(8 of 10)
Thievery aggravates another nagging problem: service. When something goes wrong with a cable-attached set, there may well be a problem determining whether the trouble is in the set, the cable hookup or the decoder box. If the latter two, the cable operator must provide service; some operators are quick in responding to calls, others are not. Thieves tapping ineptly into a cable system can ruin cable reception for everyone on a block.
One dream of cable TV subscribers—the regular transmission of high-quality cultural events such as the operas, ballets and concerts staged at New York's Lincoln Center for the Performing Arts—is still an unfulfilled promise. John W. Mazzola, president of Lincoln Center, professes himself "totally confident that we will be on a pay-cable system in a couple of years," but indications are that Lincoln Center officials are waiting until cable hits the "magic number" of 30% of all TV households reached—which could be in 198 lor later.
For all the problems, the cable industry's leaders are producing a business success story that, if it were a show, would be billed as an extravaganza. The industry has three main branches: cable companies, called MSOs (for multiple-system operators); programming companies; and equipment suppliers. All are booming.
The MSOs bid for franchises from local governments to service a city or town, and in support of their bids line up stations whose programming will be transmitted by cable. The MSO that promises the most interesting programming often gets the franchise.
Teleprompter, the biggest MSO, with 1.2 million subscribers and revenues of $147 million last year, has had a yo-yo history. Founded in 1967 by Cable Visionary Irving Kahn, it expanded furiously by acquisition. Then, in 1971, Kahn went to prison, convicted of bribing officials in Johnstown, Pa., in order to get a franchise. Overexpansion and overborrowing from banks at high interest caught up with the company; in 1973 it lost $31 million. A new management team headed by Karp, a former treasurer of Columbia Pictures, has brought the company solidly back into the black. Last year it earned $14.2 million, up 58% from 1977.
Karp was quick to appreciate the advantages of pay cable. As soon as HBO went on the satellite he bought its service to offer to Teleprompter subscribers. "Before the satellite," he says, "we had to rely on bicycling tapes and film around the country. Suddenly the satellite made possible the idea of buying programming for the entire nation. We could offer new services and look to new sources of income." Teleprompter has invested heavily in earth stations for satellite transmission and now has 80 of them; in January it bought half of Showtime, HBO's rival pay-cable service.