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Real Narrowcasters - Broadcasting & Cable

Real Narrowcasters

Broadcasters should be willing to go it alone on research labs
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David Donovan wasn't a happy man last Friday morning. You see, the head of the Association for Maximum Service Television (MSTV) is from Boston and a big Red Sox fan, the kind who recalls skipping the first day of law school 1978 to watch a Red Sox-Yankees playoff game—the one in which the Yankees' Bucky "Bleepin'" Dent delivered the fatal blow.

What was bumming Donovan out on Friday, of course, was yet another devastating loss to the Yankees. This time, it was Aaron "Bleepin'" Boone with a walk-off homer in the 11th that cost the Red Sox a chance at their first championship since 1918.

Like all faithful Red Sox fans, Donovan is used to disappointment. That's a good thing because he is also having to cope these days with the failure of the Broadcast Labs to get off the ground—a cause into which he has poured much of his heart over the past couple of years.

I've been with Donovan on this one. A broadcast R&D center similar to the highly successful Cable Labs is a great idea, perhaps critical to broadcasting's future. It would look for ways to improve over-the-air digital TV and exploit that platform by developing new services. DTV can be more than HDTV, much more.

The idea for the labs came out of the MSTV board, which agreed to ante up $1 million a year over three years. Last January, Donovan and MSTV Chairman Gary Chapman coaxed the NAB to kick in another $2 million a year. But the broadcast money was contingent on getting the consumer-electronics and professional-video manufacturers to come up with another $2 million a year.

That contingency has been the problem. Despite a huge effort, Donovan hasn't been able to entice the consumer electronics folks to play. "They all believe it's a good idea in the abstract but don't want to invest in an overall process."

That's Donovan being diplomatic. From what I can gather, the CE reluctance stems from the fact that manufacturers' don't have too much faith or interest in over-the-air broadcasting. Their interest is in plug-and-play cable sets, of which they intend to sell millions over the next few years. The set makers also fear that a broadcast labs would, despite Donovan's assurances to the contrary, result in tough receiver standards.

Here's what I don't get: Why do broadcasters need money from CE or anybody to develop their own business? Chapman and Donovan believes that, at a minimum, they need $15 million over three years to get the labs off the ground. That represents just 0.0004% of broadcasting's annual revenue of around $40 billion. It doesn't sound like much to me, but it's apparently way too much for broadcasters.

Broadcasters think they have already spent plenty on DTV, installing new transmitters, building new towers and paying swollen electric bills. All told, they have put 1,000 DTV stations on the air. And, according to a new study from MSTV, even though many DTV stations are operating at reduced power to save money, 70 million TV homes are reached by six or more DTV signals; 49 million, by nine or more; and 30 million, by 12 or more.

(That study will be released and discussed this Thursday at the MSTV's annual DTV summit at Washington's Park Hyatt hotel.)

All these numbers represent a considerable investment in DTV. But broadcasters need to keep going. They need to find new businesses for DTV, new streams of income. Broadcasters are thinking short term, when they need to be thinking long term.

Broadcasting was built by long-term guys like David Sarnoff and Bill Paley, who competed not only to put the best programming on the air but also to make sure the underlying technology was always evolving. Sarnoff had RCA; Paley, the CBS Labs.

At the NAB executive committee meeting in Washington last month, John Tupper, a small-market TV operator on the NAB board, pleaded with his fellow broadcasters to move ahead with the labs with or without the CE money. "We have to stop all the handwringing and get on with it," he told me.

Tupper's speech failed to stir the committee, although he won a promise that the full board would take up the question again in January.

Donovan defends broadcasters from my criticism that they are too cheap for their own good. It's not just about money, he says. Broadcasters and the CE industry have to work together. The broadcasters can develop new technology, but it means nothing if set manufacturers don't agree to incorporate it into their hardware. "They can just say no."

He is disappointed but not defeated. "We have not given up. Broadcasters believe this is a good idea. We are continuing to talk with CE manufacturers, chip makers and pro video manufacturers in hopes of making the labs a reality."

That's a Red Sox fan's way of saying, Wait'll next year.

Jessell may be reached athjessell@reedbusiness.com.

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