• by David Goetzl , October 2, 2006

Outspoken HDNet CEO Mark Cuban slammed advertisers, the NBA and theater chains at an Advertising Week event last week. His first salvo was aimed at advertisers that don't produce ads in high-definition--claiming they are missing a valuable opportunity to reach eager consumers.

"They're dying to see something in high-definition, and your commercial looks like crap," he told an audience he assumed was packed with client and agency executives. Cuban was referring to non-HD ads that run on HD channels, such as his HDNet and versions of linear networks, like ESPN HD and Discovery HD. If the spots are not produced in HD, they don't fill the full screen. To Cuban, this failure deprives marketers of a chance to appeal to viewers, including many high-income individuals who purchased pricier sets.

"If you're not doing your ads in HD, you're doing a disservice to everyone who is a high-definition user," Cuban added.

Clearly, Cuban's comments were self-serving, since he operates two all-HD channels: HDNet and HDNet Movies. The success of both is predicated on two factors: widespread consumer adoption of HD viewing, which has been slow, and advertisers' willingness to produce spots in HD and place them on Cuban's channels.

While Cuban lambastes HD-averse advertisers, an increasing number of marketers are producing the more expensive HD spots, including many that ran in the Super Bowl.

Although HDNet is only in 4 million homes, Cuban says its advantage is that the number of rabid HD viewers is growing, particularly males. HDNet research shows that 77 percent of males with HD programming begin their TV watching by surfing through the 20 or so HD channels.

Programmers and viewers have taken to HD because it offers higher resolution, a wider picture, and upgraded sound, compared to traditional TV.

During Cuban's talk, advertisers were not his only target: He fueled his ongoing feud with NBA Commissioner David Stern, and excoriated movie theater owners that oppose his releasing films simultaneously on TV, DVD and in theaters. Plus, he challenged YouTube's purported $1 billion value, suggesting that content owners will soon oppose piracy on the site and curtail its appeal.

The provocative Cuban, who owns the Dallas Mavericks, has been fined multiple times by Stern for criticism of the league and its officiating, and said he has no contact with the commissioner. But some believe Cuban's billionaire-of-the-people ownership style is good for the league.

Cuban then blasted Stern, arguing that the NBA is too heavily focused on building its appeal in China and Europe, while it should be boosting its appeal in non-NBA U.S. cities, such as Cincinnati and Pittsburgh. An increase of 10,000 viewers each in these mid-market cities could go a long way to increasing television revenues, he said.

As for major theater chains such as AMC, Cuban condemned their opposition to his initiatives to simultaneously release films produced by his 2929 Entertainment arm in theaters, on DVD and on his HDNet Movies channel. Theater owners argue that the so-called "day-and-date" tactic hurts their core business, which includes making money on concessions.

But Cuban dismissed such claims as shortsighted thinking that forsakes multiple revenue streams. His company has offered theater owners a percent of the DVD sales--although it's a small fraction. In addition, his argument is that happy theatergoers may buy the DVD in the theater if they like the film. He also said theater owners could negotiate to receive a portion of the TV revenues--money that now goes to studios, which later make it available on the small screen.

"As much as we've tried to sell them on this concept, they've been religious [in their opposition]," he said.

Cuban was equally outspoken about YouTube and the billions it's rumored to fetch on the open market. "There's a reason it hasn't gone public, and hasn't been bought."

According to Cuban, content owners will eventually rebel against piracy of their copyrights, which occurs when people post videos taken from networks, studios, etc. "The minute YouTube sells, there's going to be a deep pocket that will sue into oblivion," he said.

Even if networks such as NBC--which has a deal to distribute clips of shows on the site--reach agreements with YouTube, other copyright holders, such as writers and producers, will seek a piece of the action. In Cuban's words: "Anybody who buys it is a moron."