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2008 Begins, Ends With Hope - TvTechnology

2008 Begins, Ends With Hope

Industry suffers economic blows, braces for Obama FCC
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WASHINGTON As 2008 mercifully comes to an end, the year proved to be a typically eventful one for the industry—punctuated by the steady growth of HD, the end-days of analog, the triumph of Blu-ray Disc, final plans for mobile TV, and some verbal fisticuffs over the use of white spaces.

The election of Barack Obama last month will signal a new government and a new era at the FCC—a scenario that some broadcasters and industry lobbyists are assessing with a wary eye. Capitol Hill rumblings of maybe bringing back the Fairness Doctrine and other issues will be closely watched in coming months, especially given the fact that Democrats have increased their majorities in both houses of Congress and soon will own the White house for four years.

Yet while 2008 also marked the loss of comedian George Carlin, his famous Seven Dirty Words will probably not be enforced nearly as fervently by a Democrat-controlled FCC as in the Bush era. But in early November, the U.S. Supreme Court heard arguments on the fleeting-expletives issue—whose eventual ruling will directly affect all broadcasters.

WHITE SPACE WOES

Election Day in early November also saw the FCC give a somewhat cautious go-ahead for its white spaces initiative, despite loud and angry protests from broadcasters opposing the Google-backed issue. The commission's new orders will permit the use of unlicensed devices to operate inside "unused" digital channel spectrum, including adjacent channels. Broadcast groups have harshly criticized the FCC testing procedures that concluded the devices would not interfere with stations' signals.

NAB chief spokesman Dennis Wharton told TV Technology "the white space issue is purely and simply about whether television viewers will continue to receive interference-free pictures. NAB is not opposed to expanding broadband into unserved areas, but that cannot come at the expense of interference-free television… The commission [on Nov. 4] appears to have bypassed meaningful public or peer review in a proceeding of grave importance to the future of television," Wharton said. MSTV, for its part, said it will continue to monitor the situation closely.

BEIJING BOON BEFORE WALL STREET

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The 2008 Summer Olympics was watched by more viewers worldwide than any other broadcast in history. Photo Credit: Richard Giles
The Summer Olympics in Beijing provided a big boost in ad revenue, especially for NBCU's various networks and affiliates. NBC Sports not only broke sport-coverage records for its multiple, round-the-clock HD feeds and productions—with virtually the entire games airing in HD—but also for its non-stop broadband streaming of live and recorded events on various Web sites and to smart phones.

Consequently, millions of viewers watched ad-supported Olympics highlights every day on their computers for free. In all, NBCU provided more than 3,600 hours of coverage from nearly three dozen remote sites, using an armada of more than 1,000 HD cameras.

Still, above all else, a rapidly decelerating economy and Wall Street's near-collapse joined forces to end the year on a worrisome note. The crisis that began in early September caught most broadcasters and advertisers off guard, threatening to slow some stations' transitions to local HD, depress ad revenues, and necessitate painful budget cuts (already leading to lay-offs at a handful of stations this fall). Even the financial revenue boon prompted by the most expensive presidential campaign in history—coupled with hundreds of state and local races—was offset to varying degrees by late-year fiscal woes.

The financial turmoil hit networks hard as December dawned, when NBC announced it was dismissing 500 employees, CBS parent company Viacom terminated more than 850 and Tribune and Equity Media filed for bankruptcy.

Detroit's troubles could also be a big hit to the industry as automakers—broadcasters' biggest advertisers—attempt to survive the downturn. The Television Ad Bureau reported that automotive ads fell by 17 percent in the second quarter and that the category dropped to $669 million in 2008, from $806 million in 2007.

The Television Bureau of Advertising is now revising its ad projections. It originally said in early fall that national spot would sink about 7-10 percent in 2009, but then rebound as much as 16.5 percent in 2010.

A SILVER LINING?

Yet James McQuivey, principal analyst at Forrester Research, said he may see a silver lining for broadcasting here in the end-days of 2008. Money woes, he said, tend to keep people at home. "And while at home they like to be entertained—even if it's just to distract themselves from the pathos of the market. These 'alternating economic currents' will provide an enormous boost to free services like ABC.com, CBS.com and Hulu.com [NBC and Fox] that leverage existing hardware and broadband access," he said.

Also, at least one global equipment maker, Harris Broadcast Communications, reported relatively strong numbers for its first quarter (July-September). Brian Cabeceiras, vice president of strategic marketing & technology, believes the industry's digital buildout continues to drive capital spending. "As broadcasters finalize work on the RF/transmission side, they're now moving their focus to in-the-plant systems like core infrastructure, master control and [local] news systems. The market demand for 3Gbps is also driving spending," he said.

HD GROWS, TRANSITION NEARS

While U.S. homes with HD have yet to reach the 50-percent mark, the past year has seen healthy penetration growth in HD sales (with the holiday season still to come). Price points are steadily falling, and it's now easier to count broadcast and cable programs that are not presented in HD, then those that are.

While native 720p and 1080i sets continue to dominate set sales, the relatively new marketing come-on of 1080p (dubbed "Full HDTV") managed to capture about 40 percent of market share so far this year, according to analyst iSuppli.

In September, a highly publicized FCC-sanctioned transition test took place in the small market of Wilmington, N.C. (DMA no. 134). Although the FCC characterized the cut-off of four analog broadcast signals to the region's estimated 187,000 TV homes as largely "successful," (and useful as a learning tool, which was its main intent), the trial run did experience a few glitches, and prompted a few thousand phone calls (many of them not complaints, per se).

One of the lessons learned: No matter how many times viewers are repeatedly reminded that analog signals will go dark on Feb. 18, 2009, it seems there will always be a small percentage of viewers who never get the word.

BLU-RAY TRIUMPHS

In February 2008, following a few final gasps, the proposed HD DVD format joined Betamax, VHS, and (soon) analog television wherever it is that discarded technology go to die. In its wake, Blu-ray Disc remained alone in its bid to become the HD standard for video discs. But it's not other disc formats that Blu-ray (and chief proponent Sony) might have to worry about, according to some analysts—but rather, the emergence of HD VOD from cablers and DBS, and increasingly improving broadband streaming.

"Blu-ray is progressing quite well, considering the format began shipping en masse less than two years ago," said Andy Parsons of Pioneer, who chairs the U.S. Promotion Committee of the Blu-ray Disc Association. So far this year, he said, more than 6.5 million Blu-ray players (including PlayStation 3 consoles) were sold—along with 15 million Blu-ray movies and games. Blu-ray titles currently represent about 7 percent of all DVD content sold in the U.S., according to various studies.

MOBILE TV

The past year also saw progress towards the development of an ATSC mobile TV service for broadcasters as the standards committee announced the approval of a mobile TV standard late last month. This drew kudos from the Open Mobile Video Coalition, an organization of broadcasters supporting the standard.

"The OMVC is thrilled to have advanced through a critical phase in our fast-moving progress toward launching full mainstream mobile DTV in 2009. This crucial vote will allow OMVC members to continue their service development with added direction and focus," said Anne Schelle, OMVC Executive Director. "We would also like to applaud the ATSC Technology & Standards Group [TSG] for meeting an aggressive standard-setting timeline."