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Anxiety, Optimism In the Air at NAB2007

LAS VEGAS


(click thumbnail)It's a tricky time to be a broadcaster. But that's not to say that good news is hard to find.

It's clear that high-definition broadcast technology has moved successfully beyond its infancy. When a new camera or server is released with an HD sticker, it isn't newsworthy; it's perfunctory. When a consumer plops down $1,200 on an HD set, rather than raising eyebrows, it's a quiet, ongoing reassurance that the transition is on its mark.

Yet, in the simplest of terms, broadcasters don't have the luxury of resting on those laurels. Although the statement "content is king" is waved around every spring, it's a sentiment that rings particularly true this year, and perhaps even carries with it a sense of foreboding.

Why? Because the broadcast industry must already be headed down the path of change; the industry needs to jump on opportunities--some traditional, some unprecedented--that put their gold standard--content--in front of an ever-wider group of viewers.

"Without question, local broadcasters and our network partners air the most popular programming on television," said Dennis Wharton, NAB executive vice president of Media Relations. "With the majority of television stations now airing this high-value programming in digital, our opportunities to expand our offerings to new platforms on various gadgets is increasing. Our future is a broadcast signal on every new and yet-invented device out there."

Gerry Kaufhold, principal analyst with In-Stat, a technology research can reporting firm in Scottsdale, Ariz. concurs.

"Broadcast TV content is still the most highly viewed content on the planet," he said. "Broadcasters need to figure out how to negotiate from a position of strength when they move their content onto the Internet, and onto mobile services."

FRIEND OR FOE?

It's a tricky dilemma, to be sure, but doesn't come as a surprise. Broadcasters need to enhance and protect their content as well as forge relationships with a barrage of new service providers, be they Internet companies, cellular phone service providers or even local newspapers.

How to do that? Well, that's the million-dollar question that broadcasters hope to answer as they head for NAB2007 and move into securing their success in the year 2008 and beyond.

Consider, as a start, the power that video has to strengthen a company's bottom line.

Cisco Systems surprised investors when it released an unexpectedly strong quarterly profit in February. Analysts had predicted that Cisco, one of the largest manufacturers of Internet routers and switchers, would not see a strong showing in the fiscal second quarter ending in January. But shares rose 5 percent nonetheless, and some analysts are giving credit to the growing interest in IPTV Web-based video technologies provided by Scientific-Atlanta, which Cisco acquired in 2006. Interest in Web-based IPTV video isn't expected to cool anytime soon.

In a conference call with investors, Cisco CEO John Chambers said he expected his company's growth to continue in the foreseeable future, due in part to burgeoning consumer demand for Web videos such as those shown on YouTube and Yahoo! Video.

"[Our growth] is not dependent upon a specific geography or a product," he told Reuters. "But what's most exciting to me personally is video. Networks are starting to grow and if there's a killer application, it's that one."

And earlier this year, when Arris, a telecom infrastructure provider made a bid for Tandberg Television, Ericsson, the Swedish telecommunications giant swooped in with a larger counteroffer. Anticipating a rapidly growing market for television services, Carl-Henric Svanberg, president and CEO of Ericsson, said "IPTV for cable and telecom operators is the biggest networked multimedia opportunity going forward."

BETWEEN A ROCK AND A HARD PLACE

The Cisco and Tandberg news illustrate the power of video delivered via new methods like IPTV. But the new can bump heads with the old, as some broadcasters have done with video replay sites that republish content on the Web.

Take for example the battle between Viacom and YouTube.

Last October the media conglomerate asked YouTube to remove some Viacom content from its site, claiming copyright infringement. The two seemed to reach an accord quickly thereafter, with Viacom giving consent for some of the copyrighted material to return to the Web-sharing site.

But negotiations broke down, and in February 2007 Viacom demanded YouTube pull all Viacom content from its video-sharing site. In addition, a content-sharing deal between YouTube and CBS--which is owned by Viacom, fell apart last month when the two parties could not agree on certain issues.

YouTube calls the move shortsighted; Viacom--which in the meantime inked a separate content sharing deal with the Joost P2P service, which touts stronger copyright protection--says unauthorized use of its content is tantamount to stealing.

The dispute makes two things clear: how popular Web-sharing sites have become with video-hungry consumers, and how powerful new revenue-enhancing streams like these are going to be in the future to traditional media firms.

Other media companies certainly think so. NBC is working with YouTube to promote Saturday Night Live and Fox TV owns and operates the video-laden MySpace.com site. "All of these TV networks are seeing increased viewership of their traditional linear TV broadcasts as a result of putting their video onto the Internet," Kaufhold said.

The trick, it seems, is to find the right business model. Keep close tabs on lucrative copyrighted content. Don't alienate consumers. And ensure that viewers are able to access that material on popular platforms.

BACK IN THE RING

Fights rage on between traditional broadcast and cable as well, illustrated by recent dispute between Mediacom Communications and Sinclair Broadcast Group. Sinclair, owner of 24 television stations in Mediacom markets, pulled its HD and standard-definition signals from Mediacom cable systems in the Midwest in early January after the two companies were unable to agree on retransmission compensation rates. Sinclair wanted Mediacom to pay for the right to carry their stations' signals; Mediacom balked. And beginning Jan. 6, more than 700,000 Mediacom subscribers' signals went dark.

