- SIGN UP HERE
for our eNewsletter.
ProHD EXECUTIVE REPORTS
NAB COUNTDOWN ARTICLES
Recent ProHD Adoptions
ProHD News from the U.K.
The headlines in the TV station business so far in 2011 were in a large measure dealing with a coast-to-coast expansion of local newscasts and the transition to HD news and live HD ENG, driven by TV stations in smaller and larger DMAs alike concluding that future profitability requires more local content in HD.
A record amount of local news is produced and aired on U.S. TV stations in 2011. This is according to a July 2011 released RTDNA/Hofstra University annual TV station local news survey concludes that 745 TV stations are originating and airing local news while another 223 stations are airing local news produced by others. A total of 968 TV stations are on-the-air with local news in early 2011. These are all licensed as full power TV stations.
Local Newscast Expansion = More Local Control
A TV station competes locally, with other local TV stations and with cable programming. When a late afternoon live ratings leader like Oprah goes away, opportunities are presented to the competing TV stations in the local market to win over the time slot and some of the Oprah audience as well as to the recent-Oprah-carrying station to perhaps save some serious syndication costs by replacing Oprah with local news (and improve bottom line). To add late afternoon news must be a serious consideration for any TV station with an existing local news organization, as the costs to expand local news may be significantly less than the Oprah costs. And adding available reruns from years past are not likely to keep or attract the Oprah audience. Local newscast expansion with local public interest content may appeal to broad audiences and give the TV station local control and preserve future options. It’s not surprising then that so many TV stations have elected to add newscasts in 2011, whether early morning, noon, late afternoon or evening. Look at these recent headlines obtained from TVNewsCheck website at http://www.tvnewscheck.com/
Some of the larger DMA recent TV News headlines:
KTTV Los Angeles Poised To Launch 5 P.M. Newscast
WMAQ Chicago To Launch Noon Newscast
WUVC Raleigh Expands With 6 P.M. Newscast
WHDH Boston To Add 9 A.M. Newscast
KTVK Phoenix To Launch 10 P.M. News
WSVN Miami Expands Morning News Block
KHOU Houston Adding 4 P.M. Newscast
WPIX New York to Air 5 P.M. Newscast in September
KGO San Francisco Launching 4 P.M. News
WNBC New York to Reclaim 5 P.M. News slot
NBC O&Os Launch 3 More 24/7 (subch./multicast) News Channels
(KNBC Los Angeles, KNTV San Francisco, KNSD San Diego)
And some of the not-so-large DMA recent headlines:
KFSN Fresno To Replace “Oprah” With Newscast (DMA 55)
WPTV, WFLX West Palm Beach Create 4 P.M. Newscast (DMA 38)
WKYT Lexington Adding 10 A.M. Newscast (DMA 63)
WUTR/WFXV (Nexstar Duopoly) To Launch News in Utica (DMA 171)
WCTI Greenville (SC) Adds 5:30 P.M. Newscast (DMA 101)
WFFT Ft. Wayne Adds Half Hour to Weeknights News (DMA 107)
KOMU Columbia (MO) To Debut New Interactive Newscast (DMA 137)
KDCU Wichita To Launch Local Spanish Newscast (DMA 68)
WBRE Wilkes-Barre/Scranton Slots Hour Newscast At 4 P.M. (DMA 54)
Expanding Local Newscasts make more and more sense as MVPD/OTT (non-news) choices increase
Bottom line for a TV station is local ad sales, which success is largely related to the number of eyeballs watching the TV station. The problem is that, as more and more (reruns and VOD) program channels become available over cable/satellite/telco TV (MVPDs) and OTT over broadband internet, with most new OTT streaming services being movies and reruns of newer and older TV series, the TV station’s ability to compete by offering “just another syndication program” will diminish. As a matter of fact, the large majority of TV programs available to a MVPD household at any given time are reruns, with newer programs being rerun over and over again for days, weeks and even months. It’s becoming increasingly difficult for a local TV station to compete by the daytime syndication programming approach without a substantial audience following of daily local newscast. And the newscasts really need to be in HD, both studio and ENG, to have maximum appeal.
