Hustlers and Fortune Hunters Beware!

Other Texas cities won’t repeat Houston’s mistakes if they follow these ten simple steps.

When the cable TV salesman comes calling, you should fully expect your city council to sell you down the river. Not that they mean to do it. It’s simply that history shows most city councils don’t know the first thing about cable. People who can barely figure out the briefs for a utility-company rate increase can’t be expected to master the baffling language of a rapidly changing technology. So most cities follow the course of least resistance: hold a hearing, ask the staff to write hasty evaluations, and hand out licenses to whoever sounds best. These are called quickie franchises, and the cable companies love them. You won’t, unless you look forward to fifteen more years of Laverne and Shirley reruns and Rice basketball games. And you don’t have to, if you’ll just remember the ten principles outlined below. Even a city council of high school dropouts could understand it this way.

Rule 1: Cable companies need you more than you need them. Cable TV is a buyer’s market. You will be told that cable is a high-risk venture. Baloney. The economy is uncertain, venture capital is scarce, and yet cable companies are willing to spend billions each year on operations that take up to eight years to show a profit. Why? Because investment bankers believe that once the franchise is operating, it will generate cash like a telephone company did before the federal government reined it in and turned it into a “benevolent monopoly.” In practical terms, this means that whatever a city council demands, it’s likely to get. A case in point is San Antonio, which was running short on funds for street and sewer repair. Solution: the council asked UA-Columbia to advance the city $1 million against future franchise fees. UA-Columbia did—and got the franchise. Cable companies, in short, will do anything for a franchise (a former executive at Teleprompter is serving a prison term to prove it), but once the franchise is granted, your options are gone.

Rule 2: Forget about sports and movie. First-run movies and live sports networks will be available to everyone in America who wants them, for a very simple reason: they are the only cable services that consistently make money. The cable company that does not offer sports and movies has yet to be created. The question should really be phrased like this: if we give you a license to make money on sports and movies, what goodies are you going to give us in return for

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