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On-demand on the rise for Comcast, Sony

December 7, 2004 By Pamela McClintock

Copyright 2004 Reed Elsevier Inc.

Daily Variety

December 08, 2004, Wednesday

New York — Comcast’s movies-on-demand menu will get a dramatic boost once the Sony/MGM merger closes, with the newlywed conglom set to turn over 400 titles to the cabler.

Comcast — which is backing Sony’s bid to acquire MGM — also will gain access to hundreds of TV episodes. MGM is set to hold a shareholder’s meeting Dec. 17 to vote on its proposed acquisition by the investor consortium led by Sony.

Speaking at the Credit Suisse First Boston investor conference in Gotham on Tuesday, Comcast exec VP and chief financial officer John Alchin said access to 200 MGM pics and 200 Sony/Columbia Pictures titles will boost the company’s campaign to offer the most on-demand programming of any cable operator to its digital subscribers.

Presently, the company offers 150 movie titles that customers can pay for and view.

The movie category isn’t the only one Comcast intends to beef up. Alchin said the cabler’s recent pact with PBS, Sesame Workshop and London-based HIT Entertainment to launch a 24/7 kids channel will give it about 50 hours of new programming for its on-demand children’s category.

Alchin also touted the initial success of Comcast’s recently inked deal with the NFL to offer the replay of games on demand.

“This is a tremendous offering at no extra cost,” Alchin said.

Even sweeter: Satcasters EchoStar and DirecTV don’t yet have on-demand services.

While on-demand categories like sports, news and kids programming are free, HBO and Showtime are only available on demand to those customers who already subscribe to premium channels. Alchin said HBO still draws the most hits from customers of any on-demand category.

All told, Alchin said there were 56 million on-demand orders in October, compared to 21 million in December 2003. In Philadelphia — where Comcast is based — there were 10 million orders, up 50% from December 2003.

Also Tuesday, Comcast announced it has signed a long-term $100 million lease with Level 3 Communications for nearly 19,000 miles of optical fiber nationwide.

Alchin told the investors that the pact would greatly enhance Comcast’s infrastructure and allow it to better deliver on-demand programming, high-def TV, high-speed Internet and what’s known as voice-over-Internet-telephony (VoIP).

Nearly all the big cable companies are chasing after the telephone biz as they watch the basic subscriber pool become fragmented by the satcasting biz. VoIP was a major point of discussion at Tuesday’s Credit Suisse conference, which featured a parade of presentations by other cable companies, including Time Warner Cable, Cablevision and Charter Communications.

Cablevision Systems took the opportunity to announce that it has crossed the 250,000 phone subscriber mark and that its phone service, Optimum Voice, has been signing up one new customer a day in the New York metropolitan area.

During his time at the podium, Time Warner Cable chair-CEO Glenn Britt told investors that his company now boasts more than 200,000 phone customers.

Like Comcast, Time Warner is banking on its on-demand offerings to differentiate itself.

“We were doing VOD before it was cool,” Britt said, adding that on-demand revenues in the third quarter were up 60% over the same frame last year. He said over 40% of digital subscribers used on-demand services in October, amounting to 42 million hits.

Neither Britt nor Alchin would get specific about the joint Comcast/Time Warner bid to acquire Adelphia cable systems.

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