Poor Reception

Warner curtails Qube

In 1977, when Warner Communications with great fanfare launched Qube, a "two-way television" system, Gustave Hauser, then chairman of the firm's cable operations, hailed the Columbus venture as "a supermarket of electronic services."

Eventually the system expanded to five other cities and became a joint venture of Warner and American Express. But last week a key part of Warner Amex's ambitious Qube experiment joined the growing list of cable-TV casualties.

The Qube service enables subscribers using hand-held terminals to participate from their homes in programs ranging from quiz shows to televised public opinion polls. But after finding a lack of interest in the two-way offerings, Warner Amex decided to virtually close down its Qube network, which had been supplying 90 minutes of nightly two-way programming to 325,000 homes in six cities. While Qube subscribers will still receive up to two hours of locally originated two-way shows each day, they will have only occasional access to new network programs.

The blackout represents the latest cost-slashing move by former Transportation Secretary Drew Lewis, 52, who left the Reagan Cabinet last January to become chairman of Warner Amex. It currently operates 121 cable systems in addition to the six Qube outlets in Columbus, Cincinnati, Pittsburgh, Dallas, Houston and St. Louis. Under Lewis, Wirner Amex has embarked on such steps as an effort to cut existing cable service in Dallas, Pittsburgh and Milwaukee. Even so, some analysts expect Warner Amex to run up more than $100 million in losses this year, on top of an estimated 1983 deficit of as much as $80 million.

Such red ink reflects the overcrowding and the slowdown in revenue growth that have been driving some major firms out of parts of the cable industry. CBS scuttled its CBS Cable cultural channel in September 1982 after just 13 months, and RCA and Rockefeller Center, Inc. folded their Entertainment Channel last year, nine months after it began.

Other corporations have spun off cable ventures or taken refuge in mergers.

Last year ABC and Westinghouse sold their jointly owned Satellite News Channels for $25 million to Ted Turner's Cable News Network. Two additional firms, Showtime and The Movie Channel, merged last September in hopes of offering stiffer competition to Time Inc.'s Home Box Office, the industry leader.

Shake-outs and cutbacks are likely to continue. Says Lee Isgur, a leading video analyst with Paine Webber: "Cost-awareness fever has struck. The previous period can be looked upon as cable TV's infancy.

Now that companies have learned the market, the retrenchment will go on."