Despite the moans of hardship from across the economy, broadcasters coming to NAB have plenty to keep their spirits up.
First, they're actually making money. Ad spending is up, the major networks are reporting or expecting profits and Wall Street has high expectations for station groups, although war in the Middle East and uncertain worldwide economics could change the picture dramatically.Second, by summer the FCC may have removed barriers that keep big owners like Fox and NBC from swallowing up more stations. The commission may also relax small-market duopoly regulations, allowing the most challenged stations to combine forces.
But maybe most important, technology continues to leap forward. Sony's new optical disc format promises a future of media that can be adapted to any format and wrangled as easily as text documents are now. Videotapes are giving way to discs. And TV stations, most of which have already completed their initial DTV buildouts, are exploring technology to make their investments pay off in new ways, be it automation, centralcasting or new uses of their digital streams.
The genie's out of the bottle, the horse has left the barn, DTV is over the hump. DTV advocates, so accustomed over the years to making pie-in-the-sky promises of the looming revolution, can now confidently say the ball is rolling.
If HDTV wasn't really here, then why would Disney, Comcast and Viacom promise hundreds of sporting events in high definition, at yet unknown cost? Those hot new production trucks, full of multiformat cameras and the latest in switching, graphics and audio, are unlikely to sit unused in parking lots. More likely, they'll produce game after game-football, baseball, basketball and, if necessary, cricket and billiards-until the audience catches up and buys the big new sets.
At NAB 2002, broadcasters were mired in post-9/11 uncertainty and howling for some action by the federal government to move DTV forward. Just before the conference, FCC Chairman Michael Powell came up with his big plan-the one that called for voluntary actions by networks, broadcasters, consumer electronics makers, and the cable and satellite industries. The announcement seemed such a big step and came so close to NAB that it seemed impolitic at the time to criticize Powell for the gentle, "voluntary" nature of the proposal.
A PLAN FULFILLED
Yet one year later, much of the chairman's plan has come to pass. Cable (in many markets) and satellite offer HDTV with a delivery system that early adopters are likely to actually use. About half of primetime programming on the networks (except for Fox) is in HD. Cable and the consumer-electronics industry reached a landmark agreement in December to bring plug-and-play digital-cable-ready TVs to retail showrooms. The commission ordered the manufacturers to put DTV tuners in new sets. And with the Super Bowl and other marquee events setting the standard, DTV advocates are talking about an unstoppable locomotive instead of the train wreck many feared in the past.
SO WHAT NOW?
Maybe broadcasters, having satisfied the minimum DTV build-out requirements, can just pass through the network feeds, sit and wait for the audience to come. Or, they can make their DTV siblings real draws with original content in HDTV.
Craig Harper, director of engineering for Dallas-based Belo Corp., said 2003 could be a big year for advertisers to delve into HDTV, and stations with the ability to carry those ads could have a hot new selling point.
So Harper will be at NAB looking for the kinds of servers and other equipment that can seamlessly move between HD and SD content, for example.
And on the floor of NAB, that equipment is there. Scores of companies are pitching format flexibility and HD upgrades in their products, including many major manufacturers who had held back developing HD products when the format was still an oddity.
"This is the year that the vendors are catching up to the build-out," said Harper.
National Mobile Television President Mark Howorth, whose company has built the HD trucks for use by ABC and ESPN, recently assessed the migration to HDTV as a second transition-one that's all the trickier because components have to be replaced all at once, as opposed to the analog-to-digital conversion, in which stations could start with their transmission systems and upgrade the rest of their plants to digital step by step.
Other digital broadcasters are looking for advances in control, where multiformat and multiprotocol flexibility are big selling points. With hub and centralcasting arrangements drawing the attention of cost-conscious companies, the tools to manage and monitor facilities with ever-fewer people-in some cases, using ordinary Web browsers-are gaining attention and will be plentiful in Las Vegas.
HDTV may be the driver of the DTV revolution, but there's always the promise of dividing the bitstream into multicasts and datacasts, if carriage on cable were assured and if someone figured out a way to make money at it. Home receiver markets would also have to catch up with advanced technology, just as the today's HDTV broadcasters are waiting for their audience.
"I think there's an inevitability to these digital streams carrying more than 'Friends,' but the issue is, what kind of technology is at the other end?" asks Stuart Beck, president of New York-based Granite Broadcasting Co. "How does it get received?"
Engineers are working on that, and the Association for Maximum Service Television (MSTV) and NAB have announced a "DTV Lab" to test receiver equipment in conjunction with manufacturers. And receiver-chip development has been "significant and important," said MSTV President David Donovan.
A GOOD YEAR
The boom days of the 1990s may never return, but 2003 and 2004 are promising times for broadcasters. Ad spending is already up compared to 2002, and the Olympics and elections could mean an even more profitable 2004.
In addition broadcasters could get new ownership regulations they've sought for years, allowing big owners to extend their reach and small-market stations to combine and share resources and expenses.
Those possible changes-part of a comprehensive review of ownership laws by the FCC-could be announced by summer.
Some networks have advocated abandoning the nationwide ownership cap (now at 35 percent coverage) altogether. The likelihood of relaxing the rules at least somewhat is high enough that some Wall Street observers are banking on it.
"The outlook for TV station stocks now could well be beginning a six- to 18-month expansion cycle, " stock analysts USB Warburg reported in February, anticipating immanent FCC action. "This TV expansion would likely solidify by summer 2003."
Consolidation will likely ensue following the regulatory relief, according to analysts. "It's already happened in cable; it's already happened in programming," said Adi Kishore, a media analyst with the Boston-based Yankee Group, though he cautions against assuming that consolidation leads to greater profits. "Simply owning more stations will not result in more synergies," he said.
But broadcasters' FCC wish-list is still incomplete, with cable carriage still the top item. The commission may decide this year if cable operators must carry both digital and analog versions of each local station, or just one.
And Hollywood, sports leagues and other content producers are calling for the so-called broadcast flag, adoption of which they say would spur HDTV production.
"Transitional carriage [a .k.a. dual analog-digital carriage] is absolutely critical to meeting that goal, so you actually phase DTV in and have a transition," said Donovan. "When we started this journey in 1992 [with the 1992 Cable Act] we did not anticipate that we'd still be fighting about digital carriage in 2003."