ESPN PIONEERS 70%; INDUSTRY LOOKS BEYOND;NEW DELIVERY METHODS HELP BOOST PENETRATION

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For years, broadcasters and cable executives have debated whether cable TV's audiences have been half full or half empty.

Today, cable is actually about 70% full and 30% empty, according to Nielsen Media Research's most recent household coverage estimates.

Recently, ESPN became the first basic cable network to break the threshold of reaching 70% of U.S. TV homes. Several others, including CNN and USA Network, are just behind it.

That's a remarkable feat considering that cable TV's U.S. household penetration is still only about 67%. Alternate delivery methods, such as direct broadcast satellite, have contributed an additional 3% of households for the industry's programming services.

In any case, the 70% coverage milestone raises basic cable's bar a notch and puts it on more of an even keel with other "national" TV programming outlets, including the broadcast networks and, especially, syndication.

"I think 70% is symbolic for cable TV, because that has always been a minimum standard of national coverage for syndicated properties. And for years, people have clung to that number," says Dan Rank, senior VP-director of national broadcast at DDB Needham Worldwide, New York.

Mr. Rank says the leading basic cable networks are at least as "national" as syndication.

"When a syndicated show is in less than 100% of households, it's because the syndicated property is not cleared in every [area of dominant influence]; it's missing coverage in some markets. But cable TV is in every ADI. So, in a way, cable TV is more national than many syndicated shows," he further explains.

And that standard now also applies to many network TV shows, especially those running outside of prime time.

"There's a lot of network daytime shows that don't reach more than 70% coverage," says Steve Grubbs, senior VP-director of national broadcast and programming of BBDO Worldwide, New York. "This puts cable in parity with a lot of syndication and some network dayparts [though] not network prime time."

But while basic cable networks may be reaching parity with other national TV outlets in terms of coverage, Mr. Grubbs says they still lag in audience delivery.

"There's obviously a difference between coverage and audience," says Mr. Grubbs. "What we care most about is ratings."

Cable industry executives say the two factors are interrelated. As the medium's coverage expands, it will be able to justify the costs of better programming, which will lead to bigger ratings and higher ad rates. This in turn will enable cable to compete for even better programming.

"Instead of all this talk about MCA buying a network, what they should do is buy out Viacom's half of USA Network and use it as an outlet for their best product," says Jon Mandel, senior VP-director of national broadcast at Grey Advertising, New York.

"If USA is in close to 70% of U.S. TV homes and if they put on some strong original programming, they would generate ratings that maybe wouldn't be as big as the broadcast networks, but they would be damn close."

In fact, when cable networks invest in quality original programming, they often deliver ratings near broadcast network standards. Such programming includes ESPN's and TNT's National Football League games, original movies such as TNT's "The Good Old Boys," starring Tommy Lee Jones, and its "Joseph" miniseries, with Ben Kingsley, and even coverage of the O.J. Simpson trial.

Although the 70% threshold might be a symbolic figure, cable industry executives now are looking beyond it. As more alternate forms of distribution carry basic cable programming into unwired areas of the country, the cable networks' penetration could grow.

"Seventy percent is an interim plateau," says John Sims, VP-research of the Cabletelevision Advertising Bureau. "The delivery of cable programming could reach 80% by the year 2000."

Others are even more bullish. Jack Myers, president of media consultancy Myers Reports, predicts basic cable will reach 85% of the nation by 2000-especially as the satellite dish market brings more rural households into the fold.

However, predictions like these create a paradox behind cable's growth.

As the medium's coverage expands, it loses one of its earliest selling points to advertisers: by virtue of its more limited circulation into more affluent communities, cable inherently delivered higher-end demographics than broadcast.

"That rationale is evaporating," says Mr. Grubbs.

Indeed, the issue has sparked an uncomfortable bit of industry infighting, as newer cable channels with lesser penetration begin using that initial coverage argument against their better-established brethren.

"As cable grows, it is not growing into a more upscale universe. In fact, as cable networks expand, their audience will get more downscale," says Richard Zackon, VP-research of Court TV, an emerging channel available in about 24 million households. Because of its more limited coverage, it indexes much higher in upscale demographics than its more broadly distributed cable peers.

Mr. Zackon just completed the second round of a controversial study in which Court TV assessed the demographic composition of newer "growth" networks like Court TV and broadly distributed channels like USA and CNN. The study, a Nielsen analysis conducted last November, found channels like Court TV, E! Entertainment and Sci-Fi Channel are in homes that index 43% higher in household incomes of $60,000-plus than the national standard. The mature cable networks, Mr. Zackon says, index 5% below.

He says the demographic fall-off begins to occur roughly when a cable network reaches 50% of U.S. homes.

However, Mr. Zackon acknowledges, when Court TV reaches that point, he will gladly trade his superior demographic positioning for superior overall audience reach.

"We'll worry about that when happens," he says. "But we'll probably change our story.'

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