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Broadcasting Comes To a Crossroads

Just as members of the FCC assembled on a cold rainy Thursday morning in February to deny multicast must-carry to television stations, a who's who of electronic media executives gathered in a New York City conference room to talk about the future of American television.

On panel after panel at the McGraw-Hill Media Summit, there was hardly a mention of over-the-air television. To the up-and-coming new media players, most under 40 years of age, traditional broadcasters were out of sight, out of mind.

In fact, in a far-reaching keynote interview with NBC Universal CEO Bob Wright, the subject of terrestrial broadcasting wasn't even mentioned. Occupied with a full plate of media opportunities in his new job, traditional TV seemed to be the last thing on Wright's mind.

Afterward, I asked Wright, who has run the NBC network since 1986, about the must-carry decision. He offered a terse response to the FCC's negative vote:

"We'll go back to Congress."

Later in the day came another sharp response from NAB chief Eddie Fritts:

"In Washington, there are no final victories and no final defeats."

NAB, he added, will be working to overturn the FCC decision in both the courts and Congress.

I was struck by the arrogance of these reactions. After hearing dozens of bright, passionate entrepreneurs speak of their ideas for a new world of electronic media, the traditional television broadcasters seemed to be playing a retro game of demanding protection of their old ways from the courts and Congress.

This mindset bothered me. I kept asking myself... what's wrong with this picture? It was the broadcasters, after all, who asked for the DTV transition. Now, for some vague reason, they seem not to want to fully embrace it--some even suggesting it is being "imposed" on them by the government.

Not only is the enthusiastic promotion for the possibilities of DTV largely missing, but one has to wonder at this late date if many of the broadcasters even have a solid business plan for their future? For all the talk about multicast must-carry, how many broadcasters have genuinely explored its potential? Outside of some PBS stations, I would suggest very few.


It is appears that the main game plan of many broadcasters is resisting change. Do the station owners think the government is always going to protect them from the rapid changes taking place in media distribution? It certainly appears so.

The grumbling is everywhere. Even the broadcast industry's staunchest supporters in Congress are losing patience over the resistance of station owners to set public service obligations and a hard date for the return of analog spectrum. It was this hardheaded resistance--acknowledged by more than one FCC commissioner--that contributed to the defeat of must-carry.

As NAB2005 begins, it's a fair question to ask what's next for terrestrial broadcasters. Will they continue to fight to preserve the past or embrace the future? Assuming the FCC's multicast must-carry decision sticks and Congress makes it untenable to hold on to analog spectrum beyond the end of next year, what will the broadcasters do?

Obviously the answers to these questions apply differently to network owned-and-operated stations, as opposed to groups and independent station owners. The networks--with their global news operations, extensive original programming and pay television outlets--are in a stronger position to support their O&Os than are independent stations who must chart their own course.

Here are three possible scenarios for the future:

Scenario No. 1: Create station coalitions; consolidate bandwidth. At the Media Summit, a small broadcaster got this advice from Tim Hanlon, a senior vice president of Starcom MediaVest Group, one of the world's largest media brand communications companies.

Group-owned and independent stations have greater flexibility than O&Ss but are more squeezed in the current situation, Hanlon said.

"Pooling resources makes sense. Recognize you are all in this together. There's a lot of bandwidth that can be pulled together. Companies like iBlast and Geocast... those conversations happened a little too early. I think the time to have those is right now," he said.

Others who agreed that the future of broadcast stations is in aggregating bandwidth questioned whether broadcasters would bring together the necessary business leadership and investment capital to reinvent their businesses in time.

Scenario No. 2: Recognize the local broadcaster's role in the multichannel pay television universe and focus on becoming the best information source in the home market. Such a strategy means using the station's primary channel to build and promote audiences for multicast channels, making them desirable--or even essential--for cable operators to want to carry.

Becoming the leading information source for a community through a mix of cable/satellite, terrestrial broadcast and Internet distribution is a solid foundation for a long business future.

As for television, be the first in the market to originate local high-definition programming as a way to remain competitive when viewers flip across the cable/satellite dial to an increasing choice of HDTV program sources. With the rapidly falling cost of HD production and editing technology, local content--including news, live programming and commercials--can finally be produced cost-effectively in-house.

A proactive station that embraces the new capabilities of DTV and uses the technology to enhance its local brand can overcome virtually any of the barriers presented by competing media outlets.

Scenario No. 3: Maximize station value and then sell out. It has long been predicted that as many as half of the current owners of television stations are simply waiting for the right moment to sell. This has been cited as a reason why so many station owners have been sluggish about upgrading their facilities for the DTV era.

This also could be the reason some see a protracted court battle ahead on multicast must-carry. A station with five must-carry channels is far more valuable than a station with a single channel. Right? Maybe--that is if a broadcaster wants to risk the overall value of his franchise for years of legal battles on what most legal experts think will ultimately be a losing cause based on First Amendment grounds.

Of the three scenarios presented above, those who want to see local broadcasting survive and prosper in an increasingly consolidated media universe will hope for scenario No. 2, perhaps with some combination of No.1.

For station owners embracing scenario No. 3, it would be nice if they'd execute their exit strategy sooner rather than later. At least that would give a new generation of license holders a chance to reinvigorate local broadcasting with some fresh blood.

A shift from a protective retro strategy to one of boldness and vision would bring a huge relief to everyone--members of Congress, members of the FCC, the creators of television programming and technology, and most of all, to the viewers at home.

It's NAB time again, we can always dream.

Frank Beacham is an independent writer based in New York.