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Chicago Tribune from Chicago, Illinois • 66

Publication:
Chicago Tribunei
Location:
Chicago, Illinois
Issue Date:
Page:
66
Extracted Article Text (OCR)

6 Section Chicago Trtbuns, Sunday, October 11, 1031 a a -w a 1 a which leportedty made a profit test year. Son Ice SuperChannel Seattle SuperSonics, who have the largest attendance and the highest television ratings of any NBA team, took a giant gamble this year and put al their games on pay TV. Its success or failure win be closely watched by fellow NBA franchises and other sports operations. Seattle leased a channel, ottered its programming through nine local cable companies that have a combined subscriber figure of 210.000, and sold the package for $120. which breaks down to $1.33 a game.

As an exta bonus, subscribers reoeved $120 worth tickets to games at the Kingdome. The operation cost the club $1.2 million to set up. and the Sonics win break even il they sell the $120 package to about 11,000 homes. So far, says Sonics 'president and general manager Zollie Volchok, the package is doing "just fair." As of Oct. 6, three weeks before the season opener.

8,000 people had subscribed. Madison Square Garden Cable Everything broadcast on this network originates from the Garden in New York. But that is subject to change. "I need more events," says Joseph Cohen, president of Madison Square Garden Network, "and. one place cant provide enough." MSGC broadcasts 125 events annually, at night and on weekend afternoons, including a combined total of 90 hockey IRangers) and basketball (Knicks home games.

MSGG reoeives a rights fee from the three dozen cable stations that carry It. not from the viewer, but that is also subject to change. Cohen may switch to subscription TV and have viewers rather than cable operators foot the bill. He figures that if just one-quarter of MSGC's one million viewers subscribe on a pay-per-view basis, MSGC would make more money than it does now. "And we make more now than our competitor." SportsChannet This is the competitor to which Cohen referred, a Long Istand-based network broadcasting some 600 events a year, from Yankees and Mets games, to college footbalL to daily racing reports.

SportsChannel Is carried by IS cable systems in the New York metropolitan area, has 160,000 subscribers, and is adding' 5,000 monthly. A division of Cablevision, which acquires and constructs cable franchises, SportsChannel has sisters in many cities. Including Chicago. Last year, SportsChannel Chicago carried 20 events to 17,000 Cablevision subscribers in Cook and Du Page counties. Cablevision has been awarded 27 franchises in the Chicago suburbs, of which 18 are operating.

Pay TV sports packages ESPN The Entertainment and Sports- Programming Network, based In Bristol, Is a sports unkies' dream. Founded In 1979, funded by Getty Oil, and headed by Chet Simmons, former president of NBC Sports, ESPN is the only network devoted entirely to sports, non-stop, 24-hours a day. It otters an odd-ball assortment, mixing weightlifting, karate, and volleyball with minor-league games and a smattering of major events telecast on a delayed basis. ESPN relays its signal from SATCOM I and has the potential to reach 12 2 million households through 2,600" cable systems In every state but Hawaii. ESPN relies on advertising tor Its basic revenue, but sells time cheap: while the three major networks charge up to $110,000 for a 30-aecond spot, the most ESPN gets for same is $1,100.

The network has suffered huge losses In Its two-year existence. "We have a supermodem plant. OO0 employees, and lots of sophisticated equipment," Simmons says. "AM that cost a lot of money and that's why we're operating at a loss. But it an Investment Getty Is certain will pay off in the long run." USA NETWORK Big changes have occurred since this network was founded four years ago and christened Madison Square Garden Sports Network.

Last year, the ham was changed to USA Network. And last week, the New Jersey-based firm was sold by co-owners UA Columbia and Madison Square Garden to Time, and Paramount Pictures, each of which reportedly paid $15 million for a 50 per cent interest in the network. On Oct. 5, USA became a 24-hour operation, but unlike ESPN, only half Its programming consists of sports, and almost all of it Is big-league caliber. USA beams its programming coast-to- coast to some nine million potential viewers by means of 1,400 cable affiliates.

