The Broadcasters' Digital Cooperative appears to be gaining momentum. The consortium of station groups that want to lease part of their digital television spectrum to support wireless data services has added five members and is reportedly hiring an investment banker to represent it in seeking customers. And leader Granite Broadcasting has signed a deal to lease its spectrum.
According to sources, the Cooperative is close to a deal with Salomon Smith Barney. Likely customers for its DTV spectrum are prospective bidders in the FCC's ch. 60-69 auction scheduled for September.
Granite has demonstrated datacasting's revenue potential by signing a deal to provide DTV spectrum in the San Francisco Bay Area to Geocast Network Systems.
Joining the original 12 members are station groups Pegasus Communications and Lamco Communications; independent WACX-TV Orlando, Fla., owned by Associated Christian System Inc.; WRNN-TV Associates LP of New York City, which runs independent WRNN-TV Kingston, N.Y.; and KCEN-TV Eddy, Texas, the privately owned NBC affiliate in the Temple-Waco market. Jefferson-Pilot Communications has also expressed interest in joining, although the Cooperative hadn't received its letter of intent at press time.
Critics of the Cooperative say its business plan remains vague compared with that of iBlast, a consortium of large station groups that is developing a nationwide data-transport service using the DTV spectrum, and Geocast, a Menlo Park, Calif.-based firm that aims to create a multimedia program service. But new Cooperative members say the lack of a decisive focus is part of the group's appeal.
"I'm interested from the perspective of seeing interesting business plans for the DTV spectrum," says Nicholas Pagon, president of Pegasus Broadcast Television. "I'm not interested in turning over the control of the spectrum to a third party. This allows us to amalgamate a national footprint. My biggest market is DMA 50, but we're constructing towers to accommodate DTV."
Lamco President and CEO Marshall Noecker says his group, which owns eight stations, has already spent more than half its DTV budget and would like to start seeing some returns. The station is pursuing an aggressive multicasting strategy with WCYB-TV, its station in Bristol, Va. (see story on next page), and Noecker views the Cooperative as a similar entrepreneurial idea for generating DTV revenues.
"It just made more sense to target the people who are bidding for the spectrum than anyone else," he says. He also likes the fact that the Cooperative's bandwidth commitment, an average of 4 Mb/s per day, is low compared with the 7 Mb/s required by iBlast and the 6 Mb/s that Geocast's partner stations have pledged. At WCYB-TV, for example, most of the station's DTV spectrum is already used up for multicasting, but Noecker thinks he can still accommodate the Cooperative's needs.
Pagon agrees. "To me, it's onerous to give away that 6 Mb/s when you're not entirely sure what the nature of the service is and what the demand for it is," he says. "In the Digital Cooperative, it's nominally 4 [Mb/s], but the question is what proposals are actually made to us."
Pagon says it's hard to "start carving up the spectrum" when he doesn't know yet what the networks are going to be feeding, such as HDTV or their own datacasting plans. He points out that, while the networks have indicated different directions for datacasting, none of them has presented a clear plan to affiliates.
"That's going to be the most explosive problem over the next six to nine months," he adds, "as companies like Geocast, iBlast and the Cooperative are tying up spectrum [the networks] thought was theirs."
For its part, Granite was happy to lease Geocast DTV spectrum from both KNTV-DT San Jose, Calif., and KBWB-DT San Francisco. KNTV-DT has been leasing 6 Mb/s of its DTV bandwidth to Geocast since January for testing purposes, and the new one-year deal will include an additional 6 Mb/s from KBWB-DT, as well as local content from KNTV-DT that will be repurposed by Geocast.
Granite President Stuart Beck says his deal is different from Geocast's previous long-term spectrum agreements with Allbritton, Belo and Hearst-Argyle, under which the groups took equity stakes in the company. The Granite deal is a straight lease, says Beck, and the station won't be compensated by Geocast for contributing its content.
Geocast Chairman Joe Horowitz says the KNTV-DT content will be presented with the station's logo and will serve as local content within the company's national programming service. He won't speculate on whether the deal with Granite will amount to anything more than a test.
Nonetheless, the new Geocast deal is "terribly encouraging" to the Cooperative's datacasting prospects, says Granite Senior Vice President for Digital Broadcast Development Stewart Park. He adds that KNTV-DT and KBWB-DT, which are simply simulcasting NTSC programming, could each easily support both 6 Mb/s for Geocast and 4 Mb/s for the Cooperative if necessary.