More original programming, more nets bringing in more advertising

After what has arguably been cable television's strongest advertising year ever, the industry will try to continue to grow in the coming quarters with more original programming and aggressive forays onto the Internet.

At the same time, cable companies have gone through a rapid consolidation as players in and outside the industry place bets that cable will be the dominant broadband conduit into the home. Software billionaires Bill Gates and Paul Allen are behind cable. So is AT&T chairman Michael Armstrong, who became the largest single cable operator in one year by chasing the company's $48 billion acquisition of TeleCommunications Inc. with its $62 billion purchase of MediaOne this past spring. Comcast and Adelphia followed suit with their own billion-dollar broadband deals.

The merger of CBS and Viacom as this story went to press demonstrates that even companies known chiefly as content engines are looking for economies of scale.

In general, projections for cable's future seem bullish. Boosted by a solid economy that has all categories dumping unprecedented amounts of money into television advertising, cable's $1 billion upfront increase popped the total upfront to about $3.8 billion this year. If the economy remains stable, those numbers will likely be repeated or surpassed next year.

Those new dollars will flow to networks experiencing growing ratings thanks to both original programming and expanding distribution bases.

As the advertising business cooks along, cable's production of original content continues to improve and expand into more and more services. "The quality of our product is up so much that the audience and dollar migration continues," says Steve Heyer, president and COO of Turner Broadcasting.

Indeed, networks such as VH1, E!, TBS and others have joined TNT, USA and Lifetime as well as HBO and Showtime in creating original films that draw significant ratings. VH1's Sweetwater, its first original movie, drew a 1.8 national rating, making it the fourth-largest telecast ever for VH1 and increasing the time period's average rating by 189 percent. TBS' First Daughter, with a 5.3 national rating (5.3 million households), was a record for both the network and for an original movie on basic cable. Instead of three networks developing big-budget originals, now there are as many as 10.