It is not surprising that we are seeing a substantial growth in local newscasts all across the country, in terms of the number of hours per day of local news broadcasts at each station. The direct competition for a live local newscast is the limited number of TV stations (perhaps 2, 3 or 4) doing live newscasts at the same time, while the direct competition for a Dukes of Hazard rerun may be a hundred or more different (non-news) programs available over cable in the same time slot. You have full local control and flexibility over the local newscast, while you have little or no control over a syndicated rerun once contracted for. If the time slot makes sense for local news, you may wish to think twice before you sign that 3-year syndication deal!
Each TV Station Average 6+ Hours of Local Newscasts per Day in DMA 26–100
That’s 35% more time than the average for TV (news) stations in DMA 1-25, which is surprising. The average for DMA 1-25 is 4.7 hours per weekday, while it is 6.3 hours per weekday for TV stations in DMA 26-100. We speculate that the lower average for the largest stations must relate to network O&O stations (of which most are in DMA 1-25) doing less local news per TV station, one reason being that the late evening news (at 11PM east/west) is only 30 minutes and due to O&O duopoly operations where total weekday live newscast hours are divided between the two stations in the duopoly.
The Author resides in Los Angeles (DMA 2) where CBS owns and operates KCBS and KCAL while FOX owns and operates KTTV and KCOP. It appears that CBS and FOX have two different strategies here (recall that FOX does not have evening network news, like ABC, CBS and NBC, but rather just FOX News on cable). From noon to 11PM, CBS’ #2 KCAL offers 6 hours of local newscasts while FOX’s #2 KCOP only offers 30 minutes at 11PM. The largest non-Big 4 TV station in LA (KTLA–CW/Tribune) delivers 7.5 hours of local news per weekday, of which 4.5 hours is early morning. KCOP, delivering only 30 minutes of news (which was recently added), is never-the-less classified as a “TV station with newscast”, thus counted in the survey and obviously pulling down the average for the LA DMA and nationally. There are a number of Big 4 O&O duopolies in the Top-25 markets, and we may see strategies in those similar to the LA market.
But what’s behind the whopping 6.3 hours daily average in DMA 26-100?
DMA 26-100 comprise 75 markets, from Baltimore (DMA 26) to Ft. Smith (DMA 100), containing in excess of 700 TV stations with nearly 400 of those being “newscast stations” and the large majority owned and operated by the top 25 Group TV Station Owners as Big 4 affiliates. Excluding Big 4 Network O&Os, the top 25 Group TV Station Owners own and operate more than 550 TV stations across the U.S.
The RTDNA/Hofstra 2011 survey states that nearly 54% of all news stations in DMA 26-50 increased local newscasts over the past year, as did 46% in DMA 51-100, but only 41% in DMA 1-25. Only about 5% (of all news stations) decreased hours of local newscasts. In other words, over the past year, nearly ten (10) TV stations increased newscasts for every one (1) station decreasing! And with recent TV station announcements, the 6.3-hour average seems on track to make another impressive gain by 2012.
Here’s what’s behind it:
- Reruns and syndication are becoming less competitive for TV stations as more and more relatively new TV programs become available to the TV household via MVPD and OTT/Internet, resulting in ratings deterioration for TV stations relying excessively on reruns and “bland” syndication.
- Local TV newscasts only compete with other TV news outlets in the same market in the same time slot, for those eyeballs wishing to watch local news and content. The TV station retains full local control and preserves options in the shorter term. The TV station takes on 2 or 3 (known) newscast competitors rather than a 50 or more rerun and syndication choices available over MVPD/OTT (which are really unknown).
- It is relatively easy to expand live newscast hours when the TV station is already fully fitted for news operations, with news-set, newsroom and ENG facilities. And the essential transition from NTSC/SD to HD news/ENG is highly affordable with today’s cost effective HD studio cameras, HD ENG camcorders and newsroom file-based editing systems. (See JVC ProHD discussion below)
- Highly cost effective news acquisition and newsroom systems are available to TV stations currently not producing their own local news (just airing news produced by others), but wishing to initiate their own full service news operations in the near term.
