News economics

Each of the key players in a news operation can benefit from a move toward an integrated news environment. It's worth looking at each key player's point of view in detail and determining the available choices.

General managers' view

Successful broadcasters understand the big picture as well as the details. The news station must be a viable business. Financial performance ratios are commonly used tools to judge the health of a business. The primary ratio is return on capital employed, often expressed as earnings before interest and tax divided by total capital employed.

This ratio allows general managers to relate operating profit to the capital invested in the organization. In a news company with old, paid off — and therefore depreciated — equipment, some ratios can appear good. However, the real picture is more complex.

In old-style tape-based news, the anchor journalists are key to the channel branding. Craft editors are also important because their skill and speed on complex systems make the seemingly impossible happen.

A key question for any organization is: “Are we getting the most out of our people and systems, especially the expensive ones?”

Two other ratios are especially useful here:

  1. Direct labor divided by sales; and
  2. Production overheads divided by sales.

General managers run stations as businesses. They want a return on capital, the assets to be fully utilized and value of the business to increase.

A common business school maxim is that momentum to change one area is often helpful in changing another. This is a maxim that should be adopted by bold management, and HD can be a part of the change process.

News directors' view

News directors want to get compelling stories out to the audience ahead of rivals. They want staff to produce great stories, with no technical hassle.

In the recent past, crews shot on tape, and stories were edited on tape and played out to the transmitter from tape. (See Figure 1.) That all worked fine until rivals started to use disc-based editing systems, potentially beating others to the punch.

However, many early nonlinear systems were piecemeal solutions, so the benefits of a truly integrated newsroom weren't really delivered.

Now, your viewers expect to learn about major events almost as soon as they occur. They might be at home, at work or traveling. Your viewers also have access to the Internet and wireless devices capable of receiving text, sound and video wherever they may be. They're no longer satisfied with watching a journalis read a written report. They expect to see and hear from correspondents at the scene. They want to see the events for themselves — live, if possible.

That's why news directors need technology designed to provide a fast to air, cost-effective storytelling environment with HD built in as standard.

Journalists' and editors' view

While some broadcasters want to keep journalists in their traditional role, increasingly others want journalists to edit, telling stories with pictures and sounds, not just with words. Many journalists also want to make this change.

Today all material needs to be available to any designated user as it is ingested. Journalists, craft editors and designers need to work concurrently on shots or stories, massively reducing time to air.

The user interface needs to scale from straightforward browse stations to fully featured craft editing systems so there is a common workflow for users and a common language between applications. (See Figure 2.)

Engineering directors' view

Before making a major new technology change, wise engineering directors will carefully consider the present technical infrastructure and working practices. Most days have predictable peaks and downtimes but big, unexpected events can hit anytime. A lot of people and expensive equipment can be required to cover these demands in conventional tape workflows.

Engineering directors then take a hard look at real requirements:

  • Typically most stories are simply shots cut from source footage. You don't necessarily need highly trained linear editors to do that. Journalists, producers and in some cases cameramen are quite capable of doing the work — and basic storytelling mostly needs only basic editing.
  • It's efficient for graphics artists and craft editors to share effects and graphics footage concurrently. Simple graphics can be made on a graphics workstation with a predesigned template. Highly skilled craft editors and designers are better used adding value to special reports, designing better templates and improving the station's look.
  • The people who write the headlines, intros, traffic reports, recaps and teases are capable of selecting shots themselves, given the right level of tools.

With this in mind, it's now time to think about technology that will fit the business needs.

Engineering directors are charged with implementing the tape-to-server transition smoothly. That's no small task. The enabling technology must work reliably, be easy to use and train on, and be future-proofed as much as possible. The solution must meet those requirements, both today in SD and tomorrow in HD.

There must also be a concern for what legacy technology will remain and how it will interface. Engineering directors understand where the cost efficiencies in the transition lie, such as maintenance of legacy equipment, cost of tape stock and VTR head replacement.

Workflow is of paramount importance as the whole idea of the transition is to enhance capability, as well as creativity. Metadata must travel with the clips, and that means down to the single frame.

How technology choices affect the business model

Some might get the impression that all disc-based news technologies are the same. Not so. There are major differences between systems, and these differences affect the business model.

A few broadcasters might consider buying prosumer PC- or Mac-based systems. This can provide some with a solution that fits their application and has a financial appeal because it's inexpensive at time of purchase. By using only standard IT technology, the individual components appear to be relatively inexpensive, and the choice of components appears wide.

However, there are hidden costs associated with using prosumer technology that can negate any apparent savings related to the original purchase. Poor integration can mean poor workflow and higher staff overhead. Stories can take longer than expected to get to air and may be difficult to re-version. Highly complex media management means bloated disc arrays. With HD, these problems would be even greater.

Of course, there are systems on the market that can work at HD resolution, but these can be costly either at time of purchase or during a later upgrades. In many cases, these offerings don't scale easily, even at SD resolution.

Some of these offerings are actually multivendor, meaning the company that provides them has implemented a number of solutions together to create a workflow. Different user interfaces, code bases and architectures can mean hidden operational and engineering costs. Sometimes, three different servers are required to ingest, edit and play out, which adds to the cost and operational complexity.

The need for an integrated server architecture

To publish a breaking news story on the air you first need to ingest the material, cut the story and add any graphics and effects. Then play out to air. This process is illustrated in Figure 3.

While some manufacturers use this multiserver solution, an HD upgrade can be expensive. In fact, some systems have to use two edit servers just to provide protection in case of a lost disc.

Day to day, that all means making, managing and moving unnecessary media. In the long term, an upgrade could completely break the original amortization schedule and pricing model.

The need to manage material efficiently

Finally, once broadcasters make the transition from tape to disc, they will need to rethink how to manage stories. Suppose you want to delete one or many legacy stories, and these stories contain shots you want to keep.

Some solutions allow you to delete the old clip, but at the same time you end up destroying the specific shots you want to keep. Other systems won't allow you to delete the old clip (keeping the disk unnecessarily full), so there is a constant need to defragment and consolidate the disks. When working at HD resolution, this problem is amplified because there is so much more data. The workflow can suffer greatly in this scenario.


The business advantages of moving to truly integrated nonlinear, server-based news creation are clear, and when you do, it makes sense to consider HD. The world is changing fast, and for broadcasters everywhere, HD future-proofing makes sound commercial sense. However, keep in mind that any new technology choice must support both the current and possible future business models.

Mark Horton is strategic marketing manager for post and broadcast at Quantel.