Cable's Big Squeeze

By Richard Zoglin

Tom Bergeron and Laurie Hibberd are new on the job, but already they are the most laid-back personalities on morning television. While camera operators and stagehands wander in and out of shots, the co-hosts of Breakfast Time, a new morning show on the fX cable network, sidle from room to room in their spacious, apartment-like set in New York City. When not trading quips with a wisecracking hand puppet, they introduce segments that make Good Morning America look like The MacNeil/Lehrer NewsHour: a visit to an Oklahoma ostrich farm; an interview with a Florida man who makes furniture out of junk; a live report on Hula-Hoopers in the park across the street. This is homemade TV -- and proud of it. On the show's first broadcast, Bergeron playfully chased his executive producer around the set and accidentally broke a lamp. "You're watching our final day on fX," joked Bergeron. "Tomorrow the Lint Channel will be here."

Maybe the Lint Channel has already arrived. fX, launched three weeks ago by the Fox network, is perhaps the ultimate example of disposable television. Along with its lighter-than-air morning show and a slate of oh-so-familiar / network reruns (Hart to Hart, Batman, Family Affair), the channel features a pet show, a consumer guide to rock CDs and a collectibles program. If it weren't for a Nightline-style interview show hosted by former CBS correspondent Jane Wallace, the network would be so insubstantial that it might float away.

Yet fX and two other similarly superfluous channels created by broadcast networks are the most potent newcomers on the jammed cable dial. Fox's entry went on the air with a subscriber count of 18 million homes -- the largest start-up figure for any cable service in history. Nearly 11 million homes are expected to be on board July 4, when nbc introduces America's Talking, a new network consisting of -- are you ready, America? -- nothing but talk shows. Last October ABC launched ESPN2, a hipper, younger version of cable's largest sports network; it currently reaches 12.8 million cable homes.

For years, cable visionaries have promised a day when everyone from sailing enthusiasts to opera lovers would have a cable channel to suit his tastes. But the new cable programmers are pursuing a more old-fashioned strategy: aiming for a broad-based audience by replicating fare that already gluts the airwaves. Meanwhile dozens of other worthy cable aspirants -- channels devoted to history, health, fine arts, golf -- are struggling to be born. There may well be an audience for more knockoffs of Oprah, more sappy morning shows and more reruns of Dynasty. But viewers looking for the diverse array of niche programming that cable once promised are still looking. What has gone wrong?

One answer is that, remarkable as it may seem, the cable dial is full. The much hyped 500-channel future is years away, and for now the average cable system has only about 40 slots for programming. Take away the dial positions that must be given to over-the-air stations and public-access channels, and there aren't nearly enough spaces for the more than 70 basic-cable services vying for an audience -- and for the advertising revenue they need in order to survive.

Actual crowding on the dial, however, is only part of the problem. A more important roadblock to new channels, in the view of the cable industry, is government regulation. In the 1992 Cable Act, Congress responded to consumer complaints about the rising cost of cable service by instructing the Federal Communications Commission to regulate rates. The FCC proceeded to roll back current rates and to establish a strict formula for how much cable operators could raise them in the future.

While consumers rejoiced, the cable industry griped that the regulations took away the incentive to add new programming to their basic service -- those packages of channels offered for a flat monthly fee. The regulations allow systems to pass along the cost of new channels plus 7.5%, but cable operators complain that the percentage is too small to make carrying such channels worth it. Hence few new channels on basic cable. "In regulating the industry," contends Carter Maguire, executive vice president of sales for Turner Cable Network, "the FCC has paralyzed it."

Instead of adding new basic services, cable systems have turned their attention to channels that can bring in revenue unhindered by the rate caps: premium services (such as HBO and Showtime), home-shopping networks (from which cable operators get a portion of the sales income) and pay-per-view movies. One of the biggest growth areas is adult-movie channels -- a lucrative business, since the cable operator typically can keep 70% or more of the $4 to $5 customers shell out for an evening of soft-core sex.

But if cable systems are refusing to add new basic channels, how did fX and ESPN2 and America's Talking end up getting carried? It has less to do with must-see programming than with deals struck between the cable industry and Fox, ABC and NBC. Traditionally, cable systems have been able to retransmit local broadcast stations for free. The four broadcast networks, which own local stations in big markets, have always been frustrated by this situation, and in 1992 they were allowed to seek retransmission payments from the cable operators. The cable companies refused to pay, however, so a compromise was reached. The networks dropped their demand for money, and in return the cable systems agreed to carry and pay for new cable channels that the networks would devise. (CBS bungled this battle and ended up with nothing.)

These network-owned channels have been guaranteed carriage in major markets; the fate of other cable newcomers has been much different. In April, Ted Turner launched Turner Classic Movies, which offers many vintage, long-unseen films from Turner's MGM and Warner Bros. archives. Cable systems serving only 250,000 homes were persuaded to sign up. Horizons Cable Network, a pbs-backed channel that plans to cover lectures, panel discussions and other educational and cultural events, had hoped to debut later this year, but it was forced to ! delay the launch after cable systems representing 6 million homes, citing rate restrictions, backed out of a commitment to carry it. Ovation, a proposed fine-arts network, and the History Channel, offering documentaries and historical movies and mini-series, both plan a January launch but are having a hard time building up a subscriber base. "The way the rules are structured today," says Barry Rosenblum, president of Time Warner Cable of New York, "cable operators are only motivated to launch services that are unregulated. And those may not be the best services for our customers."

Established cable services are suffering as well. Officials at C-SPAN, chronicler of Congress and government activity, say the channel has been booted off or cut back in systems representing 4.2 million homes. "The regulatory environment is making our life miserable," says C-SPAN president Brian Lamb.

FCC chairman Reed Hundt has promised that the agency will listen to the cable industry's complaints and consider refining the rules. Consumer advocates, though, scoff at cable's cries of pain. "When I hear a cable operator say he can't add a new channel," says Bradley Stillman, legislative counsel to the Consumer Federation of America, "I wonder how many shopping channels he's got on the air, or how many channels in which he has a financial interest. Channel decisions are driven by many factors -- and the industry is trying to blame it all on the FCC and the 1992 cable law."

Whoever is to blame, the oversupply of reruns and chat on the cable dial has become oppressive, the attempts to breathe new life into them almost laughably desperate. America's Talking will offer such quirky variants on the talk-show form as Am I Nuts? (psychologists offer advice to people facing everyday stress) and Pork (its single topic: government waste) On ESPN2, the hotshot hosts can be abrasive enough to provoke violence (New Orleans Saints quarterback Jim Everett, taunted by interviewer Jim Rome this spring, overturned a table and pounced on him).

Increasingly, the theme is homegrown, back-to-basics TV. Spurred by the need to look different and to do it cheaply, new channels proudly let the seams show -- a throwback to the earliest days of TV -- and stress spontaneity and viewer participation -- an attempt to achieve the intimacy of talk radio. Anne Sweeney, chairman of fX, says her channel's goal is to create "a national network based on a local feel." America's Talking will use interactive | technology to get viewers involved. "This is a place where Americans can come, pull up a chair, pour a cup of coffee and join the national dialogue," says head of programming Elizabeth Tilson.

But televised talk radio and the return of Hart to Hart were not all that the cable revolution was supposed to bring us. Maybe, when the tide of banality has run its course, viewers will finally be fed up and start turning to the cornucopia of choices that cable was supposed to offer -- and, one day, may actually provide.

With reporting by S.C. Gwynne/Austin, Texas, Martha Smilgis/Los Angeles, William Tynan/New York and Adam Zagorin/Washington