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Diller Maps Out New Strategy for Broadcasters : Television: Fox chairman urges legislation requiring cable companies to pay for the right to carry network programming.


NEW ORLEANS — In a departure from the normal strategy of the youthful Fox Broadcasting Co., which usually attempts to set itself apart from the aging Big Three networks, Fox Inc. chairman Barry Diller issued a rallying cry Tuesday to all broadcasters.

Apparently weary of seeing cable networks grow fat at the expense of broadcast networks and their affiliates, Diller called for new legislation requiring cable companies to pay for the right to carry network programming.

Cable operators currently pay a license fee to carry most cable networks--including CNN, ESPN and A&E--but they receive Fox, CBS, NBC and ABC for free.

"For 143 million Americans, television, all television, is now a pay service," Diller said in a speech here at the opening of the annual convention of the National Assn. of Television Program Executives, where syndicated TV producers sell programs to individual stations.

"Sixty percent of Americans write a check each month to receive television," he said. The TV industry is at a "critical juncture" in its transition from being a free, universal service to a pay service, and there is danger of "screwing up the transition," Diller said.

Sounding increasingly like executives at the Big Three networks, which have been steadily losing ratings and revenue for several years, Diller warned of tossing out the value of the old for the new. He said that it was a "real problem" that CNN creator Ted Turner was being honored as Time magazine's Man of the Year at the same time that Roone Arledge, the president of ABC News, was forced to make cutbacks in his division.

Diller argued that while cable networks have dual revenue streams--from cable operators' license fees and from advertisers--the networks are forced to rely solely on advertising.

"Television is television, and subscriber fees are the new economic foundation of the business," he said.

The Fox chief pointed out that narrow-interest programmers are thriving in the current cable-TV system, despite the fact that the majority of cable viewers still turn to the mass-market entertainment provided by the networks. In that sense, he suggested that cable networks are being subsidized by the broadcast networks.

"Broadcasters are not being compensated," Diller said. "The game is rigged."

Current regulations prevent broadcasters from being included in television's new economic order, he said. "We don't need a bail-out for broadcasters . . . or a gravy train for Hollywood. (But) the government must remove its clumsy, heavy hand so broadcasters can compete."

Ironically, the "must-carry rule," forcing cable operators to provide the networks on their systems, was lobbied for by networks fearful of being left off of cable systems. Now broadcasters are hoping to repeal that rule and require cable operators to pay for network service.

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