here was one more step he proposed to take: an expansion of the "adult entertainment" on AT&T's cable systems. The adult channels on the company's cable systems were relatively tame, featuring lots of nudity and occasionally simulated sex, but nothing truly hard-core. But DirecTV and the Dish network, which were the Tough Calls cable industry's only real competitors, had started offering something called the "Hot Network" that was much more explicit. The profit mar- gins on the Hot Network were 85 to 90 percent, and, since there didn't seem to be much price sensitivity in this market niche, it carried a price of about $8 a night, twice that of the soft-core channels. AT&T was one of only two cable operators that did not offer the Hot Network (the other was Adelphia), and Somers was convinced that some sub- scribers were giving up their cable service for DirecTV just to receive it. He had a sample of the programming in the VCR if Armstrong wanted to see it. Saying that that was unnecessary, Armstrong gave the go-ahead to add the Hot Network to the adult pay-per-view pro- gram tier. I didn't learn any of this until I stepped off an airplane in Phoenix, Arizona, three months later, in May of 2000. Adele Ambrose, the company's media relations vice president, called my cell phone and told me that Leslie Cauley of the Wall Street Journal was working on a story saying that our cable systems were planning to carry hard-core movies to boost revenue. "Is it true?" I asked. Well, apparently it was, and, as keeper of the AT&T brand, I couldn't understand why I hadn't been told about it. As soon as I got to my room, I called Armstrong, who was at home and still a little groggy from anesthesia for a full colonoscopy he had undergone earlier in the day as part of his annual physical. "Mike, did you know that Somers plans to run something called the Hot Net- work?" "What of it?" he said. "We carried it at DirecTV. It's junk, but there's an audience for it, and it has great margins." I then gave him a quick summary of AT&T's prio