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Message: [QUOTE="Scott Greczkowski, post: 56897, member: 1"] By JULIA ANGWIN, PETER GRANT and NICK WINGFIELD Staff Reporters of THE WALL STREET JOURNAL April 26, 2004; Page A1 [URL=http://online.wsj.com/wsjgate?subURI=%2Farticle%2F0%2C%2CSB108292985324892853%2Demail%2C00%2Ehtml&nonsubURI=%2Farticle%5Femail%2F0%2C%2CSB108292985324892853%2DIJjf4NolaJ3o52uan2IaquDm4%2C00%2Ehtml]TO READ THE ENTIRE ARTICLE CLICK HERE - YOU MAY NEED TO BE A WSJ SUBSCRIBER TO READ IT ALL[/URL] In late 2002, Comcast Corp. Chief Executive Brian Roberts warned cable-industry executives that a new technology was putting their livelihoods in danger. The technology: digital video recorders, such as TiVo, that let consumers store dozens of TV programs and zip through commercials. A consumer who uses such a device "is getting all that content and recording it real easily, paying nothing extra to get it and stripping out the advertising," Mr. Roberts told an industry gathering. But now Mr. Roberts is singing the praises of the digital recorder. Comcast, the nation's largest cable provider, is installing the device in customers' homes as quickly as it can. So are other top cable operators such as Time Warner Inc.'s Time Warner Cable unit. So far, only about 3.5 million homes have the recorders, but they are spreading fast. The cable industry's embrace of digital video recorders, or DVRs, is a huge gamble. Cable companies are bulking up their profits by charging customers an extra $10 or so each month to use the machines. But if people tune ads out, it could undermine the basic economics of the television business. Advertisers spent $54.5 billion on U.S. television advertising in 2003, according to TNS Media Intelligence, more than any other medium. Many of the companies that sell monthly cable-TV service also own cable channels that rely on advertising revenue. Time Warner, for instance, gets about 16% of its revenue from advertising, much of that from its cable channels such as CNN, TNT and TBS. Comcast already owns a handful of cable networks, including E! Entertainment Television, and has made a bid to buy Walt Disney Co., which owns ESPN and other cable channels. Even if they don't own programming, cable companies still want people to watch TV commercials. They get some revenue from selling local advertising time. Just as important, ads pay for much of the cost of making TV programs. Cable companies pay fees to carry the likes of CNN and ESPN, but if those channels couldn't carry advertising, the fees would likely be much higher. Before launching DVRs, cable companies focused on pushing video-on-demand services in which viewers can order movies and other programs from a central library, often at no charge. But eventually cable executives say they saw little choice but to introduce the new machines, in part because satellite-TV rivals such as EchoStar Communications Inc. were already doing so. "This is something consumers really want and ultimately that's what's going to drive everybody in a competitive business," says Mr. Roberts, the Comcast chief, in an interview. He says his 2002 speech was mostly targeted at cable programmers, not cable operators, and it didn't mean that he wanted to hold back the technology. Read the rest at [url]http://online.wsj.com/wsjgate?subURI=%2Farticle%2F0%2C%2CSB108292985324892853%2Demail%2C00%2Ehtml&nonsubURI=%2Farticle%5Femail%2F0%2C%2CSB108292985324892853%2DIJjf4NolaJ3o52uan2IaquDm4%2C00%2Ehtml[/url] [/QUOTE]

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