AT&T wires Peacock

10-year carriage deal includes digital, HDTV

By JOHN DEMPSEY

NEW YORK -- NBC and AT&T have engineered a deal that will extend the carriage of CNBC and MSNBC to the 10-million-plus AT&T cable subscribers through 2008.

Equally important, AT&T agrees to retransmit the regular signals of the 13 NBC-owned TV stations plus additional digital offerings or high-definition TV programs created by the stations for the next 10 years.

Various industry sources say the deal could cost AT&T an average $40 million a year.

Leo Hindery, president and CEO of broadband and Internet services for AT&T, said in a conference call, "We've created a real partnership between the cable industry and the broadcast industry."

Battle-free zone

Hindery says the deal disproves the conventional wisdom that cable and broadcast TV would battle over cable carriage of the digital channels that every TV station will put together during the next few years.

One of the clauses in the agreement specifies that only AT&T's rebuilt cable systems will have to carry all the NBC stations' digital and high-def bells and whistles. The non-rebuilt 35-channel systems get a pass because they would have to throw out cable networks such as C-SPAN to accommodate the digital services. As these smaller systems are rebuilt, though, they will come under the terms of the deal.

Another element in the deal that Hindery and his counterparts -- David Zaslav, president of cable distribution for NBC, and Tom Rogers, president of NBC Cable and executive VP of NBC -- touted was AT&T's commitment to the 250 hours of exclusive cable coverage of each of the next five Olympic Games on CNBC and MSNBC.

This coverage will supplement the 165 hours of Olympics that the NBC broadcast network will carry in primetime and all day on the weekends, starting with the 2000 Summer Games from Sydney, Australia.

Olympian task

"The Olympics are such an important part of viewing habits of consumers that it's a stunning accomplishment to have so much of this programming exclusive to cable," Hindery said.

NBC is hoping that Hindery's endorsement of the Olympics will spur other cable operators to jump on board. Many operators are balking at the surcharge NBC is demanding for the Olympic coverage on CNBC and MSNBC, in some cases as high as one-third of the CNBC license fee.

"Unfortunately, it's not a one-time-only surcharge but an extra monthly fee that would get locked in for the life of the contract," said one cable-operator executive who's unhappy with NBC's Olympic terms.

A 500,000-subscriber cable operator would have to pay NBC $300,000 a year extra for the Olympics, a price that goes up if the operator fails to sign the contract by July 31, the source said.

But "the Olympics are unique," Hindery said. "This kind of an Olympics cable deal has never happened before."