The network, says spokesman Mark Braff, has reached the break-even point. PRISM A Joint venture of 20th Century Fox and Ed Snider, who owns the Spectrum and the Philadelphia Flyers, PRISM has been operating out of Philly since 1976. Only a third of its programming is sports retafed: the rest is first-run movies and entertainment specials. PRISM airs 30 games each of the Phillies, the Flyers, and the 75ers, and doesn't Intend to Increase the numbers, feeling It has achieved the right balance of sports and entertainment. Some 230,000 subscribers pay $10 a month for PRISM.

i i 1 I -4 I 1 1 ri.nm i WmAMmmmJkMuMi I 1 I 4 15 Pay TV facts -I 2 Ynu're There are four primary ways that pay television is distributed in the Chicago area: .1. .4 oivung a i This is just a sample of the action that will be available to subscribers to the new 5portsVision package of programming. Four Chicago teams OK pay-TV plan; i Drj-t4-4tr rictty STV Subscription television. During the day, these are normal broadcast television stations; at night, they emit a scrambled signal that can only be picked up by a subscriber. Currently, there are two STV stations operating in metropolitan Chicago: Channel 44 and Channel 66.

Both offer first-run movies. Channel 44 offers them under the name of ON-TV, and has some 95,000 subscribers. Channel 66, which began operating in September, markets its STV product under the name Spectrum. In the future, two more channels will offer subscription TV here. They are Channel 60 which will cany the new sports package, and Channel 26, which a few weeks ago received permission from the Federal Communications Commission for subscription distribution, but has not yet announced programming plans.

An STV package retails for. about $20 a month, excluding an. Installation fee. Open DELUXE GENUINE 7 enormous sum," Dowdle says. "You'd naturally figure they'd put more games on subscription basis next year.

But they aren't going to. Instead, they're putting 20 more games on free TV. They realize they have a-good thing now and they could blow it if they got greedy." BILL VEECK, formtr White Sox owner and longtime baseball entrepreneur, says he's not certain whether a sports-pay TV package will succeed in Chicago. "I've gone backwards and forwards on this and I don't think anybody knows the answer. If you have a good ball club, you talk about one thing.

If you've got a Continued from page one- per cent in football, 375 per cent in basketball, and 491 per cent in baseball. Wirtz says the Black Hawks' player payroll is 600 per cent higher than it was in 1970. THOSE BEHIND SPORTSVISION claim that putting their product on pay television is the only way to keep pace with rising costs. The ratio of total revenue to gate receipts, which stands at 2 to 1 for most sports franchises, is predicted to spiral to to 1, 10 to 1, or even higher, once pay TV is introduced. "We are going to change the economics of your business," cable consultant Robert.

Days Sheepskin lesson for us. We lost "money on the fight But it shows you the power of ON-TV. And it shows you the strength of what people want in the THAT SAME POWER can make, or maybe break, a franchise. It could make the Sting, for instance. The recently crowned North 'American Soccer League champions have a higher profile than ever.

The Sting also has an almost year-round season since it introduced the indoor game last year. That means if a fan subscribes to SportsVision in the summer for baseball, or in the winter for basketball or' hockey, he will also be able to catch a Sting game. Because soccer, particularly the indoor game, is largely unfamiliar to sports fans in America, TV can serve as an educational tool, as well as a vehicle to draw attention to the game. But the pay package could also prove a detriment to at least one team in the SportsVision combine: the Bulls. "I'm admits Jonathan Kovler.

"The Bulls have never had their home games on TV. I don't know bow it will affect our gate." Just when the club has begun to draw near capacity crowds to Chicago Stadium, Kovler Auto Seat Covers Introducing our new genuine sheepskin seat covers. Natures natural insulator, eliminates the hot summer and the ice cold winter seat. Pure comfort luxury. Our genuine sheepskin covers are made of the finest skins in Available in 1 0 colors.

jj Custom made seat covers rwiinunTi.it em for Mercedes, Jaguars, BMW, Datsun, Corvettes, etc. starting at $85.00 each. MDS Multipoint Distributional Signal. An MDS channel uses a microwave signal with a limited reach about 30 miles far less than the range of an STV channel. In order to receive an MDS channel, there must be nothing blocking the view between the home and the transmission site.

