Ma Bell’s Naked Ambition

This morning it was reported that AT&T, by way of its newly acquired cable unit, will make available to digital cable customers a “hard-core” adult-movie pay-per-view channel called the Hot Network. On another dull, low-volume trading day, smirking and tittering was a forgivable response to this development.

AT&T, after all, was for years the quintessential widows-and-orphans stock, a safe, profitable, easy-to-understand bet. That good old Ma Bell is now in bed, as it were, with the Hot Network simply underscores something any T holder figured out long ago: The safe and easy days are over. I’m sure anyone who bought shares in the last couple of years figures the most obscene thing about AT&T is its stock chart.

Anyway, the deal may generate a bit of debate over whether such an arrangement might damage AT&T’s “wholesome” image–and there seemed to be a couple of protesters vowing to bail out on the Yahoo message boards today–but that’s kind of missing the point. AT&T doesn’t have a wholesome image. It has a desperate image. The company objects to the spin that making the Hot Network available only to subscribers to its new souped-up digital service is a sign that it’s fledgling cable operation is under pressure. OK, maybe that isn’t why AT&T did this deal. But it’s still true that the company has spent a lot of money upgrading its networks for digital content, and is still 340,000 subscribers short of a goal of 400,000 new cable customers by the end of 2000. What AT&T shareholders better be hoping is that the firm has something a lot more substantial up its sleeve than a deal, however lucrative, with a purveyor of lowbrow smut.

To the extent that there is any controversy about this, I expect AT&T will simply shrug it off, and it will be right to do so. OK, other cable carriers may be squeamish about this particular porn channel, but none seem particularly squeamish about porn in general. AT&T is simply making a decision that will be sorted out in the market for potential subscribers. Or as one executive put it: “This is about supplying programming that meets the desires of customers.”

Well. Meeting their desires might be overstating things a bit, but you see what he’s getting at. Anyway, back to smirking and tittering.