By  on March 8, 1994

NEW YORK -- The only thing now standing between would-be home shopping networks and millions of potential viewers is cable distribution -- or the lack of it. While concepts abound, available cable channels are scarce.

The reality of the cable squeeze -- too many new networks for too few channels -- has forced some of the new home shopping ventures to rethink their distribution strategies.

"There will be a real channel crunch for at least 18 months, but after that it will go the opposite way and it should be relatively easy to get a channel," said Bill Harvey, president of Next Century Media, a Woodstock, N.Y., consulting firm. "That's because there will be enough digital channel boxes for digital compression."

Digital compression, the technology that lets many cable channels share a thin strand of fiber-optic cable, is seen as a panacea to the dearth of channels.

"The smart move at this point would be to test and not go for a lot of homes, but go for a small amount of learning," Harvey said. "You can pre-test the programming and know you've got a winning package, then roll it out."

That's what TV Macy's may be thinking.

At a Coopers & Lybrand seminar on electronic retailing, held at FIT last week, Eugene J. Rohrer, senior vice president of corporate planning for R.H. Macy & Co., said, "We want to increase our subscriber base through cable, but we are also very interested in direct broadcast satellite with Hughes, CD-ROM and wireless, through the phone companies."

Afterward, Rohrer said this was the first time the company had spoken publicly about alternatives to cable.

"When we came out of the box a year ago, we said, 'Cable, cable cable,"' Rohrer said. "Now, we just don't know. The reason we're bringing in the other alternatives is because life changes. You can get on cable, provided you are willing to pay too much."

Rohrer was referring to an offer reportedly made by QVC chairman Barry Diller to pay cable operators a whopping $5 per subscriber to carry his new Q2 network. QVC declined to comment on the reports.TV Macy's has said it wants to have 15 million to 20 million viewers by the time the channel is launched, which is 12 to 18 months away. It has a commitment for 2.3 million subscribers from Cablevision, a partner in the TV Macy's venture.

Time Warner's Catalog 1 home shopping channel would appear to have a ready-made distribution outlet in the company's 7.2 million customers. But Gordon Cooke, president of Time Warner Interactive Merchandising, said, "To a degree, our cable systems are independent and make decisions based on economics."

Cooke said paying cable operators for subscribers is not a new practice. "Cable operators are already getting $2 from another shopping service," Cooke said. "Anybody that throws out a number like that [$5] sets a benchmark for any other shopping service."

Federal must-carry rules that force operators to carry certain programming has eaten into some operators' capacity. The cable industry is fighting those rules in court.

Cable industry experts said the Federal Communications Commission's recent move to cut cable rates has also complicated matters.

"The cable operators don't understand the implications of the new cable laws and what prices they can charge for new services," said one expert, adding that operators may be hesitant to commit to any new services right now.

Until the issue of diminished capacity is resolved, new ventures like FAD-TV, a fashion and shopping network, may not see the light of day on cable television.

Anthony Guccione, FAD-TV's president, who estimated the network will cost $60 million to launch, said he will try selling programs to syndication or buy time outright on broadcast television while waiting for cable channels to become available. And available they will become, said industry experts. All it takes is a little patience -- and a lot of time.

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