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AT&T adds sex channel
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May 31, 2000: 4:16 p.m. ET
AT&T's cable unit to offer hard-core porn network to digital subscribers
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NEW YORK (CNNfn) - Sex sells and Ma Bell stands to make a bundle serving it up "Hot" to its cable customers.
AT&T Corp. (T: Research, Estimates) on Thursday announced plans to offer The Hot Network, a hard-core adult film channel, to its two million digital subscribers in a programming deal that could be very lucrative for the telecommunications giant.
AT&T's Cable Services unit will add the pay-per-view channel to its customers with digital set-top boxes "in two or three months," an AT&T spokesman said.
 Van Nuys, Calif.-based Vivid Entertainment Group operates the Hot Network, which has X-rated fare characterized as steamier than Playboy Enterprises' Playboy and Spice porno channels - services also offered by AT&T.
Many big cable operators, including Comcast Corp. (CMCSK: Research, Estimates) and Time Warner Inc. (TWX: Research, Estimates), the parent of CNNfn.com, also offer Playboy's channels, but have refused to include Hot Network's sexually explicit content on their cable systems. Combined with sister station The Hot Zone, Hot Network serves more than 25 million households.
With its films typically ringing in at about $8 a pop - nearly twice the price of regular pay-per-view - and minimal marketing costs attached, The Hot Network represents a very attractive catch for AT&T.
Cable systems typically reap more than 80 percent of every dollar spent by a viewer for an adult movie, compared with between 40 percent and 60 percent of each dollar for Hollywood films and movies featured on the Playboy channel.
According to media research firm Paul Kagan Associates, gross pay-per-view revenue from adult-video networks last year jumped 29 percent to $342 million, and is projected to top $400 million this year.
An AT&T spokesman had no comment on the deal's financial arrangement, or the price it will charge for individual films. He stressed that the addition of the adult channel simply gives its customers more entertainment choices.
 "We offer a wide variety of programming to meet the different needs of different kinds of customers," AT&T's Steve Lang told CNNfn.com. "This is available in the competitive marketplace and customers who are interested in it may have access to it and customers who aren't won't."
The agreement comes about one week after the Supreme Court overturned a federal law intended to shield children from seeing sexually explicit programs on older cable television systems not equipped with signal blocks.
AT&T's Lang said that the digital cable system grants consumers the ability to block any program they want at no charge.
Shares of New York-based AT&T on Wednesday slipped to a closing price of 34-11/16, off 11/16. 
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