SI Vault
William Oscar Johnson
August 10, 1981
Cable and pay TV, which already have brought remarkable variety to the home screen, are precipitating revolutionary change, and all of sport will be affected. The first of two parts
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August 10, 1981

You Ain't Seen Nothin' Yet


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Willard Nichols, former chief of the cable bureau at the FCC and now administrative assistant to the chairman of the commission, says, "It took us 4½ years of economic study and econometric modeling to conclude that the premise that local broadcasters would be hurt by cable was wrong. Sure, they're going to lose viewers. But what we were never able to work into the equation was the fact that every year they were increasing their profits in the face of increased cable competition. So in July of last year we got rid of all the limitations designed to protect local stations."

The broadcast establishment complained, but it wasn't the only group involved in the battle to curtail cable growth. "Commissioners of baseball, the NFL—all of them—have been fighting our deregulatory efforts," says Nichols. "They have argued that the impact is on the live gate. But we've found that people won't stay home just because a game is on the tube. They stay home if it's 12 below zero or if a poor team is in town."

Whatever the objections and obstacles of the past, cable TV is now pretty much free to grow as it pleases. How big will it get? The most optimistic observer is Robert Ross, who, as senior vice-president of the National Cable Television Association, an industry watchdog and clearinghouse, is paid to be optimistic about such things. "Right now cable is in about 25% of the 80 million TV homes," says Ross. "And we're adding subscribers at the rate of 250,000 a month. That's a fairly significant growth rate."

Last November, J. Walter Thompson, the nation's second-largest advertising agency, projected that "by late 1985, 36% of the nation's households would be wired, and by the end of the decade we should have half the country hooked up. In 1979, half the homes in the country could receive nine or more channels. By 1989, half the country may well have more than 50 channels to pick and choose from!"

Nichols is less sanguine. "Our best estimates are that only about 40% of urban viewers will ever have cable," he says. "In round numbers, that means a little more than 48% of the entire country will have cable at any time in the next 10 or 12 years. But it's hard to project. Who would have guessed the boom in cable resulting from satellite delivery of pay services? And that, I say, is the real key to the recent explosion."

Yes, the satellites—the key to the immediate past and to the far future, the key to ESPN, the superstations and, of course, to polo in Lolo.

Satellite TV communication dates back no farther than the mid-1960s, when the Communications Satellite Corporation (COMSAT) sent into orbit the famed Early Bird. It carried the first live transoceanic telecast in 1965. In the intervening years, 11 U.S. communications satellites of various kinds (of which 10 are still functioning) have been sent up to shower signals down to earth. But the one that ultimately revolutionized the industry was RCA SATCOM I, which was launched in 1975. Having leased two transponders on SATCOM I, Home Box Office, a division of TIME INC., the publisher of SPORTS ILLUSTRATED, began that year to bounce its programming off the satellite. HBO was the pioneer, and it gave U.S. cable operators, for the first time, high-quality programming that was different from network shows.

HBO is one of several pay-cable services for which subscribers are charged a monthly fee in addition to their basic cable package. It's hard to overestimate the impact HBO had on the American television industry. Alex Best, an engineer at Scientific Atlanta, which supplies just about everything for cable systems, from earth stations to set-top terminals, says, "Five years ago, just before HBO and satellite transmission became feasible and affordable, cable took a downturn. We had wired the rural areas almost to saturation and were moving more into the cities. But no one is going to pay $10 a month to get the same television you can get with a pair of rabbit ears. Satellite transmission of recently released movies, sports and other HBO-type programming changed all that. It opened up the cable market."

The advantages of satellite communication are many. Weather and sunspots rarely affect it, and transmitting television signals via satellites is cheaper than transmitting by undersea cable, microwave, coaxial cable or overland wires. They are called "geostationary satellites" because they remain in "stationary" rotation precisely 22,300 miles above the earth.

To pick up the signal from a satellite, a cable operator needs a dish-shaped antenna called an earth station. At first, the FCC insisted that all antennas be at least 10 meters in diameter. Early earth stations cost more than $100,000, which was yet another obstacle to the growth of cable systems. The newly enlightened FCC dropped the 10 meter antenna rule, too, and business boomed. In 1977 there were only 300 earth stations in the U.S. Within 12 months there were 600. Today there are about 1,500, and the cost has dropped to $10,000.

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