Transition to Local HD News/ENG accelerates:
DMA 26-100 lead the HD way this year
745 full power TV stations produce and air local news. In addition, 223 full power TV stations air local news produced by others, for a total of 968 stations delivering local newscasts, according to the RTDNA/Hofstra survey conducted at the end of 2010 These numbers are not likely to change materially through 2011. What will change (and change fast) are the TV news stations transitioning to HD newscasts and to HD ENG. Note that the 2011 RTDNA/Hofstra study (conducted end 2010) did ask the question of how many TV stations broadcast news in HD, resulting in about 40% responding in the affirmative (390 TV stations).Thus the (August 2011) numbers presented in here are developed by the Author considering various recent data collected on the internet and processed, and using the HD news baseline data as reported by the 2011 RTDNA/Hofstra survey (conducted end 2010).
The Author found, not surprisingly, that TV stations in DMA 26-100 lead the way in HD news transitions so far in 2011, as an estimated 80% of TV news stations in DMA 1-25 are already fully HD capable, and stations in DMA 151+ are perhaps under less pressure to go HD. Here are some recent announcements, headlines again courtesy of TVNewsCheck:
Some of the DMA 26-100 recent HD transition headlines:
WSYR Syracuse Launches Local HD News (DMA 82)
WJAR Providence To Be First with HD News (DMA 53)
WSAZ Charleston (WV) Completes HD Local News Transition (DMA 64)
WFRV Green Bay Broadcasting Local News in HD (DMA 71)
WBIR Knoxville To Produce HD Newscasts (DMA 59)
KXXV Waco Rolling Out Local HD Newscasts (DMA 89)
KSL Salt Lake City Moves To HD ENG (DMA 32)
WKRN & WZTV Making Nashville All-HD Town (DMA 29)
More than 500 TV Stations will be
Broadcasting Local News in HD by end 2011
The Author estimates that, of the 745 full power TV stations both producing and airing local news, 425 stations will be doing it in HD by the end of 2011, including many of those also doing HD ENG field acquisition. Of the 223 TV stations broadcasting news produced by others, an estimated 90 stations (40%) will be on air with HD news material by end 2011. Thus, more than 500 TV stations (about 52% of the total of 968 TV stations broadcasting local news) will be delivering HD news by end of this year.
That’s an estimated increase of 125 TV stations which will have transitioned to HD news during 2011, from 390 to 515 or 32% growth. Note that, of the projected total increase of 125, the “produce and air HD news” share counts an estimated 90 TV stations while the balance of 35 TV stations are “just airing” HD news produced by others.
The current HD studio camera and HD ENG camcorder market is owned by JVC, Panasonic and Sony, where JVC’s highly cost effective and professional ProHD camera/camcorder line leads the pack in DMAs 26 up.
Access interactive map = http://pro.jvc.com/tvstations
The first ever HD Local News Transition . . .
WRAL made major commitment 11 Years Ago
WRAL-TV, owned and operated by Capitol Broadcasting Company, the CBS affiliate in Raleigh-Durham (DMA 25), was the first TV station in the U.S. to convert local newscasts and news operations to HD. That was indeed a major pioneering commitment, both in capital investments and in operational efforts. It was perhaps not surprising as WRAL was already known for its pioneering way of thinking through the years. WRAL’s first local HD news broadcast was on Friday October 13, 2000, while the all-HD local newscasts officially started in January 2001.
Why is this relevant to this article?
Because the 29 HD ENG camcorders acquired by WRAL 11 years ago each had a list price of $43,600 without lens. Compare that to the current list price of JVC’s latest top-of-the-line ProHD ENG camcorder (GY-HM790U) at $9,995 with lens. Adding the price of glass to the $43,600 number did bring the list price up to nearly $60,000 or SIX TIMES the current price of JVC’s GY-HM790U. Did WRAL negotiate a healthy HD equipment package discount in 2000 for being a pioneer? Probably.
Local HD News Transition (Equipment) Cost
in 2011 is less than 33% of 2001 Cost . . .
In addition to the HD ENG camcorder cost analysis above, go back a few years and recall the HD studio camera costs in 2001 when a complete HD studio camera system was selling at around the $200,000 mark each after adding prompter, monitor, box lens (very expensive), studio pedestal and remote control facilities. Compare that with the current JVC ProHD fiber-connected remote controlled HD studio camera configuration with a selling price around $50,000 studio ready, or about 25% of that “not-so-good-old” $200,000 price tag.
