Broadband Cable Association of Pennsylvania


October 13, 2011

Comcast Corp.'s Universal Pictures abruptly canceled a plan to offer the coming comedy "Tower Heist" as a high-priced rental three weeks after the movie hits theaters, bowing to pressure from movie-theater owners who worried that the plan could undermine their ticket sales. The episode highlights the difficulties Hollywood faces finding new ways to distribute movies as domestic box-office and DVD sales plummet.

Just last week, the studio announced plans to let Comcast digital cable subscribers in Portland, Ore., and Atlanta watch the Ben Stiller-Eddie Murphy comedy for $60. That's 10 times the cost of normal video-on-demand movies, but the film would have been available far sooner than the usual four-month delay between a movie's theatrical and on-demand releases.

Premium VOD, as such early, high-priced offers are called, has become a contentious topic in the entertainment industry. Movie studios and cable companies have been eager to embrace it as a new revenue opportunity, targeting people who might be willing to pay extra to see a relatively new movie at home. Studios are suffering from declining sales of both tickets and DVDs. Rentals have grown, both online and at kiosks like Coinstar Inc.'s Redbox, but not enough to offset the studios' losses. Nonetheless, theater owners have consistently objected to the plans, saying they threaten to eat into ticket sales.

Objections to Universal's "Tower Heist" plans were among the most strenuous yet. Several large theater chains, including National Amusements Inc. and Cinemark Holdings Inc., threatened to ban "Tower Heist" from all of their locations-not just those in the two test markets-if Universal proceeded with the deal. Universal's decision, announced in a brief statement, cited "a request from theater owners" as the reason for its decision. The studio added that it hopes to "find a way to experiment in this area in the future."

The National Association of Theatre Owners, a trade organization, expressed satisfaction with the reversal. In a statement, its president and chief executive, John Fithian, praised "the open and collaborative nature of the dialogue" between the two sides.

Time Warner Cable Inc. last year began courting movie studios with a proposal to offer subscribers movies for $20 or $30 as soon as 30 days after their release in theaters. Despite circulating detailed proposals among Hollywood executives, the company has not yet rolled out the service. Rival DirecTV Group Inc., after a drubbing from theater owners, had more success getting its own offer off the ground earlier this year. That service, known as Home Premiere, lets certain subscribers watch a limited selection of movies for $30 about two months after they open in theaters.

The studios participating in Home Premiere include Universal, Time Warner Inc.'s Warner Bros. Pictures, Sony Corp.'s Sony Pictures and News Corp.'s Twentieth Century Fox. (News Corp. also owns The Wall Street Journal.) The service has offered customers the opportunity to watch movies such as Sony's Adam Sandler comedy "Just Go With It" and Universal's science-fiction thriller "The Adjustment Bureau."

DirecTV declined to disclose how many viewers have used Home Premiere, saying the service is still being evaluated. Wall Street Journal

The majority of Pennsylvanians who lost power because of Hurricane Irene in late August had the lights back on within 72 hours. But communication breakdowns, technical problems and rural terrain prevented utility companies from getting all power restored in a timely manner, company utility executives told the state Public Utility Commission on Wednesday.

PUC officials said overall the utilities' response to storm was effective, and they are not intending to impose additional regulations at this time. "It is the 5 (percent) to 10 percent of customers that have had an extended outage " and figuring out how to get these customers back online more efficiently and restoring power as quickly as we possibly can, (that) would be a great lesson learned," said John Coleman, vice chairman of PUC, a state agency that balances the needs of consumers with the oversight of utility companies and requires these companies to file annual public reports on their performance, including power outages.

For those customers who were without power for an extended period, it was a frustrating experience. Peter Antonio, owner of Mountainhome Diner, waited five days for power to be restored after the storm. Aside from a week's worth of lost business, Antonio threw out $3,000 in spoiled food. "It wasn't good. I think they should have done much better," Antonio said of PPL Electric Utility's response to the storm. PPL serves 1.4 million customers in northeast and central Pennsylvania. He said a downed tree across the street from his establishment was the reason for power being out. "It was right on the road, and every day trucks were driving past it," Antonio said.

Carl Segneri, PPL vice president of distribution operations, acknowledged the frustrations of customers like Antonio but said those instances were less common after Hurricane Irene than other major storms in the past. About 428,000 PPL customers experienced power outages from Hurricane Irene. Power was restored to 67 percent of those customers within 24 hours and 94 percent in 72 hours, he said. PPL had outages in all 29 counties it serves.

The most widespread problem reported by the utility companies Wednesday was technical issues that prevented them from accurately relaying information to customers about outages and restorations. According to PUC, total power outages from Hurricane Irene reached a peak at 760,000. By Aug. 31, 92 percent of those customers had power restored. More than 1.3 million customers lost power at some point between Aug. 27 and Sept. 6, until all customers' power was restored. Segneri said PPL's automated information system shut down after about 800,000 customer calls on Aug. 28 and is one area where the utility company needs to improve. "Customers understand the outages," said Segneri. "They just want to know what is going on. That's something we know we can do better and must do better."

Segneri said PPL is working with vendors to increase the capacity of the system in preparation for future storms. Other utility companies reported similar problems communicating with customers. Nicholas Austin, director of operations services for Met-Ed, with 625,000 customers, said Met-Ed needs to create a more user-friendly version of its website for outage information. Met-Ed had 224,735 customers without power from Hurricane Irene, including more than 140,000 at the peak of the outage. Representatives from the six electric utility companies that operate in the eastern part of the state were on hand for Wednesday's meeting. Stroudsburg Pocono Record