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Warner-Amex Satellite Entertainment

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Warner-Amex Satellite Entertainment Company (WASEC) was a joint venture owned and operated by Warner Communications (whose share was overseen by Warner executive David Horowitz) and American Express (Lou Gerstner, then American Express President, ran the Amex share) that developed and worked on interactive television systems in the late 1970s and initiated several successful cable networks that remain well-known.

The QUBE

In 1974, Warner Communications entered the cable television industry by forming Warner Cable in Ohio and Virginia. On December 1, 1977, Warner Cable's Columbus, Ohio unit introduced the QUBE, the world's first interactive television programming system that predated Video On Demand by decades. QUBE featured 30 channels, including ten premium and pay-per-view networks and ten interactive channels operated by set-top box connected to a modem.

Among the channels introduced on the QUBE were precursors to popular channels that exists today including:

  • Star Channel: Existing prior to the creation of QUBE in 1973, it served as a premium movie channel for the system. The direct precursor to The Movie Channel.
  • Sight On Sound: A network that aired music programming such as concerts and music videos. It was the prototypical version of MTV.
  • Pinwheel: An educational/entertainment network aimed towards preschoolers and children. Transformed into Nickelodeon in 1979 and was later the name for that network's preschool programming block until 1990.
  • Pay-Per-View: First-run movies, sporting events, headline news and special programming were available with a push of a button for a fee. The direct prototype of all pay-per-view services and in turn, video on demand.

Despite its technological innovation and vision, the creation of the QUBE and its relative financial failure meant that Warner Communications needed outside capital to expand beyond Columbus, Ohio. Additionally, Warner leader Steve Ross understood that the future of cable television was going to demand an ever expanding programming need. In December 1979, Warner Communications and American Express each contributed $75 million to form a joint venture with two divisions. Warner Amex Cable Company, run by Gus Hauser, would build local cable systems across the United States (today as Time-Warner Cable, the second largest cable operator in America), and Warner Amex Satellite Entertainment Company (WASEC), run by former CBS Network President John A. Schneider, to supply programming to the rapidly expanding cable television universe.

Beyond QUBE and the end of Warner-Amex

Seeing the potential in the creation of new cable networks, WASEC divested QUBE's biggest brands, Star Channel and Pinwheel, into nationwide outlets. Star Channel began by satellite in January 1979 and was renamed The Movie Channel by the end of the year. Pinwheel, which entered another market in New York in April 1979, became a national satellite network in 1981, renamed as Nickelodeon.

WASEC President Jack Schneider had as his de-facto operating officer executive vice-president John Lack. Lack, in turn, brought in radio programmer Bob Pittman to manage The Movie Channel.

Lack had worked in sales at CBS Radio (in fact, it was he who suggested Schneider to Warner chief Ross) and had an idea of cable programming as a series of special-interest 'channels.' A devotee of popular music, he developed a half-hour show named Pop Clips at Nickelodeon with musician Mike Nesmith as a program for music video film clips. He also planned a series of 24-hour channels to imitate the strategy of The Movie Channel—single-focus programming for music, video gaming, and shopping. Bob Pittman accepted Lack's idea and inaugurated the music channel as MTV: Music Television (née The Music Channel), in the process developing the careers of such future media executives as Mark Booth, Larry Divney, Fred Seibert, Andy Setos, and John Sykes.

In 1983, concerned by the strategic and financial failure of its pay-TV venture The Movie Channel (started to reap the benefits Time Inc. was having with Home Box Office HBO), WASEC established a joint venture with Viacom, merging TMC with their premium movie network Showtime to form Showtime/The Movie Channel, Inc.

Meanwhile, WASEC operating partner Warner Communications experienced financial upheaval, including the reversal of fortunes at innovator Atari, and legal questions about business dealings of Ross and his senior lieutenants. In an effort to maximize the good news, Warner Communications decided to spin off Nickelodeon and the rapidly growing phenomenon MTV as a public company (MTV Networks). American Express exited the WASEC venture at this time. Jack Schneider also left WASEC, being replaced by senior Warner executive David Horowitz (who oversaw Warner Communications' half of the WASEC joint venture).

A year later, American Express sold their stake in Warner-Amex to Warner Communications, which renamed the company Warner Cable.

In 1985, Warner sold its interest in Showtime/The Movie Channel to Viacom, making them the sole owner of both networks. Warner would return to the pay-TV business a few years later, when it acquired HBO and Cinemax as part of its merger with Time Inc.

During this period, Warner Cable reorganized itself by dividing the company in half (a "metro" unit that had newer wired communities and a "national" unit which comprised the older systems), selling the Dallas and Pittsburgh systems to Tele-Communications Inc. (TCI), and ceasing operations on QUBE completely. As a result of subsequent mergers TCI became part of AT&T Broadband and later Comcast.

In 1987, Warner Cable rendered MTV Networks private, selling its assets (MTV, RTS and Nickelodeon) to Viacom for $685 million.

The Warner-Amex networks now

The networks that were a part of Warner-Amex are owned by numerous parties. The pay-per-view unit remained under the ownership of Warner Cable (which became Time Warner Cable after the merger of their parent company Warner Communications and publisher Time, Inc.) and has undergone numerous transformations before its current incarnations as iN DEMAND and the differing video on demand On-Demand service. MTV and Nickelodeon (and later Video Hits One or VH1 for short, which launched shortly before the sale) became the core units of Viacom's MTV Networks. Over the decades, it has expanded into separate units, including:

The Suite from MTV (digital cable networks):

Showtime Networks also continued to thrive in spite of competition from HBO, Cinemax, and Starz. The units of Showtime Networks include:

  • Showtime
  • The Movie Channel
  • FLIX

As of January 1, 2006, the Warner-Amex units are separated from each other as a result of Viacom dividing itself into two companies, "new" Viacom and CBS Corporation. The Showtime Networks unit is now a unit of CBS while the MTV Networks is a unit of the new Viacom.

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