Cablevision-Sony Deal Rains On Satellite Parade

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Cablevision's recently announced deal with Sony to develop and build interactive digital cable devices (TWICE, September 20, p. 58) is in part aimed at stemming the momentum of the home satellite industry and will likely tap the skills of retailers to get the message out to consumers.

One indication that Cablevision had its eyes on its satellite rivals was the timing of the announcement, which came one hour before the Satellite Broadcasting & Communications Association (SBCA) began a day-long seminar on the home satellite industry for Wall Street analysts. A conference call with the press came smack in the middle of the event.

Sony was one of the first consumer electronics manufacturers (following Thomson) to make and market digital receiver equipment for the DirecTv platform. Still, Sony said its deal with Cablevision is not exclusive, meaning that it could choose to enter into similar deals with other cable operators.

In public announcements, Cablevision CEO James Dolan said his intention is for the platform to exceed the capabilities of today's home satellite platforms. In addition to delivering multiple channels of digital programming, the boxes will offer a range of TV-centric Interactive applications, including video on demand, electronic program guides, data-enhanced text overlays, and presumably WebTV-like interactive connectivity for e-mail functionality.

The platform will also be capable of accepting high-definition television programming, although exactly how and in what form that would be delivered was not explained.

Although Dolan would not say definitively that retailers -- such as the Cablevision-owned chain The Wiz -- would sell set-top boxes for the new digital platform, he did acknowledge the possibility. Cablevision, he said, is targeting 3 million subscribers, who are mostly from the New York City area, to take the new equipment and services.

Under the deal, Sony will provide the system and equipment design, which will conform to OpenCable standards and will be based on the Aperios operating system developed by Sony and General Instrument. The box will also take middleware to perform various functions, but Cablevision has not determined which of those systems it will choose.

The Sony box will include an IEEE-1394 "iLINK" standard high-speed digital interface to link the box with digital television sets, digital VCRs and other devices. Sony said it will include the 5C digital copy-protection solution it helped develop along with Hitachi, Intel, Matsushita and Toshiba. Sony will also incorporate its HAVi (Home Audio/Visual interoperability) home-networking software to make it possible to distribute digital content around the home.

Both companies will collaborate on development of digital entertainment services. Cablevision will pay Sony roughly $1 billion for the equipment and technology. Currently, the cable company -- which with 3.4 million subscribers is the nation's sixth largest multi-system operator -- leases its General Instrument built analog and advanced analog devices.

Sony Corp. of America chairman Howard Stringer said the exact functionality of the system would be determined by the feedback of Cablevision subscribers, acknowledging that "we are building this as we go along."

The deal is not the first between a Cablevision company and Sony. Last year, the two firms announced that Cablevision's Madison Square Garden network had purchased Sony HDTV 1080i production equipment for N.Y. Rangers and N.Y. Knicks games. Both teams are owned by Cablevision.

Cablevision currently offers games in HDTV using the ATSC standard 8-VSB-modulation scheme to subscribers who live in areas that have been upgraded to fiber-optic cable.

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