The $200,000 HD studio camera system is still available, but, generally and understandably, only purchased by the Big 4 for network studio applications, by high end mobile television trucks and by the larger TV program producers. Let’s look at a comparison of the “two contenders” in a typical TV station local HD news studio application, to analyze why it makes perfect sense to choose the $50,000 HD studio camera system for the most TV stations transitioning to or expanding local HD news. Look at the illustration below.
The two contenders are located on the same news set with optimized lighting. The cameras’ HD-SDI outputs are seamlessly switched in master control and then alternately supplied to the ATSC OTA chain for viewing test purposes. Many TV stations today are operating with at least one SD sub-channel, in addition to the main (H)DTV channel, and planning for the Mobile DTV service. Thus the MPEG-2 encoded bitrate for the main HD channel may be limited to at most 12 Mbps, which is sufficient to deliver TV station broadcast quality, but introducing some softening of the cameras’ output resolution, particularly in the 1080i format. Any noticeable resolution advantage by the $200,000 camera system seen in master control will be substantially eliminated in the ATSC encoder (and in the home HDTV receiver’s decoder) in the opinion of the Author.
Looking at the home HDTV viewing environment, we must consider the home distribution of the screen sizes of the HDTV sets, as we can conclude that a very small difference in HD resolution presented to the home audience can only be detected on a relatively large HDTV screen (50-inch and up, with normal viewing distance) and then only by “critical viewers” looking for flaws. The Author estimates that this combination is less than 2% of total audience, thus 98% of home audience cannot perceive any HD quality difference between a local HD newscast shot with a $50,000 or a $200,000 HD studio camera system.
The large price drop in HD studio cameras and HD ENG camcorders over the years is duplicated in other areas of HD news equipment. Recall those early non-linear HD editing and graphics boxes developed for that large European national TV network, also selling in the $200,000 range, promoted (sometimes successfully) to U.S. TV stations. What do you use now? Highly capable PC and Mac-based NLEs and graphics workstations at a fraction of the price.
There has never been a better time to invest in local HD news acquisition and production. Equipment capital costs are low and the time is ripe to start to grow your TV station’s standing in your local market. JVC’s ProHD cameras and camcorders are designed to support the most efficient file-based non-linear workflow, to operate flawlessly in an environment of reduced news department staffing, and delivering highly competitive broadcast quality HD to the home audience.
There’s no business like local TV news business
. . . IF you’re a TV station
Sports coverage on TV stations’ local newscasts has declined over the past two years, while local news, weather and traffic are up, reports say. It makes sense, as sporting events and sports news are now available from many “sports desk” sources, from ESPN to the major leagues’ own TV channels and OTT streaming. The sports enthusiasts don’t go to the TV stations’ local newscasts anymore like they did 20 years ago, because, 20 years ago, there was no other place to go to get the daily sports news.
Let’s take a lesson from that observation.
The same situation is now happening with syndicated TV shows and movies, even with new prime time programming. The same programs are available from more and more sources, as the program originators sell non-exclusive rights for reruns and VOD availability to multiple program distributors. This wide (and wild) distribution results in a lower audience rate for the syndicated shows contracted for by the TV stations, due to ever increasing availability and choice.
The answer may be to expand local newscasts, include local interest stories, deliver HD quality and using talent resources to attract and retain a larger audience share in a known competitive environment: competing directly with the several TV news stations in the DMA rather than against hundreds of rerun and VOD program choices. And your TV station exercises full local control of talent, creativity, timing and operations.
Retransmission fees are forecast to rapidly grow from $1.4 billion in 2011 to an estimated $3.6 billion in 2017, with full service HD News/ENG TV stations poised to getting the lion’s share.
The FCC rules that regulate retransmission agreements were established following the passing of the Cable Act of 1992 (long name: Cable Television Consumer Protection and Competition Act). The Cable Act gave local broadcasters two options to be carried on cable TV (now MVPD Multichannel Video Program Distributor): (1) elect to negotiate with cable operators and give retransmission consent to carry signals for a negotiated fee, or (2) elect to be covered under must-carry provisions without receiving any compensation. TV broadcasters are required to choose one option in “elections” every three years. Over the last nearly twenty years, market developments have tilted bargaining power to the advantage of the major TV networks for compensation, which in 2012 will receive more than 50% of the total retransmission compensation pie through their O&O stations.
But, what will really happen to Retransmission Fees by 2017?
