Daily Variety

December 18, 2003, Thursday

Mark Cuban's fledgling high-definition program package has scored a cable distribution coup, securing a carriage deal with the second-largest operator, Time Warner Cable, to carry HDNet and HDNet Movies as part of its nationwide high-def program lineup.

Though barely 4 percent of U.S. TV homes have high-definition TV sets, falling prices are expected to push penetration to around 10 percent by the end of next year.

HDNet already has carriage deals with satcasters DirecTV and EchoStar, as well as cable operators Charter and Insight. But with a 10 million-plus footprint, TW Cable significantly expands HDNet's potential reach.

Time Warner package already includes high-def programming from all the major broadcast nets, as well as Showtime, Discovery HD Theater, NBA-TV and select Fox Sports Net regional sports networks. The new nets will join the high-def InDemand offering on its premium high-definition tier.

High-definition is one of the cable industry's key pillars of new advanced service revenues, alongside voice-over-Internet, high-speed data, enhanced set-top boxes with digital video recorders and video-on-demand services. Such services are critical as the growth in new digital subs inevitably slows in the next few years.

TWC, which boasts digital penetration of 40 percent of its basic subs, is heavily pushing high-def as well as DVRs. Cabler has 185,000 HDTV subscribers and around 338,000 deployed DVR-enabled boxes. Some 98 percent of TWC's 10.9 million nationwide customer base is capable of using high-def set-top boxes.

Comcast also is pushing its digital subs into premium reception, and so far this year has added 225,000 high-definition customers.

Both Comcast and smaller operator Insight claim many of their new high-def customers are new to digital cable, which implies these cable operators may be winning back some subs from satellite.

"Creating a premium HDTV tier is the next logical step as we continue to deliver on our promise to provide customers with the best in choice, value and control available for high-definition programming," said Chuck Ellis, executive VP/chief marketing officer for Time Warner Cable.

The deal comes just a week after New York-area cabler Cablevision beefed up its own high-definition offerings in a bid to keep pace with satellite operators that are pushing the upgraded services as a point of differentiation. The Dolan family-run cabler last week announced plans to offer four new high-def versions of movie services Cinemax, Starz!, Showtime's the Movie Channel and VOD service InDemand, thereby upping its roster of high-def channels to 11.

Two-year-old HDNet produces and televises original high-def programming, including concerts, news and select sports packages. Licensed programming includes series from Paramount, Warner Bros. and Sony.

HDNet Movies broadcasts 24/7 full-length feature films from Warner Bros., New Line, Paramount, MGM, Buena Vista, Lions Gate (in which Cuban owns a stake), Artisan and Sony Pictures Television. HDNet Movies also features movies produced and finished in true 1080i high definition.