Channel Blames MSOs for Denying Carriage, But May be Hurting Self

Gorshein’s line in the sand risks alienating the cable operators he needs most to survive, analysts said. “I've done it at severe risk to my company, at severe risk to my career,” Gorshein said: “My hope is that the right people, whether legislators, regulators… create a set of conditions in this merger that will provide independent channels a greater way to compete.” American Channel has sent documents to the FCC that Gorshein said help prove cable operators discriminate against independent programmers.

TAC’s expected 2005 start of operations on Verizon’s FiOS fiber TV product “all depends on Comcast,” said Gorshein. It won’t be “viable” without carriage from the cable provider, he said. “Investors are going to be smart… They will not put money into a venture unless Comcast or Time Warner are on board,” he said: “I have very little hope that they will get on board.” Analysts we spoke with agreed. “They are correct in saying for them to be successful they do need Comcast or Time Warner at some point in time,” analyst Bruce Leichtman, a former cable executive, said: “They have gone beyond the normal role of a programmer and tried to make it a political matter.” Another analyst concurred. “They have to focus on building their business instead of burning bridges,” said ABI Research’s Vamsi Sistla. “They don’t have demand, they don’t have a subscriber base, so with that you try to alienate your prospective client base. That’s just bad business.”

Several cable operators we spoke with said either that hadn’t spoken with TAC or weren’t negotiating to carry it. “They haven’t contacted us,” said Sandy Colony, Insight senior vp-communications. Some officials at the firm haven’t “heard of them,” she said. “We have had no recent meetings with them,” said a spokesman for Cox: “There is no deal at the moment.” Gorshein declined to comment on whether smaller operators voiced interest in carrying his network. Research shows that without Comcast or Time Warner, networks don’t achieve “the thresholds essential to viability and survival,” said a July 21 TAC filing. Comcast said the network hasn’t shown its creative capabilities. “TAC has yet to produce a single hour of programming for MVPDs to review, has virtually no in-house programming expertise, has no reliable source of funding, and has been denied carriage by virtually every other MVPD,” Comcast said in a statement to us.

TAC’s focus on Bells and DBS for potential distribution has met with some success. The digital network, whose first publicly announced customer was Verizon’s upstart FiOS fiber TV (CD Aug 31 p6), since has said it’s been added to SBC’s Project Lightspeed, to launch next year. Adding momentum are carriage talks with DirecTV and EchoStar. The negotiations “have been productive and encouraging and have been underway for some time,” said Gorshein. A DirecTV spokesman confirmed the firm has talked with TAC, but couldn’t comment further. EchoStar had no immediate comment.

Four telecom firms plan to carry the channel, Gorshein said. He declined to name the others. The network, to feature non-fiction shows on diversity, family and other issues facing “real people,” is to be available on Verizon’s expanded basic package. SBC declined to confirm plans for TAC; a spokesman said it’s not discussing “specific deals until we get closer to launch… for competitive reasons.” Gorshein said he’s “pleased with the reception in the telco community,” But it will take more than the Bells to make TAC a success. “You cannot make a business solely based off the Bells,” said Leichtman. “It might get you a little bit of carriage… you need 20 million or 30 million” subscribers. Verizon, the only Bell now selling its own video service, expects to pass 3 million homes and businesses by year’s end with FiOS (CD Sept 26 p8). Not all of them may get TV.