Pay-per-view TV's growth watched with hope, fear


When historians look back on tonight's rematch between heavyweight boxers Mike Tyson and Donovan "Razor" Ruddock, they may well conclude that the most important letters connected with the fight are not KO or TKO, but PPV.

That's PPV as in pay-per-view television, a growing buy-only-what-you-watch cable service on which the fight is being marketed to subscribers of about 1,400 cable systems nationwide at prices ranging up to $39.95.

With promoters hoping for well over a million "buys" of the telecast, the PPV take could exceed $50 million. That would be about 50 percent more than was generated by the first Tyson-Ruddock fight in March, which Mr. Tyson won on a controversial technical knockout. It could even surpass the PPV record of $49 million racked up by the Evander Holyfield-George Foreman heavyweight title fight in April.

PPV observers say such figures could provide a significant boost for the 6-year-old industry, which generated $250 million in revenues last year from sports events, movies and concerts. They also could boost concerns about the possibility that PPV eventually might diminish access to cultural and sporting events traditionally broadcast for free.

"I think every time an event generates that kind of money, people look at the business in new ways," says Scott Kurnit, president of Showtime Event Television, which provides programming for PPV and is co-producing the telecast of tonight's fight.

Mr. Kurnit says that the money -- for a non-title fight, no less -- will encourage cable systems without the capacity to deliver pay channels to invest in the technology necessary to do so. About 17.5 million homes, a third of cable subscribers, can get PPV regularly.

It will also remind those systems that do offer PPV to step up promotion of the service, he says, potentially increasing revenues for all pay-per-view programs and providing a larger base for all events.

"It's like grocery shopping," he says. "Once you know the store is down the street, you'll go there more frequently."

Local cable operators are also looking for a shot in the arm. "We're hoping it will be bigger than the first [Tyson-Ruddock] fight," which generated about 10,000 orders and other expressions of interest in PPV, says Kurt Pendleton, general manager of Comcast Cablevision of Maryland, which serves 195,000 cable subscribers in Baltimore and Harford counties.

United Cable of Baltimore, which has 100,000 subscribers in the city, hopes to exceed the 6,000 households that bought the first Tyson-Ruddock fight and expects the positive effects to continue beyond tonight.

"What happens is that people get pay-per-view for the first time for a major event or a movie they really want to see and continue to ask for it after that," says Joyce Rutledge, program services manager at United.

While producers of pay events and cable operators look to expand what they call the PPV "universe," the researchers are working on the means to greatly increase the number of pay channels.

Advances such as fiber optics, direct broadcast satellites and compression technology are expected to triple the number of available channels on cable systems from the current average of 33, and it is expected that many of the additional channels will be devoted to PPV.

Lloyd Werner, president of Request Television, a leading provider of pay-per-view movies, foresees a doubling of households that can get PPV by the end of the decade. He expects many of them to have access to more pay channels than the current limit of four or five on most systems. That means that "more movies may be provided" beyond the current 10 to 15 a month and that there will be a "greater range of times" for viewers to watch, he says.

Even before that, however, PPV is becoming a growing factor in the presentation of culture and sports. New York's Metropolitan Opera, for example, has tentative plans to offer its 25th anniversary gala in September as a PPV event. NBC plans to offer round-the-clock coverage of the 1992 Summer Olympics on three PPV channels at prices of up to $175, while telecasting other key events for free. And the National Football League has said that it might experiment with PPV telecasts as early as next season.

These developments have raised concerns about the siphoning of big events from broadcast television to PPV, raising the specter of what Representative Edward J. Markey, D-Mass., chairman of the House subcommittee on telecommunications, calls a "technological Grinch which steals the Super Bowl and the World Series, the Olympics, the Oscars," thereby creating "a world of information-rich and information-poor."

Already, PPV has made a dinosaur out of closed-circuit arena telecasts, which used to draw thousands to fights involving such boxers as Muhammad Ali and Sugar Ray Leonard. The last fight the Baltimore Arena showed was October's James "Buster" Douglas-Holyfield fight, which drew a paltry paid attendance of 936.

The modern era of PPV was launched in the mid-1980s, several years after the introduction of pay-television services such as Home Box Office, for which subscribers pay a flat monthly fee to receive a network's entire programming.

PPV was made possible by computerized hardware that allows subscribers to activate descrambler boxes in their homes by pushing a button on the remote control or dialing the cable

company on a push-button phone.

Since then, PPV has grown impressively. From 1987 to 1990, the industry's revenue nearly tripled, from $86 million to $253 million, according to Paul Kagan Associates Inc., a California-based media analyst.

One of the main reasons cited for the growing popularity of PPV is convenience.

Another is timeliness. Though movie releases on PPV lag behind those on home video by 30 to 45 days, they precede by at least six months the movies' release on premium services such as HBO, Showtime and Cinemax.

Despite its growth, PPV remains a minuscule part of the multibillion-dollar electronic entertainment industry. Last year, for example, movie theaters and pay cable had $5 billion in revenue each.

Steve Rockabrand, executive director of pay television and ancillary markets for Paramount Pictures, says there has "not been any detrimental effect" on either from PPV, which "allows us to deliver our product directly to the consumer."

The $10-billion-a-year home video industry isn't worried, either. In his letters to shareholders, Blockbuster Chairman H. Wayne Huizenga cited projections that by 2000, $20 billion will be spent annually on home video rentals and $2 billion on PPV.

Concert promoters aren't as confident. Suzan Crouch, a

marketing consultant for SET, which has produced concerts by groups ranging from the Rolling Stones to New Kids on the Block for PPV, says her company is concerned enough about the effects on the live gate that it won't allow a broadcast until the end of a tour, when much of the excitement has dissipated.

In Baltimore, the James Brown concert earlier this month attracted 2,300 buys, about the same as most movies.

"Sporting events do best on PPV," Ms. Rutledge says. And that is why there is concern that such premiere sporting events as the World Series and the Super Bowl could wind up soon on PPV, generating enormous paydays for the sports involved.

Mike Connolly, a spokesman for Mr. Markey, says Congress is concerned that programs of widespread interest that are now free could become available only to those who can afford them.

"Like it or not, the Super Bowl is part of our cultural fiber," he says. "It's also a question of precedence. If programs of national interest beginto migrate from free over-the-air TV to PPV, what does it do to the future of the networks? There's an intrinsic value in having a national communications network."

After Mr. Markey expressed his concerns early this spring, the National Football League promised that its PPV experiment would mean more, not fewer, games on free television. In essence, it could mean that, say, a transplanted Washington fan in Chicago could pay a fee to watch the Redskins play the Cowboys instead of watching the Bears and Vikings for free.

PPV officials also dismiss concerns such as Mr. Markey's, pointing out that none of the current programming has been taken off free television.

For the moment, Congress seems mollified.

"We're hopeful [regulatory] legislation won't be necessary," Mr. Connolly says. "The big events, we're confident, won't migrate" to PPV.

After tonight, however, just about everything else might become fair game.

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