If the Congress passes legislation to allow the FCC DTV Spectrum Grab and Auction to go ahead based on voluntary “spectrum sell-back” by some TV broadcasters, the “selling” broadcasters will no longer be OTA and thus no longer be broadcasters entitled to retransmission fees. Of course, as a part of the “Spectrum Grab and Auction” process, the FCC will be required to materially modify its rules now based upon the Cable Act of 1992, which may (or may not) guarantee the “selling-going-out-of-OTA-business” broadcasters must-carry rights on MVPDs, at least for a limited period of time.
A Relationship between Local HD News and higher Retransmission Fees?
Can we make a credible showing that a TV station delivering “full service” HD news achieves substantially higher retransmission consent revenues than a TV station with no local news or content? The Author says yes.
Let’s look at ION Media Networks, the largest U.S. TV network in terms of TV stations owned (60) and in reach of TV households OTA (65%)
ION Media owns/operates the largest group of broadcast television stations (60) in the United States, including full power stations in all Top-20 DMAs and in 37 of the Top-50 DMAs. These stations are operated as a nationwide integrated programming network known as “ION Television”. The network’s programming lineup consists mainly of syndicated TV series, feature films and a limited amount of other entertainment and sports programming. The stations also broadcast so-called infomercials. Revenue is derived from these infomercials and from commercial advertising sales. All 60 full power TV stations each provide one HD channel as OTA primary, plus two additional simulcast channels. ION’s business model does NOT seem to include traditional newscasts or other local content delivery.
The Author lives in Los Angeles where he is served by Time Warner Cable (TWC), and ION KPXN-DTV Ch.38 is carried on the TWC HD Tier as Ch.410, with the SD/analog version on Ch.21. The two OTA simulcast sub-channels (Qubo and ION Life) are not carried on TWC, as such is not required by any FCC regulation. ION is currently not a publicly traded company, thus operational financial details are not made public such as retransmission fees collected if any. But for the last year public information was available (2007, before ION became a private entity), ION annual revenues were about $230 million. Retransmission income was not found in the 2007 SEC filing. Following the 2008/2009/2010 recession, if ION’s 2011 revenues will come in around $300 million, that will be an average of $5 million for each of 60 TV stations.
What about the Big 4 O&O Stations?
As a comparison, the 28 CBS O&O stations are expected to produce 2011 revenues exceeding $1.6 billion, or $57 million average for each station, including each station receiving an average of nearly $9 million in retransmission fees. (CBS O&Os are detailed below.) These are really the two extremes, where we can easily see the difference in revenue potential between a major TV network O&O “full service” news station and a “no-news, no-local-content, no-Big 4 affiliates” syndication-mostly station.
And the Group owned affiliated TV stations?
In between these two extremes are the major Group TV Station Owners and their major network affiliate stations with nearly all stations delivering “full service” local newscasts. One such “typical” major pure-play group owner is publicly listed Belo Corporation, with 20 full power TV stations of which 9 are in the Top-25. Belo reported revenues of nearly $700 million in 2010, averaging around $35 million per station. Belo received about $50 million in retransmission fees in 2010 or $2.5 million average per station.
Look at above chart. The BLUE column shows major pure-play Group owners with the large majority of their TV station properties in the Top-50 DMAs, with all stations being “full service” news outlets and Big 4 Network affiliates. The difference between Big 4 Network O&O stations (RED column) higher average (~$50 million) and Group station average (~$30 million) is that many of the Big 4 O&O stations are in the Top-10 DMAs (and very few are in lower than the Top-30), which increases the average revenue number significantly. The average independent TV station (ORANGE column) in the Top-50 DMAs, without news and without any Big 4 affiliation, seems to be in the average annual revenue range of $5 million.
HD News = Higher Ratings = Higher Retransmission Fees
The amount of retransmission compensation follows the overall ratings and DMA ranking, with Big 4 Network O&Os leading with average retrans fees of about $8 million per station (16% of total average revenues), followed by the Group owned Big 4 affiliated stations with an average of $2.5 million (8% of total revenues), while retrans fees for Group owned stations without newscasts and without Big 4 affiliation seemingly fall far behind with insignificant retrains fees in comparison to “full service” HD news stations in the same DMAs. The actual numbers for such “no-news” stations are much more difficult to ascertain as detailed financial data is often not published, such as is the case with privately held ION Media. The Author speculates that a number of such stations elect must-carry rather than retransmission consent, as the station may not carry much weight in negotiating for retrans fees.
