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American Television and Communications, the No. 2 MSO, with nearly 1 million subscribers, has been growing continuously since Rifkin put it together in 1968. During the last fiscal year, it increased revenues 34%, to $71 million, and profit 65%, to $10 million. At the end of 1978, Time Inc. completed a buyout of A.T.C. for a total price of $179.6 million. Among other things the acquisition added to A.T.C. the 100,000 subscribers of Manhattan Cable, which Time Inc. had bought earlier. Unlike Teleprompter, which is concentrating largely on adding subscribers in areas where it already operates, A.T.C. is eagerly bidding for new franchises. It is now building or about to build in 15 new areas, including Memphis (250,000 houses reachable by cable), Jacksonville (200,000) and Kansas City (165,000). Says Rifkin: "While it is not necessarily our objective to be No. 1, we think that it is inevitable within two years, considering the numbers and sizes of the systems we are building."
The ranks of the other MSOs are being shaken up by mergers prompted by the industry's growth. General Electric Cable, a subsidiary of GE, is about to acquire Cox Broadcasting for roughly $560 million if shareholders and the FCC approve. The merge would create the third biggest MSO, with 745,000 subscribers. Tele-Communications, Inc. (700,000 subscribers) would be pushed down to fourth, and Warner (620,000 subscribers) to fifth. Times-Mirror Corp., the publisher of the Los Angeles Times, has just bought Communications Properties Inc. for $128 million. Consequently, Times-Mirror has jumped from 26th to sixth biggest MSO (415,000 subscribers).
The programming companies, which put together shows to be seen on pay cable, are divided into two leading national firms, HBO and Showtime, and a bunch of smaller ones serving mostly local audiences. Among them: Prism, Hollywood Home Theater and Cinemerica.
HBO, which was founded in 1972 and leaped audaciously aboard the satellite in 1975, more than doubled its business last year. Its programs now reach 2.4 million subscribers, vs. 1 million at the end of 1977. HBO's sports programming leans largely to documentaries of a sort; for example, an April baseball preview in which American League managers and players discussed the Yankees' chances of whining a fourth straight league pennant. HBO will also spend $13 million on original programming this year. Sample: National Lampoon Presents Disco Beaver from Outer Space, a satirical revue that was shown in February and included skits racier than any seen on regular TV. One was The Breast Game, starring Lynn Redgrave in a parody of TV game shows. An interview show called Upclose went on the air last October; first guests included Woody Allen and John Travolta.
HBO employees read original scripts for movies, with a view toward helping producers finance those that look good. The purpose is to assure a supply of movies for HBO customers. Results of the first few films that have been produced with HBO's help have been mixed: Who Is Killing the Great Chefs of Europe? was a moderate success; Magic and The Bell Jar were panned by many critics, including those writing for Tune Inc. magazines.