MDS Is cheaper than STV, retailing for about $14 to $16 a month. In Chicago, the only MDS transmitter is atop the Hancock building. It is Is operated by Teleprompter, the nation's largest cable company and a recent acquisition of Westinghouse Broadcasting. The programming It offers is called Showtime, a mix of movies and entertainment specials, and its clients are more than 300 major buildings and apartment complexes ir) the City and All eur teat covers come with a 24 month warranty. FACTORY OUTLET mmm G3 lU worries that putting 12 home games on pay TV Wl ACCIPT MAIMRCMIIQ! WM 316 N.

Michlsan-3rd Floor (AtTheKlvtr) (111) 7IM4S1 IKOKII The DBS Direct By Satellite. These channels receive their signal directly from the SATCOM I satellite, In orbit 1 22,000 miles above the earth. The signal is picked up by an earth station, a dish-like structure that ranges in cost from about $3,000 to $50,000, depending on the sophistication of the system and the number of people it serves. An individual can erect a dish in his backyard: last year, home-earth stations, do-it-yourself kits that sell for about $7,000, were a $100 million business. Some of 'the largest apartment buildings in the city have dishes on their rooftops, or like the 900-unit Lake Point Tower, on their grounds.

The DBS system at Lake Point Towet consists of three channels ESPN, The Movie Channel, and Cable News Network, all operating 24 hours a day. 3836 Dempster Street Qt bad club, you talk about another." Even a good ball club can have problems, though. Take the Seattle SuperSonics, which drew the largest crowds of any team in the NBA last season, and in addition, had the highest ratings over regular network television. This fall, the Sonics took a big gamble and put all their games on pay television. With the season opener just three weeks away, they have sold the $120 TV package to just 8,000 households, 3,000 less than they need to break even on their investment, and far under they 'd hoped to sell.

"We're disappointed that it didn't take off like we hoped," said Zollie Volchok, Sonics' president and general manager. "If sales don't pick up, we will consider adding other sports to our package next year." Volchok said the Sonics might invite major league baseball, the North American Soccer League, and high school championship teams to join them if they cannot make it alone. "We are pioneers," Volchok says. "We just felt now would be the time to experiment. But we're not going to fool ourselves." ON A NATIONAL LEVEL, ESPN, the 24-hour-day sports network, has reportedly lost $75 million since it was founded two years ago with the financial backing of Getty Oil.

Chet Simmons, former president of NBC Sports and current the head of ESPN, says the losses anticipated, that they represent a substantial investment in technology and person-nel that will reap dividends in years to come. A few weeks ago, ESPN joined with ABC Video to present one major sports event each' month on a pay-per-view basis. Simmons says the agreement is not a move to shore up Skeeplierder Aim lecationf in Mill Onttrt Acctptttf New YORK tOSTON could reverse the trend and keep fans home-permanently. "The argument that the Sox and Cubs have always had home games on free TV this year on WGN and not suffered at the gate is not applicable to us," Kovler says. "Baseball is played in the summer, when people like to go to the ballpark.

For winter sports, when you have to go out to the Stadium in the cold and the snow, I just don't know." THE WHITE SOX Say they have no such worry. In fact, they are confident attendance at Comiskey Park will increase. "For years we've been showing almost all our games on -free TV," Reinsdorf says. "Three million viewers in this area alone have been able to watch our games without having to go to the ballpark. Now, unless they purchase the pay package, they won't be able to see too many games.

We think this will bring more people into the ballpark." Reinsdorf insists, he is not threatened by his crosstown rivals' plan to continue broadcasting Cubs' games free over WGN. Schmidt told fop sports executives at a convention in Denver this summer. Indeed, Wirtz points to another NHL entry, the Buffalo Sabres, as proof of Schmidt's, statement. "They derive1 25 per cent of their total revenue from pay television," Wirtz says. "They can outbid us for players.