CBS O&Os expect receiving $250 million in 2012. . . just in Retransmission Fees
If the industry forecasts are right, the straight line growth year-on-year on the above graph forecasts total retransmission fees of $1.8 billion for 2012.
CBS announced earlier this year that their TV Station Group expects to receive at least $250 million in 2012 in retransmission fees from cable, satellite and telco TV service providers (MVPDs). CBS’ TV Station Group comprises 28 O&O TV stations, making the average of fees received about $9 million per TV station (forecast for 2012). This looks very good. Let’s look at more CBS detail:
CBS Television Stations include sixteen (16) that are part of the CBS Television Network, eight (8) affiliates of The CW Network, three (3) independent stations and one (1) MyNetworkTV affiliate. Major market “full service news stations” are WCBS-TV (New York), KCBS-TV and KCAL-TV (Los Angeles), WBBM-TV (Chicago), KYW-TV and WPSG-TV (Philadelphia), KTVT-TV and KTXA-TV (Dallas-Ft. Worth), KPIX-TV and KBCW-TV (San Francisco), WBZ-TV and WSBK-TV (Boston), WUPA-TV (Atlanta), WWJ-TV and WKBD-TV (Detroit), KSTW-TV (Seattle), WTOG-TV (Tampa-St. Petersburg), WCCO-TV (Minneapolis, and Minnesota satellite stations KCCO-TV and KCCW-TV), KCNC-TV (Denver), WFOR-TV and WBFS-TV (Miami), KOVR-TV and KMAX-TV (Sacramento), KDKA-TV and WPCW-TV (Pittsburgh) and WJZ-TV (Baltimore).
The Author has no reliable data as to the breakdown of fees to be received by each TV station, as retransmission agreements are generally confidential. But one can assume that the New York City flagship station WCBS receives by far the largest amount of retransmission compensation. The New York DMA counts some 7.5 million TV households of which more than 6 million are cable, satellite or telco TV subscribers. At an average monthly MVPD (Multichannel Video Program Distributor) subscription price of $90 ($1,080 per year), the total annual MVPD TV subscription take in the NY DMA is over $6 billion (of course excluding broadband and IP telephone revenues). At $0.60 retransmission fee per month per (full paying) subscriber, WCBS may take in an annual whopping $40+ million in 2012 just in retransmission fees. This one WCBS flagship station may be responsible for more than 16% of the total $250 million retransmission revenues expected by CBS in 2012. In Pittsburgh (DMA #24), the smallest market for a CBS O&O “full service news station” (KDKA), with about 1.2 million TV households of which about 1 million are MVPD subscribers, the same computation produces annual 2012 retransmission fees of about $7 million.
The 100 or so Big 4 O&O TV Stations receive about 50% of all Retransmission Fees
We have looked at CBS, which has been very vocal about the need to substantially increase retransmission fees. So has FOX. The total number of the O&Os operated by the Big 4 TV networks is about 100 TV stations. ABC, FOX and NBC will each approach the 2012 $250 million to be achieved by CBS, thus the Big 4 will together receive an estimated $900 million or 50% of the total forecast $1.8 billion in retransmission fees to be paid by the MVPDs in 2012.
Industry experts estimate that as much as 70% of the total pie will go to TV stations located in the Top-30 DMAs, mostly to “full service” HD news stations, leaving only about $500 million to be shared by many hundreds of TV stations around the country. PBS stations do not generally ask for retransmission compensation, as they are non-profit, funded by government appropriations and private grants and donations.
