. Says Warner's Hauser, "The combinations of ways to make money on TV sport are damned near infinite. The marketplace is more open than ever, and sports organizations are just beginning to realize that there is lots more money out there for them than either the gate or the networks have been able to generate."
Whatever the method of payment or the technique for collection, this, too, is unchanging: Ultimately, the viewer will be stuck for the dough. This is nothing new. Although commercial network executives like to throw around the word "free" when they talk about advertiser-supported TV, the cost of such ads has always been fed back to consumers through markups on product prices.
Even so, advertising alone can no longer underwrite a full slate of major sports for the networks. In fact, it hasn't for some time, particularly in prime time. Says Van Gordon Sauter, president of CBS Sports, "Sports programming on prime time has decreased in recent years because the ratings haven't been high enough. The networks and advertisers view sport as an economic entity. Prices in prime time are staggering, and most sports simply don't produce enough return on the advertiser's dollar from a prime-time audience to make his commercials pay off. Only the NFL, the World Series, the Olympics and a few other special events consistently generate audiences large enough to satisfy advertisers who prefer prime time."
Ergo, prime-time sport leaves the commercial networks and joins some other delivery system that operates on a smaller audience base. "When a sport doesn't produce enough mass appeal for the networks, then cable and pay cable can become a viable competitor for the rights," says Jim Spence, senior vice-president of ABC Sports. "But no one really knows how things might lay out down the road. Pay cable? Is that really where the money is? I'm not sure that the U.S. public will be willing to pay regularly—every night—for routine events. Special events, yes. A few big boxing matches, yes. The NFL will probably someday get into pay cable on a partial basis. But I wonder if there's a lot of money out there for run-of-the-mill events."
It's a good question: Is there really enough money out there to support sport in the manner in which it has—or would like to—become accustomed? The answer varies from city to city and sport to sport. Yes, says the Prism pay cable network, which has been operating out of Philadelphia since 1976. The network transmits mostly movies, but it also airs heavy helpings of the Phillies (30 games), the 76ers (25), the Flyers (30) and local college teams. Some 230,000 subscribers pay $10 a month for Prism. Does this generate enough money to make sports entrepreneurs happy? Absolutely. Bill Giles, vice-president of the Phillies, says, "In terms of overall revenue, the increase in our pay TV money is greater than that of any other income we have. From our experience, I'm convinced that pay TV is going to be the savior of professional sports—the one and only financial savior."
Jim Barniak, sports director of Prism, projects his euphoria well beyond the immediate situation. "Cable has popped everyone's eyes," he says. "I think you're going to find in the future that a person will own not only a team and a stadium, but also a means to electronically transmit his team's games. I think you'll see everything go to pay-per-view. You watch something and they'll send you a bill for it. If Prism were to switch from $10-a-month subscription to, say, $2 a game, hey, we could take in $460,000 a night. It's going to be there someday."
Is it? At the moment, there are precious few bench marks by which to measure the true potential of pay-per-view. However, there was a night last November when a most impressive test of pay-per-view occurred, and neon dollar signs have been flashing in the brains of sports entrepreneurs ever since.
It happened in Los Angeles, and the experimenter was ON TV. Ordinarily. ON TV charges its subscribers about $20 a month for programming. That includes movies and a selection of local pro and college sports. ON TV is not a cable service. It is known as subscription TV (STV), and to control its viewership, ON TV sends a scrambled over-the-air signal that is picked up and unscrambled by a decoder (a small box in the home). The system has more than 515,000 subscribers.
The night of Nov. 25,1980, ON TV offered its subscribers something extra, the second Leonard-Duran fight. But to receive it, viewers had to ante up $15 above and beyond their monthly subscription rate. About a minute before the start of the fight, an ON TV computer scanned the subscriber list to determine which sets would receive the fight. Some 165,000 L.A. fans sprang for the $15, which added up to a cool $2.5 million.
The next major test of pay-per-view comes up Sept. 16, the night Leonard fights Thomas Hearns for the undisputed welterweight crown. Main Event Productions, headed by Dan Duva, a New Jersey attorney, is promoting the fight. Main Event has guaranteed the fighters a total of $15 million. That's the highest purse in the history of boxing. Where will such a tremendous sum come from?
Duva estimates the live gate will reach $6 million and the closed-circuit broadcast in theaters will add another $30 million. He also figures to reap $15 million from an ad hoc network of pay-per-view audiences sitting in their homes. The creation of this one-fight network, which had never before been attempted on a national scale, hasn't been easy, because the technology of pay-per-view TV is in its infancy. Duva's network will be made up of at least 20 cable and STV systems in 15 cities. Those 20 represent 95% of the households that subscribe to systems with pay-per-view capability. That comes to no more than one million homes.
Even though pay-per-view is limited now, Duva thinks it will soon mushroom. "In a year we'll have four or five times as many households available," he says. "Five years from now we could probably do this entire promotion with the money we could take from pay-per-view in homes."
The Leonard-Hearns bout will cost the home viewer $15, with the local TV systems usually paying Main Event a guarantee as well as a percentage of their take. In the future, says Duva, the more sets equipped with pay-per-view technology the lower the cost per viewer will be. "Say we have 10 million sets in five years," he says. "We could charge as little as $8 each and still gross $80 million!"
It takes no talent for addition to extrapolate from these figures a wildly optimistic view of the megabuck possibilities for pay-per-view on a national scale. Think of it. At $15 a head, the Super Bowl draws $1.5 billion. A seven-game World Series, $2.1 billion. The Kentucky Derby, $496 million. It's like trying to visualize infinity.
