If I were from California, I’d argue that everything that’s changing about the TV industry is tied together in a vast conspiracy. But I actually come from a toddling little town in the Midwest. And I’m thinking local, lately.
Let’s try to understand how all the trends are converging on local TV:
SYNCHRONICITY GOES AWAY
No, this is not going to be another rant about keeping audio lip-synched. (You know who you are.)
Rather, 20 years ago, with the spread of VCRs in consumer homes and the birth of nonlinear editing, we understood that both media production and consumption were beginning to move from synchronous to asynchronous processes. At the time, we in the AV technology business dissed the implications of packetized (and thus most efficiently asynchronous, but also potentially isochronous) audio and video in the ATM standard; IBM and AT&T said it was good for us, but we thought we knew better. We didn’t. By the early ‘90s, when the ATM-inspired FireWire came along, AV people began to pay attention to the power of asynchronicity in signal distribution, too. But still, it was ludicrous to think of broadcasting packets (though those crazy Europeans did; they developed a wireless FireWire called HiperLAN). And then they went broke on 3G cellular systems aiming to bring video to cell phones. Hah! What a nutty idea!
Meanwhile, here in the technologically advanced U.S.A., MPEG-2 and all the HDTV standards banged together into the ATSC were about synchronous, realtime bitstreams. No packets. Data broadcasting was about paging services, or maybe electronic program guides. It was a side business, impossible to intertwine with core TV broadcasting. It made use of special, nonstandard protocols that had nothing to do with existing computer-networking standards. And better not talk about it too much, or someone might challenge your TV license next renewal period. But then along came the Internet and the World Wide Web.
Synchronous usage will remain far more valuable than asynchronous in sports. It will maintain some added value in news. This is good news for broadcasters and cablers. But only good insofar as the residue of realtime programming is used as an anchor for thematically connected asynchronous media. Otherwise, the audience for realtime events alone may not go away, but it surely will stagnate in size.
FROM CHANNELS TO COMMUNITIES
Perhaps the ultimate “thinking outside the box” for broadcasters is the realization that channels must evolve into communities. News Corp., in its purchase of MySpace.com, and NBC Universal, in its purchase of iVillage, have recently voted with many millions of dollars in favor of joining TV and community websites. MySpace founder and SVP, marketing and content, Shawn Gold says a MySpace channel on DirecTV may be in the works, or perhaps just a few Fox shows. The synergies are just being figured out, and maybe they won’t actually happen.
But here’s what I think is happening.
TV channels are marketing concepts that were born out of technological determinism. A channel was carved out of spectrum, and analog signals were run within it as a river runs within its banks. Consumer receivers found the channel, in the early days, by fishing in a sea of white noise with a dial that moved a stick of metal along a magnetized coil. Then came ratchet gears, then rubber bands and preset buttons, then little digital phase-locked loop assemblies to replace the big, manually wound tuner coil. But the analog river of information within its carrier remains, like a force of nature.
And anyone who has ever been close to a huge volume of electrical power carrying that signal through waveguide to the top of a tower will continue, ever after, to respect it as a force of nature. But few people in broadcast management positions these days have had that experience.
You might think that an allotment of spectrum, to carry bits in almost any way its licensee chooses (as long as it includes at least one realtime offering of video that meets one of many fuzzy definitions of comparable quality to today’s free analog TV), might still be called a “channel.” But this would necessitate holding your thoughts within a very old box. The Internet also comes to its users through a channel: one or more 6 MHz channels in the DOCSIS cable standard, for example, or the band between 10 kHz and 1 MHz, over wire between telco central offices and a home modem for ADSL. Ethernet runs multiple channels over wire or glass, but it would be insane to organize one’s communications because of this peculiarity of the physical layer (or “PHY”). Once within the Internet—or any other packetized digital “channel”—information can be organized by metaphor. File folders, pages, forums, communities, iTunes, Microsoft’s failed Bob user interface of the early ‘90s: it’s all virtual, it’s all possible, and what works best for the user will win out. Efficient media use (as opposed to the engineering efficiency of carrying as many video and audio bits as possible in given bandwidth or per given power) has nothing to do with the form of the PHY.
MASS MEDIA TO MICRO-NICHE MEDIA
So you’re a broadcaster with a digital bandwidth allocation, or a cable operator with, say 750 MHz worth of wire going to most homes. You can now get a few channels—should you decide to continue thinking in “channels”—over the same bandwidth formerly used to carry one. But what’s the big additional benefit of having three or four channels in a world of hundreds of channels vs. having just one? Terrestrial radio is now finding this out as it moves to HD Radio and competes against satellite, Internet and downloads. Actually, for any of the 86% of U.S. homes with cable or satellite, you’re already in the microniche business. And just how would you get program rights for shows for those additional digital channels which will somehow be roughly as popular as the programs you’re already showing on one channel...without also cannibalizing that channel? As consumer subscription dollars and advertising get stretched across the megachannel universe, profits per channel, service, or company—any way it’s sliced—inevitably go way down.
SCARCITY TO ABUNDANCY
The power goes to the consumer in this relationship; it’s basic supply-and-demand stuff. Spectrum is still scarce, enough so for the FCC to expect to get upwards of $10 billion when auctioning off the analog frequencies TV broadcasters currently use. But Internet bandwidth is getting bigger all the time.
Video and audio production gear is also getting more and more abundant. Professionals may wince at the amateurish quality of most of what we hear these days, but it is undeniable that a PC (probably a Mac, but Windows PCs, too) plus a few hundred dollars will buy better audio production quality than in a $100,000 studio room a few years ago. And video is headed in the same direction. Barriers to entry in virtually all sides of the business have imploded.
SO WHAT HAPPENS TO ESTABLISHED MEDIA COMPANIES IN LOCAL TV?
As people build out new AV networks for advertising everyplace from elevators to bars and retail stores, cellular video and IPTV, system integrators are doing fine. More TV everywhere means more programming and spot production business, so most readers will continue to find their professional services in ever-increasing demand. Some local broadcasters will hop on these trends and provide news to digital signage in shopping malls and to cellular mobile video. But that would be one or two stations or local cable nets per market, not all.
Pretend for a paragraph that local TV is the record business. The four major labels’ combined market share is now down to 72%, and should decline pretty rapidly from here out. And it’s not just relative decline; revenues and profits are down at every major. They’ve laid off layer after layer of management, and still have layers to go. But lots of little independents are growing. Now pretend the four major labels are the four TV stations in your market.
Local news is a fortress, but with crumbly walls. In the admittedly very unusual city where I live, New York, local TV news has little to do with my local life. Because they’re covering a metro area of 21 million people, they have little time for my little borough of three million. But three million people is, how shall we say, a significant market. A hundred websites have bloomed in recent years that, collectively, give me far better connection to what’s going on locally than all TV and newspapers combined. There’s no similar dynamic in sports yet, and there may never be, but it also may only be a matter of time. And it may only be a matter of time until the same competition comes to Littleville’s southside neighborhood of 50,000. Or it may not. It all depends on how good a job established media do at covering local events.
My guess? They’ll do an ever-lousier job in most places, as Big Media react to declining profits by cutting staff. And those canned staff will turn up as the Web-based competition. And then the smart local representatives of Big Media will cut deals with that formerly-employed competition to use some of their digital-bandwidth to transmit them.
But that’s just my guess.
Neal Weinstock is editor-in-chief of Weinstock Media Analysis and can be reached through www.weinstockmedia.com.
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