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Bell Atlantic Reaches For The Stars In Hollywood

Special Repmrt


Michael Lasky is your typical bicoastal entertainment executive. He used to acquire movies for the video division of Carolco Pictures Inc. in Los Angeles. Before that, he lived in New York City, where he bought movies for the Showtime premium cable network. Now, he is in Arlington, Va., working for the phone company, Bell Atlantic Corp.

Say what? "If you had told me a year ago that I would be working at a phone company, I'd have said 'Get out of here,'" laughs Lasky. Like many entertainment types, he figured the Baby Bells were bureaucratic, boring, and staid--quite unlike the freewheeling atmosphere at Hollywood studios such as Carolco. Yet after hearing about Bell Atlantic's high ambitions in multimedia programming, Lasky took a flyer. Now, six months later, he is convinced that Bell Atlantic is an entertainment company for the 21st century.

Granted, Bell Atlantic owns neither a movie studio nor a cable network. Its top executives still talk more about asynchronous transmission than about Single White Female. But in a recent court ruling, Bell Atlantic won the right to sell entertainment programs over its telephone network. And the Baby Bell fully intends to take on such multimedia giants as Time Warner Inc. and the proposed Paramount-Viacom combine.

NAVIGATIONAL AID. What's more, Bell Atlantic thinks it can lead the way in one critical area: the evolving business of helping viewers navigate the bewildering choices promised by interactive television. On the eighth floor of Bell Atlantic's Arlington office building, Lasky and 150 other employees are developing a sophisticated interactive system with the lofty name of Stargazer.

Basically, Stargazer turns your TV set into a shopping mall for video services. By pressing buttons on a remote control, you can call up everything from movies and TV shows to interactive commercials and home shopping. This is no theoretical concept, either: A 3-D, cartoon-like representation of a mall actually appears on the TV screen. Bell Atlantic executives say the mall is intended to make the Stargazer system easy for technology-addled viewers.

Programs and shopping options are arranged up and down hallways, with an elevator to transport the viewer from floor to floor. The Stargazer prototype features an MGM studio store selling home videos and movie paraphernalia. Other floors offer vintage TV series, programming for children, educational shows, and features on health and fitness.

For now, Bell Atlantic is testing only a rudimentary version of Stargazer in the households of 50 of its employees in northern Virginia. But the company plans to expand that test to 400 and later 1,000 households. And it will soon ask the Federal Communications Commission for permission to test the system with outside customers.

A few years from now, Bell Atlantic plans to sell Stargazer throughout its six-state region. The Baby Bell may also license the hardware and software to rival telephone and cable companies. Arthur Bushkin, president of information services at Bell Atlantic, says the company is already talking to more than 20 such companies. "We're not doing this just to take a piece of the $20 billion cable market," says Bushkin, "We have our eye on a much larger target."

BILLION-DOLLAR BABY? Bushkin wants Stargazer to become an industry standard for navigating interactive TV. That would allow Bell Atlantic to break into potentially lucrative markets such as home shopping and banking, since it hopes to receive a percentage of the sales that result from using the Stargazer system. Bushkin also wants to charge retailers rent for space in his electronic mall. He envisions one or two "anchor" tenants, plus an array of specialty stores. With so many streams of revenue, says Bushkin, interactive video services could eventually be worth billions in new revenue to Bell Atlantic.

But Bushkin faces keen competition. Time Warner, Tele-Communications, Viacom, American Telephone & Telegraph, Microsoft, Apple Computer, and Ameritech are all developing software for interactive TV systems. Time Warner executives point out that while Bell Atlantic has expertise in areas such as digital switching, it can't draw on the savvy of Home Box Office and Warner Brothers Inc. "Technology is not the major component in creating, packaging, and marketing products to consumers," says Bob Zitter, senior vice-president for technology operations at HBO.

Outside observers also note that telephone companies have a checkered record in divining consumer tastes: "Phone companies commit classic marketing mistakes," says Jerome Lucas, president of consulting firm TeleStrategies. "These are the guys whose predecessors brought you the video phone during the Sixties."

For its Arlington test, at least, Bell Atlantic has assembled an impressive array of Hollywood studios and TV networks: Walt Disney, Paramount Pictures, NBC, HBO, and USA Network, to name a few. This month, employees can order movies such as The Fabulous Baker Boys and A League of Their Own. But Bell Atlantic got all this programming gratis in return for sharing its market research from the test. Now it must renegotiate those deals for real money.

HACKER HEAVEN. To cultivate Hollywood and retailers, Bushkin has recruited industry veterans such as Lasky and Bob Townsend, a former top executive at Home Shopping Network. These days, they mingle with computer hackers, who are writing interactive software, and telecommunications experts, who focus on digital switching and video servers. Bushkin has also hired people from the catalog and travel industries to help Stargazer break into those businesses.

For good measure, Bushkin has thrown in one executive with experience at Qube, a failed effort at interactive cable TV that Warner Communications Inc. and American Express Co. started in 1976. With an almost $50 million annual budget on the line, Bushkin doesn't want to repeat the mistakes of such pioneers. Stargazer is a nifty brand name, and he would hate for it to be an ironic epitaph for another foolhardy foray into interactive television.Mark Landler in Arlington, Va.

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