But in truth, it probably isn't limitless. "Pay-per-view is way overrated," says Herb Granath, vice-president of ABC's Video Enterprises. "Sure, the Duran-Leonard fight got $15 per home, but that's about the only event I can think of that could draw that kind of money. People call it the wave of the future. I doubt it. I'm hard put to think of any event that would bring in millions of people willing to pay $15 to see it."
Of course, Granath is a network man, and his vested interest lies in the hope that pay TV can't produce that kind of bonanza. Yet dyed-in-the-wool network disciples aren't the only ones who believe that huge pay-per-view payoffs are a very iffy proposition. Indeed, one who agrees basically with Granath is Andrew Wald, senior vice-president (programming) of—yes—ON TV. "We spent a lot of time looking at the concept of pay-per-view and found that very few events qualify for the rate of distribution the Leonard-Duran fight did," says Wald. "Some people think you could ask the consumer to pay for a weekly professional football game. I don't believe that. The networks are surely going to remain the major outlet of the NFL for quite a while. And if one football game were carved out per se for pay TV on a weeknight, it simply won't have any value, since viewers can see so many others."
Jerry Levin, group vice-president of TIME INC.'S video division and the first programming chief of HBO, is also dubious. "You just aren't going to generate $10 million every time you turn on the lights," says Levin. "Sport needs more marketing than that. You need a broad base of subscribers to support sport on a day-in, day-out, week-in, week-out basis. And it takes a lot of extra work to create the mood that makes a viewer react positively toward putting up $10 or $15 to watch something in his home."
CBS's Van Sauter says, "There's going to be a lot of pressure on the tolerance of the entertainment dollar. How much of a bite will home TV take? Can someone afford $60, $70, $100 a month for entertainment and sports on TV? It's very hard to project."
Nevertheless, with revenue coming from sources other than network advertisers, we can look forward to a great fragmentation of power in the broadcasting industry as well as an even greater fragmentation of options for viewers. And that is plainly the best part of this whole revolution. At the moment Atlanta is perhaps the prime example of what much of the U.S. can expect in the next decade or so. The city is the first major metropolitan area with a 54-channel, 400-megahertz cable system, which means that cable subscribers there have about as rich—and confusing—a menu of TV fare as anywhere in the world. Among other things, they can receive all eight local over-the-air stations; channels devoted exclusively to religious programming and the Atlanta public library; ESPN; the USA Network; two super-stations (WGN and WOR); the Video Sports Network; HBO and Showtime; stock-market and weather reports; plus services providing home security, temperature control, public-access programs, coverage of local governmental bodies in sessions, etc., etc.
As Wayne Vowell, director of marketing for Cable Atlanta, says, "We don't know what everybody likes, but whatever it is, we're going to try to deliver it. If we sell half the city our service, our responsibility is not to learn why they bought it, but why the other half didn't, and then to give them whatever they want to make them buy."
Giving viewers a myriad of options is indeed the wave of the future. "Cable will become entirely the tool of the consumer by the end of the 1980s," says Kay Koplovitz, president of the USA Network. "Whatever he wants, he'll get. The networks will no longer control programming or the choice of programming. The viewers will be their own programmers because they'll be selecting what they really want to see."
True enough, and, more than ever before, sport will be centered in the American living room. But then, just what is going to happen at the events themselves? "It will be super nice if pay TV works out according to all the rosy predictions," says San Diego Clippers General Manager Ted Podleski. "But you have to ask: What exactly is a sport event? I think it's a happening. What if there weren't any people in the arena screaming and hollering? Sport is emotional. We have to have a contribution from real people, real fans, to keep the players motivated. Do you suppose we could be reaching a point where we'll have to hook up mikes in the house so the sounds from the living room can be broadcast back into the arena?"
Do you suppose?
Well, no one could have foreseen the revolutionary forces that have gone to work on TV sport—and its fans—in the last few years. Even something as wondrous as polo in Iolo has come to seem ordinary. Nevertheless, much is in doubt.
EIGHT PHOTOS
ESPN
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NBC
TWO PHOTOS
USA
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WOR
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CBS
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HBO
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ABC
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WGN
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WTBS
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PBS
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Collegiate hoops riveted Squires in Montana.
THREE PHOTOS
Outside its offices in Bristol, Conn., ESPN uses three earth stations to send and receive satellite signals. Inside, staffers monitor programming.
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Simmons, a former president of NBC Sports, now head of ESPN, says unless he obtains rights to more major events, "We might as well pack up and forget it."
ILLUSTRATION
DONALD MOSS
ESPN
ESPN
MW
T
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Mahanoy City's Walson went to the mountain to get Philly.
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Turner: The networks must change to survive.
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Koplovitz: Soon viewers will dictate TV fare.
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Hauser: The home, not stadiums, will be the major sports arena.
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Manhattan Cable's control center gives viewers 26 channels.
How ESPN and others typically cablecast a live event: The picture that ends up on the screen is first picked up by a control truck at the site and sent via microwave (MW) or telephone lines (T) to a nearby earth station, which transmits the signal to a satellite orbiting 22,300 miles above the earth. (In some cases the signal is beamed directly from the event to a satellite by way of a mobile earth station.) From the satellite the signal travels to network headquarters, where, if necessary, adjustments in the picture and sound are made. Next, the signal is sent to a second satellite, from which the nation's local cable operators pick it up. They in turn Feed the transmission to their subscribers by means of coaxial cable. The entire process takes but half a second.
NEXT WEEK
Sports television grapples with exciting possibilities in an uncertain tomorrow.