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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: Ian deSouza who wrote (32092)	4/10/1998 3:39:00 PM
From: John Rieman	Respond to of 50808

Cable digital settops, it's all economics........................... multichannel.com Malone described an economic model for the forthcoming advanced-digital set-tops that earns about $22 per household in incremental revenues. From that -- and ignoring the capital costs of the boxes themselves, because they will likely move to an off-balance-sheet model -- Malone subtracted cash expenses per household to come up with a per-household revenue figure for digital services. The expense side came to $5.75 per digital household in incremental expenses: $3.80 in "intercompany" costs, meaning costs paid to TCI's "family" for the electronic program guide, for programming from Headend in the Sky, for satellite-signal delivery from the National Digital Television Center and to programmers in which TCI has affiliate interests, Malone said. Malone also subtracted $2.20 in fees paid to "Hollywood" for the use of pay-per-view movie and event titles. Another 47 cents went to outside costs, "so that the only money that flows outside of the TCI empire is that 47 cents per month," Malone said. Subtracted from the $22 per household earned in revenues, "that's damn near a doubling of cash flow for the average customer," Malone said. Malone's economic model is what is driving the MSO's aggressive digital-video-launch schedule, which is targeted to serve up to 1 million TCI customers this year. But other MSOs -- even those that signed on as part of TCI's sweeping, 15 million-unit deal with GI earlier this year -- aren't convinced. At least two of the nine MSOs involved in the GI deal privately said that they weren't pleased with what they called "GI's blue-light special," when they were given 12 hours in December to decide whether or not they wanted to get favorable pricing on advanced-digital set-tops in exchange for agreeing to take equity warrants in GI.