A Bigger Screen for Mark Cuban

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STEVE LISS FOR TIME

Cuban has five high def TVs in his suite in the Mavs arena

It's three hours before a Dallas Mavericks home basketball game, and team owner Mark Cuban is sitting with his bare feet on the coffee table, surfing satellite-TV offerings on five huge screens in his courtside suite at the American Airlines Center. Clicking on Channel 199, he pauses to watch a bikini-clad woman conducting a tour of an Egyptian temple. The picture is startling not because of the bikini but because everything seems so real--as if the woman and the temple were somehow just outside the window. "It's like being there, isn't it?" asks Cuban, with something like pride of ownership in his voice.

But, then, he is the owner of the channel onscreen. Having made his first million dollars on computer networks in the '80s and his first billion on the Internet in the '90s, Cuban is now betting on high-definition television, which uses digital technology to produce a picture four times as sharp as that of its nearest competitor. Last September, eager to broadcast Mavericks games in the high-definition format and frustrated by the industry's slow conversion to digital, Cuban launched HDNet --the first national TV network to offer all its programming in high def. On the air 16 hours a day via DirecTV satellite, HDNet offers mostly sports, including the recent NCAA Final Four, Major League Baseball and National Hockey League games as well as concerts, beauty pageants and, yes, travelogues hosted by babes in bikinis.

HDTV has been around, at least in concept, since the '60s, and everyone who has seen it agrees that it's a joy to watch. You can literally see each bead of sweat rolling off a player onscreen. The format's adoption, however, has been slowed by a broadcasting industry that has billions of dollars invested in the old ways of doing TV. Now comes Cuban, who has a proven eye for the next hot technology. He knows when to invest and--rarest of gifts--when to sell. After creating Broadcast.com to transmit radio programs over the Internet, Cuban sold out to Yahoo for $5.7 billion in stock in 1999. Later that year he unloaded or hedged almost all his tech stocks, publicly calling them overpriced, shortly before they began to slide. Cuban's investment in HDTV is forcing the technology and the business to be taken more seriously.

Richard Doherty, who analyzes digital-technology trends for the Envisioneering Group in Seaford, N.Y., observes, "Now that Cuban is clearly in the tech and marketing lead, the broadcasters are taking notice. He's been more effective in the last seven months than companies 100 times his size have been in the last seven years." Cuban's efforts got a big boost two weeks ago, when Federal Communications Commission Chairman Michael Powell pressed the TV industry to roll out HDTV more quickly.

Cuban, 43, can afford to travel the world or just hang out with his players on the customized $46 million Boeing 757 he bought for the Mavericks. Instead, he has taken on another business challenge--a daunting one--with HDTV. Of 100 million U.S. households with TVs, only 2 million have high-definition sets, most of them used for playing movies on DVD, according to Cahners In-Stat Group research. Neither Cuban nor DirecTV will say how many of the company's 10.7 million satellite-TV subscribers have the special set-top boxes required to receive the high-definition signal and tune in to HDNet. But most industry analysts estimate the present audience at a mere 100,000.

That is changing, but slowly. The economic slump has left consumers reluctant to invest $2,000 or more in new TV gear. Broadcasters, especially network affiliates, and cable systems have resisted HDTV, citing the costs of new equipment and lack of programming. At last month's meeting of the National Association of Broadcasters in Las Vegas, the anti-HDTV forces worried aloud about piracy of satellite-transmitted high-def movies and even questioned whether the technology would ever work. Cuban, whose technology works just fine, retorts that movie studios are running around like Chicken Little and should be more worried about capturing a market that Cahners In-Stat expects to hit 7 million to 8 million homes by 2004. The tiny audience he has today doesn't faze Cuban. "It's like saying how many people used the Internet in 1995; it's irrelevant," he argues. "So while these guys in Hollywood keep coming up with reasons not to compete, I just walk in and establish myself and get bigger and bigger."

In hopes that HDNet will soon broadcast round the clock, Cuban is on a buying spree for content. Last month he signed a deal to broadcast 80 Major League Baseball games this season. He has laid expensive high-def cable in 40 stadiums. He helped NBC defray the costs of broadcasting the 2002 Winter Olympics in high-def so he could carry them on his network. He is shopping in Hollywood for 35-mm movies to be converted to high def. A kids' show is in the works. He even sent veteran war correspondent Peter Arnett to Afghanistan to report a seven-part series, providing the most disturbingly real pictures yet from the war zone--in jarring contrast to the main networks' blurry satellite-phone feeds. Cuban says he would have "no problem" spending $100 million of his $1.9 billion net worth to make HDNet a success. "It's not a question of if HDTV will make it, but when," he says. "It's a question of, Can I get to the economics before I run out of money? The answer is yes."

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