Then things got ugly. Sinclair took the fight public, offering Mediacom subscribers a rebate if they'd switch to DirecTV to receive their signals. Mediacom handed out antennas to its subscribers. Senators and the FCC Chairman were called in, with the latter suggesting that the two sides consider binding arbitration.

In early February, a deal was struck. Without disclosing terms of the deal, both companies announced they had entered into a multiyear retransmission consent agreement for both analog and digital signals that will expire Dec. 31, 2009.

The fight serves to cast some new light on the long-standing retransmission consent issue. It illustrates, analysts said, the power that content has in the broadcast/cable retransmission battle, and illustrates just how much cable firms value network content--particularly HDTV.

Kaufhold believes that such issues are important and will have differing solutions. These will depend upon the popularity of a local station within a market, content quality from that station, availability of HD content and just how much perceived value carriage of the signal has for CATV operators.

MOVING FORWARD, FIGHTING BACK

One way that broadcasters have begun to fight back is with their own think-outside-of-the-box strategies. In an effort to capitalize on the growing number of consumers who use cell phones for entertainment, CBS, for one, has introduced new content designed specifically for mobile applications. Three new CBS Web sites now cater to mobile users, with downloadable versions of CBS News, Entertainment Tonight and SportsLine programming.

Users pay a fee to download a mix of content from the site, including games, video clips and video wallpaper featuring scenes from CBS shows. Two other wireless application sites (WAP sites) are advertiser-supported and offer sports scores and news updates.

"We call this 'platforming content' to mobile," said Cyriac Roeding, executive vice president of CBS Mobile. "The content is designed and made specifically for mobile, but at the same time it offers a seamless link to our top television shows."

Some local broadcasters have begun to think outside the box as well. In early February, WRAL-TV in Raleigh, N.C., announced a pilot program that it hopes will allow viewers to access local WRAL programming as well as CBS network programming over the Internet.

Partnering with Decisionmark Corp., a provider of Internet-based broadcast solutions, the station has installed broadcast replication technology called TitanCast. This is an 'air-to-Web' technology that's designed to allow the network to stream local, network and syndicated content over the Internet, but only within the bounds of their geographic area. That's an important consideration for licensees who have permission to operate only within a specific geographic area. In the program, viewers will be able to go online, enter their address, and once confirmed by Decisionmark, access the live broadcast stream online.

The move is designed to give viewers new means of accessing WRAL--and vice versa.

"We want you to be able to get us live over the Internet," said Jim Goodmon, vice president and CEO of Capital Broadcasting Company, parent of WRAL. "There is going to be more viewing of television on computers, and we want to do it live."

WRAL is hoping the pilot program will persuade CBS that it's smart business for local stations to distribute Webcasts and downloads of network programs. At press time, CBS had yet to comment on the new service.

The overarching goal is clear: local affiliates want to someday be able to stream nationwide network content--not just local feeds--over the Internet in an effort to bolster the network/affiliate relationship when it comes to devising new revenue streams via Web broadcasting.

"The broadcast industry has been searching for ways to serve local audiences via the Internet without jeopardizing protected content," said John Marino, vice president of science and technology for NAB. "WRAL has found a way to do this and I suspect that other broadcasters will follow."

FINDING ANSWERS AT NAB2007

The NAB convention will undoubtedly attempt to address those issues and more through sessions such as "IPTV--Market Outlook 2010" and "Portable! Digital Media Content Anywhere, Anytime" along with others.

NAB2007 will also feature a number of new sessions and conferences, such as Telecom @ NAB2007, which is designed to touch on issues such as IPTV and broadband video.

Fortunately, optimism is one similarity that many of the sessions, speakers and conferences at NAB2007 share.

"The opportunities out there for broadcasters are phenomenal," said Stu Lipoff, an industry consultant who will serve as a panelist for the portable digital media session. "If you look at the number of people who have these mobile, portable devices today, it's a dramatically expanded population of eyeballs that was never there before."

In short, the market is changing, as it often does. But this time around, as the industry heads into NAB2007, broadcasters not only have to worry about securing the technology behind a transition--which was key to the acceptance of DTV--they need to re-imagine what it means to be a broadcaster in the year 2007.

"The trend toward portable media and consumers' desire for content--when and where they want it--is driving big changes in our industry," Marino said. "The most important issue for broadcasters today is to stay educated on the changes taking place as new content distribution platforms continue to evolve."

The key to success may be their ability to enhance and protect content while they solidify new relationships--not only with cable and Internet service providers, but also with those unknown entities that may be coming around the bend.

Susan Ashworth is the former editor of TV Technology. In addition to her work covering the broadcast television industry, she has served as editor of two housing finance magazines and written about topics as varied as education, radio, chess, music and sports. Outside of her life as a writer, she recently served as president of a local nonprofit organization supporting girls in baseball.