Fighting for Retransmission Dollars: HD News & Live HD ENG build audience and market leadership
We establish above that the local TV station consistently leading in the local DMA audience race is in the best position to negotiate for the most in retransmission compensation, whether directly with local MVPDs or through its Group Station Owner negotiating with national or regional MVPDs. The three (3) primary areas where TV stations may increase audience share are:
- Deliver network programming with higher audience appeal, which is NOT under the control of the TV station or the Group Station Owner (but is a function of network affiliation)
- Deliver syndication programming with higher audience appeal, which is often controlled by its Group Station Owner making package syndication deals covering all of its TV station properties
- Deliver local news, weather, sports and traffic with higher audience appeal, which is materially a function of local TV station control and operations
Delivering highly attractive local content, in the form of news, weather, sports and traffic, is the only primary activity available to (and fully controlled by) the local TV station which may substantially improve audience share. And the HD News set and live HD ENG capabilities make up the foundation for a successful local news operation. The local station executive team will no doubt score high marks at the Group Station Owner’s HQ when achieving a substantial and lasting rating boost through a clever implementation (or expansion) of HD news, enabling the Group Station Owner to demand higher retransmission fees.
HD News & Live HD ENG promote network and syndication shows . . . and feed the website !
Local TV stations’ promotional efforts of its network, syndication, local program and website content are greatly aided by successful HD News activities, with an opportunity to create a positive circle of audience awareness and support.
Can you imagine a local TV station’s website without local news, weather and traffic? The local competitive advantage is obvious, as, without news, weather and traffic, the website becomes just a TV program guide but only for its own channel. And the future revenue growth potential of a successful local TV station website is an important consideration in the longer term, together with the stronger retransmission compensation position of a full service TV station. HD News and live HD ENG is really a competitive and financial necessity.
(HD) News REVIVAL at TV Stations: HD Studio Cameras and HD News Camcorders are now highly cost effective
After the difficult years of 2009 and 2010, TV broadcasters are bullish on local news again, fueled by (a) the realization that a TV station without significant local content may not be relevant in a few years as most prime time and syndie shows may be available directly to homes through the OTT/ internet, and (b) the potential local revenue gains establishing or expanding local news shows a very attractive ROI now that the cost of HD news facilities have dropped substantially, in terms of both equipment acquisition and operations. From major markets like New York to smaller markets like Boise, TV stations are expanding local news efforts. Nearly all major market news stations have already converted to local HD studio and most of those have transitioned to live HD ENG. But, overall, below the Top-25 markets, there are hundreds of news stations in process of transitioning or planning to go HD in 2012.
JVC is the 2010/2011 market leader in HD ENG camcorders and HD studio cameras in terms of quantities of products delivered to a record number of TV stations across the U.S. JVC has concentrated its ProHD professional camera line to be cost effective yet entirely professional, in one family of products suitable for HD studio, HD ENG/EFP and HD Hyperlocal. In addition, its compressed streaming output, widely available file-based work flow and instant editing capabilities have propelled ProHD to be the most implemented HD News and HD ENG format among Group Station Owners over the past several years.
Fast Forward to 2017:
New dynamics for Retransmission Fees?
The Author does not claim to be a Soothsayer, but the handwriting seems to be on the wall for a number of issues relating to the future of television. Let’s analyze some of the major issues, going fast forward towards 2017:
How many TV Stations on the air (OTA) in 2015?
The FFC “DTV Spectrum Grab and Auction” of taking 120 MHz from the TV broadcasters in the 600 MHz band is scheduled for transition in 2015, IF Congress goes along passing the appropriate legislation in 2011/2012. It is likely that many non-news TV stations may voluntarily turn in their 6 MHz DTV channels to the FCC for promised compensation and that the remaining TV stations keeping their spectrum will be repacked to accommodate perhaps less than 1,000 TV stations to remain on the air after 2015. (Currently, there about 1,780 full power TV stations OTA across the U.S.) To be a relevant “real OTA” TV station after 2015, the station really needs to deliver substantial local content including HD news, weather, sports and traffic to the local audience.
TV Everywhere rules in 2015
TV Everywhere (at any time) will be largely developed by 2015, expecting to provide live and time shifted access to all prime time and syndication TV programming over the internet/OTT, where the TV Networks may no longer rely on local affiliate TV stations to exclusively deliver network programming. New business models must be developed for the local TV stations which MUST include local content in the form of HD news, weather, sports and traffic, and perhaps mobile television through Mobile DTV and/or through 4G smartphone/ tablet streaming arrangements with wireless providers, and not to forget the increasingly important TV station website.
Fiber-to-the-Home (FTTH) trumps Cable TV by 2017?
