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Cable Operators

Telco VOD Plans Take Shape

2/27/2005 7:00 PM Eastern

Video aspirants SBC Communications Inc. and Verizon Communications Inc. have begun to turn their eyes toward video on demand, as both telcos negotiate to secure rights for traditional entertainment and adult content.

TVN Entertainment Inc. will handle Verizon’s VOD content aggregation and distribution chores as part of a multiyear exclusive agreement the two parties reached last week.

Verizon will take advantage of TVN’s on-demand deals with all the major Hollywood studios — except The Walt Disney Co.’s Buena Vista Television division — as well as more than 2,000 hours of VOD content through relationships with such providers as Here! TV, Anime Network, Varsity TV and Total Hollywood TV.

TVNOW IN THE MIX

TVN will also offer Verizon advanced VOD technological services, including the TVNow rapid-turnaround service that enables subscribers to order news and events, such as this past January’s presidential inauguration, within hours of their occurrence.

“We think TVN does a good job in terms of how they execute their business,” said Verizon vice president of programming and marketing Terry Denson, who worked with that company when he was a programming executive at MSO Insight Communications Co.

Denson said Verizon will continue to negotiate with other content providers for VOD programming. Verizon has said previously it hopes to light up its first video service before the end of the second quarter (June 30).

TVN executive vice president Jim Riley would not say how many subscribers he expected to gain from its partnership with Verizon, but did say the telephone company would rank among the company’s larger affiliates.

Verizon will offer much of TVN’s non-studio on-demand programming free to subscribers as part of its VOD package, which he says will be available to 90% of Verizon’s “FiOS TV” video subscribers.

Other subscription video-on-demand services, from premium networks like Showtime and Home Box Office, will be offered as part of those networks’ respective pay network packages.

“The most important thing for on demand is usage,” Denson said, echoing his philosophy while at Insight. “You want to maximize the number of unique users, so you want to create content packages that will compel usage.”

Meanwhile, SBC is talking to several VOD content aggregators about accessing on-demand programming, but has yet to reach an agreement.

“We’re talking to everybody and reviewing our options,” SBC executive vice president of programming Dan York said. “We’ve had numerous conversations with all the relevant players in the space and are considering our options.”

Along with TVN Entertainment, MSO-backed In Demand LLC and telco-targeted company ViewNow offer complete VOD content aggregation and distribution platforms.

SBC could also choose to negotiate directly with Hollywood studios, cable networks and VOD-content providers.

To spearhead on-demand planning, SBC has hired former In Demand executive Richard Wellerstein as vice president of VOD, according to sources close to the telco.

SBC also plans to offer adult programming, although York would not reveal specific plans. Nor would he reveal whether SBC is negotiating with any of the major adult players, such as Playboy Entertainment Group, New Frontier Media or LFP Broadcasting, which owns Hustler TV.

Verizon said it will distribute Playboy’s various networks as part of its relationship with TVN, but Denson said it has not determined how risqué the adult programming lineup Verizon offers will be.

While almost every cable operator offers some traditional cable-edited adult fare, many operators are offering more explicit double- and triple-X adult content via VOD, which tends to significantly outperform more heavily edited programming.

ADULT-EDITING DILEMMA

Offering more-explicit programming could cause a backlash if it becomes widely known, as Adelphia Communications Corp. recently discovered. The up-for-sale MSO — which recently added adult product after founder John Rigas banned it during his reign — two weeks ago pulled its triple-X adult fare after “different groups” reacted negatively to the programming.

“We haven’t officially determined what our editing standard will be,” Denson said. “We will offer adult programming that’s generally competitive with the top 10 distributors. We will not be the most aggressive in the pack and we will not be among the most aggressive.”

Executives from LFP Broadcasting would not comment, while Playboy and New Frontier executives could not be reached for comment at press time.

September