They have both the large gate attendance, plus they have money from television." Wirtz states flatly that sports cannot survive without the money pay television will provide. "The old economics are out" Wirtz says. "My family has been in hockey 50 years and it's very dear to us," he says, "but when you lose $2 million every year, you have to think about new economics." CERTAINLY YOU MUST think about it, says Dowdle, Tribune Company's broadcasting chief, but that doesn't mean you must plunge into it. As Dowdle sees it, the Sox are making a big mistake by putting the bulk of their games on pay TV offering only 30 games on free television. J'You've got to crawl before you walk," he says.

The secret to success lies in striking what he terms the "right balance." Surveys show only. 24 per cent of those who watch the evening news pay attention to the sports segment, Dowdle says. "That's 76 per cent of the viewers who have what is really a marginal interest in sports. If you put most of your games on pay TV, you alienate the marginal audience who might have gone to the ballpark once in a while." And Dowdle cautions not to underestimate the importance of the "marginal" audience, "When you get 40,000 people out at Comiskey you get 20,000 diehards and 20,000 mar-' ginal fans who go to just a few games a year," Dowdle says. "That 20,000 is attributable to marketing, and free TV is a very strong marketing arm.

It provides great exposure for the product and it puts people in the ballpark, where they become part of the excitement the team generates. i "When you make people pay, that's when you can lose the marginal fan. I learned that from the baseball strike. I saw an awful lot of people say, 'I don't 'really miss Maybe I'm wrong, but I just don't think there that many diehards." Dowdle thinks the Los Angeles Dodgers have a TV package as balanced as they come. They draw three million fans to Dodger Stadium annually, yet air 50 games on free TV, and only 12 on pay.

"They made $75,000 from each game on subscription television this year an discount tires THINGS YOU Cable TVThis Is by Jar the largest potential source of pay television, but potential is the key word. Chicago is not wired for cable a franchise has yet to be awarded so the city must turn to other forms of pay TV for perhaps the next five years, or longer. A cable signal Is, transmitted by wires laid beneath the ground, or strung from telephone poles. In the eight-county Chicago metropolitan area, there are nearly 75,000 cable subscribers; that number will Increase rapidly because cable franchises in the suburbs are being awarded every day. Cable Is more appealing than other pay television modes for several reasons: capacity, clarity, and cost.

A cable station will offer between 35 to 54 Channels. The reception generally is clearer since interference is And the price averages half that of other pay senices: for $8 to $24 per month a subscriber gets up to 50 times the programming, and in addition, can opt for pay-per-view services, at a reduced rate. la i ir i 1 CIS CAS SAVEH "The way I see it, the Cubs can't afford to stay on free TV forever. Their economic situation, is the same as ours. They have a small ballpark and Tribune Company is not going to put in lights.

That really limits their. ability to draw. ONE OF THE PRINCIPALS in the Channel 60 deal said the impetus for Tribune Company's purchase of the Cubs may well have been Einhorn's announcement that he was putting together a pay TV sports package. Einhorn1 began talking to the press about the combine in February. Tribune Company began talking to Cubs' owner William Wrigley in March.

ESPN resources "I don think we need rescuing at but is rather a timely merging of two creative forces. "All major sports events will be carried on pay TV eventually," Simmons says. "Now is the time to get in on the ground level." Wirtz, for one, concurs. "I learned my lesson with the Hearns-Leonard fight," says Wirtz, whose family owns Chicago Stadium, where the Sept. 16 bout between Tommy Hearns and Sugar Ray Leonard was shown on closed-circuit television to just 1,800 viewers.

The fight was also available to the home viewer for a $15 pay-per-view fee over ON-TV, the subscription network. "Of the 112,000 homes in this area that subscribe to ON-TV," Wirtz said, "51,000 bought the fight. It was a very expensive OOP FREE MOUNTING Radial Truck "I think Tribune Company was afraid Wrigley might join the Sox in the combine and take his games off WGN," the source said. Without both Sox and Cubs games, WGN would have suffered a tremendous loss of advertising revenue, the source said. ACTION1 PRICE 185-14imMr.

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