Terrence Elkes: In listening to some of the discussions, at least earlier in the game, I was sort of reminded of trying to distinguish between the theory of intuitive reasoning as opposed to deductive reasoning. The summary is, if you're watching a ball bounce it's one point of view, but if you're inside the bouncing ball, the view is quite different. I've been inside the bouncing ball for about 25 years or so, in this industry.

Dr. Needham said something earlier this morning which I thought really fit exactly what we've been trying to do. He talked about the fact that the universities and large companies - and I underline the word "large" - dictate the research and technological environment, or at least try to, within which future product development takes place, but he also emphasized that it's the smaller companies that ultimately create the product.

What he didn't say is probably the pass/fail rate is about one to a hundred. But entrepreneurs, and that's the subject of this panel, understand risk-taking, they understand the ability to fail. They know they're going to fail, but they have the ability to learn from mistakes. They have a passionate, consuming dedication. They are able to take opportunistic advantage of events, because events often dictate decisions. The ultimate objective of most of the entrepreneurs I know is to build a business. Financial success, truthfully, in most cases, is secondary. It's nice when it happens, but that's not why they are there in principle.

You have to really appreciate that, despite all of the science and all of the technology that goes on, how things happen is very often left to people, motivation and how things work, and the environment that surrounds it. And I want to give as an example my own background in the pioneering days of cable television.

It's interesting to note that cable television is predominant here in America but really hardly existed in western Europe. The reason for that is back in 1960s, in the days of broadcast television, several of the television stations or networks that were on the higher band of the VHF, channels 11, 12, and 13. Their signals could not be received anywhere nearly as well as the lower-band signals, predominantly owned by the old radio networks, CBS and NBC, and so Congress held what was appropriately referred to as "de-intermixture proceedings," the concept simply being to basically go off the VHF and move to the UHF band, as was done in Europe. Therefore, everybody had roughly an equal signal and the playing field was level.
The interests that were in power controlled; the system remained the same; the playing field was thus not level. This created signal-reception problems in many areas of the country, and the cable television industry rose to the occasion, and it was originally called CATV, standing for Community Antenna Television. And so, an industry was built by principally selling signal. To a large degree, the existing television networks didn't mind, because it enhanced their advertising circulation base. However, the cable television companies had more channels than content. The only problem was that under rules promulgated by the FCC, you could not show certain types of programming, such as motion pictures that were less than three years old, nor more than 10 years old, thus effectively foreclosing everything that was valuable that people might wish to pay for.

So a bunch of us got together and decided to sue the FCC on the grounds of First Amendment. We didn't think we had too good a case, but the alternative was that we would be out of business if we couldn't. And the fact of the matter was that we got lucky. We won in the circuit court, the Supreme Court denied certiorari, and we were off and running with pay television and all these other kinds of wonderful things.

What's interesting is that in those days the telephone companies had owned cable and didn't want to be in the business. The networks had owned cable and, until ordered by Congress to get out, they just kept cable down. Now, today, what we have is, everything is converging. It's the popular phrase, "convergence." We have the PC groups, the telephone groups, the cable groups - they are all converging and all basically competing for each other's set-top device, screen, or what have you, and ostensibly the name of the game is bandwidth. Well, I submit to you that that's not the name of the game. The name of the game is what you do with the bandwidth. It's content, and content is king, and ultimately that's what really drives the business.

Two examples of that, if I may. This is what makes, I think, our industry a little different than airline seats or other types of transactions. There's no way in the world we can predict the kind of success or lack of success we're going to have with any particular program that we produce.

About 10 years ago, I basically had come down dead set against a program that my management team wanted to initiate on television. I came down against it because it was a situation comedy, and situation comedies were not scoring well on television. I came down against it because it was on NBC, which had the smallest audience. I came down against it because the star of the show insisted on having the show produced in New York, and that was very expensive to do. I came down against it because the show was basically a nightclub act, and I didn't see how you could sustain 25 weeks in a year on a nightclub act. The best thing that ever happened to me was I was overruled, or persuaded, by my management team that I had hired to make those decisions. And so we launched "Cosby."

The point of this is that you cannot dictate. You cannot predict the uniqueness of the product. You don't know until you try. And what I find exciting is the Internet applications, really the combination of Internet and digital technology, to programming to me open a whole new area, a whole new level. It's multi-dimensional. There are no time or geographical constraints, and so basically you can time shift, you can program, you can watch "Cosby" at any particular time on many channels. You can create interactive programming and transactional programming. So, it's an open game, OK? And it's not necessarily going to be controlled by the powers that be.

The challenges to our industry are sort of interesting. The havoc that we wreaked with cable television means that the viewer today has more viewing options than he or she ever had. Today, there are 75 channels that are available, even though you may feel there's nothing to watch, as I often do, but that's what available. Within 10 years, if you include PC and telephony, there will be 1,000 options available to viewers. So, we have a trend of per-program audience reduction. For example, "Seinfeld," which was the most popular show, would not have scored among the top 10 in audience ratings 10 years ago. That's the fragmentation of the audience. Programming costs are higher. People want to pay $750 million for NFL football; and yet, conversely to the laws of economics, there's more airtime available. These are the challenges the industry faces.

The solutions we offer, in my view, are - in real estate it's location, location, location; in this business, it's content, content, content. We're going to have to promote and market it more intelligently because it's harder to find these shows with all these options available. Yet, I think the solution's going to be that we're going to find more advertising dollars. Even though the television audience is fragmented, the amount of advertising on total television today is twice what it was less than 10 years ago. Also, we're going to find additional sources of revenue. If you're a typical television broadcaster, and it's five to 10 years from now and you now have digital technology, and you've got highly compressed signals, you can put your ads on one channel and filter calls on that channel for the product and have a home-shopping channel for that same advertiser. That's a very dramatic way to derive revenue.

Somebody asked about who the winners are and who the losers are in the world of tomorrow. I don't know. Trends are taking place now which are dissimilar from what we saw 10 years ago. The Internet was conceived to be perfect competition, hundreds upon thousand of entrants, hundreds upon thousands of sellers. The fact is you can't find anything, so you're seeing consolidation into what we call portals. Search engines are combining with networks. Who's to say if tomorrow these search-engine networks, a Yahoo, an AOL, won't combine with an NBC? The businesses I think that will succeed are businesses that are not even yet on our radar screen. I think that recourse to the past is helpful but not necessarily conclusive. We think that the winners in the 21st century will be those businesses who understand that history and dynamics of their business and the particular environment which encourages those results. It will belong to those who are prepared to revisit their businesses annually against the moving paradigm and question its very existence. It will belong to those who encourage new ideas and create the means of communication, so that these ideas flow smoothly within their organizations, no matter how large. And finally, especially with regard to those who manage our entertainment and media and communications industries, it will belong to those persons and management teams who steadfastly refuse to believe their own publicity. Thank you.