The many hundreds of TV channels delivered all the time to Cable TV subscribers through HFC (Hybrid Fiber Coax) delivery systems is a waste of bandwidth, as each subscribing TV household generally and largely limits their regular TV watching within the household to twenty (20) “favorite” channels or less. The 20-channel mix may vary from month to month or from quarter to quarter, but there is no need to present all 500+ channels to each of the STBs in the home, all the time. Telco IPTV does the same, however, both Cable TV and Telco IPTV is now starting to use an emerging technology called SDV (Switched Digital Video) applied to conserve bandwidth from the neighborhood distribution hub to the subscriber home by only delivering that one channel (or those several channels) being watched at any given time. This frees up a large amount of “last mile(s) bandwidth” and makes it possible to supply many more subscribers from each neighborhood distribution hub and/or apply the bandwidth saving to other broadband services.
The STB communicates with the hub, delivering only the TV channel called for by the STB which is controlled by the viewer. This is similar to OTT, where a discreet stream of (requested) compressed video is delivered from the nearest OTT provider hub (being local, regional, or national) with the appropriate unique IP address for the OTT device located in the (requesting) home. The OTT device may be an IP STB, a ROKU box, a HULU/VUDU/Netflix IP capable Blu-ray player, a PC or Mac, or an Internet-capable HDTV set. A majority of TV viewers may in 2017 watch more TV at any one time through OTT/FTTH delivery than through “traditional” MVPD delivery, which may include prime time (first-run) TV shows delivered directly OTT, perhaps bypassing the local affiliate TV stations as the “middlemen”, or at the minimum making affiliate TV stations non-exclusive outlets.
Reverse Affiliate Fees and share of Retransmission Fees
Back in “the good old days”, the TV networks were making handsome payments to their affiliates for carrying the network programming. In recent years, the TV networks have turned the tables by demanding and receiving “reverse affiliate fees” from the stations, and recently demanded a share of the retransmission fees paid by the MVPDs to the local affiliate stations. This continuous pressure exerted by the TV networks to extract ever higher payments from the local TV stations is unsustainable in the longer term, and may be the preamble to the TV networks seeking alternate “OTT channels” of delivery of their prime time programming to the TV homes, at first allowing dual delivery through the “old” affiliates and the “new” OTT channel, but eventually cutting out the “old” and exclusively deliver through a new technology/revenue model. By 2017, it is probable that such a new technology/revenue model will have emerged, where local affiliates no longer can rely on being (exclusive) local outlets for the TV networks.
Future Existence Insurance:
Local HD News, Live HD ENG and Streaming Website
Strong market, technology and regulatory forces will cause material changes to the various TV industry business models over the next five years. A large shift in the way TV is received by the viewers, by a significant decline in “traditional” MVPD delivery to a majority of consumers viewing TV delivered OTT, may actually reduce the total Retransmission Fee pie, as program compensation to the TV networks takes a different form and “middleman” compensation to the local affiliate station may be made redundant. (Discussed above)
“All politics is local”, again quoting the late Tip O’Neill (D-Mass), former speaker of the House, as the Author states that “Most news, weather and traffic of interest is local”. National and international news are provided by the major TV networks as well as by CNN and other cable news organizations, seeking “bundling” with local news to reach maximum audience. The local viewers are first and foremost interested in local news, weather and traffic, thus a local TV station news leader has the foundation for a successful future existence and is best positioned to negotiate profitable relationships as new technology/revenue models and opportunities emerge, whether with TV networks, MVPDs, wireless broadband providers or ISPs.
HD News optimizes short, medium and long term revenues . . . preserves future options
The shorter term opportunities lie in the traditional TV station business model where increased ratings produce increased ad revenues and retransmission fees.
The medium term opportunities, made possible through “full service” local HD news leadership, include maintaining relevancy as an OTA TV station in turn preserving the OTA tool necessary to build out the Mobile DTV and to lead local content streaming OTT, in concert with website success.
The specific long term opportunities are difficult to predict at this time, but it is certain that a local OTA TV station with “full service” HD news, Mobile DTV, local content streaming OTT, and an interactive website has indeed preserved a maximum of future options, compared with a TV station without news and local content.
# # #
Hi and welcome to the JVC Broadcast website. We’re delighted you’re here and like to share the reasons why so many broadcasters have chosen JVC for their transition to HD. Of course the picture quality of a camera and the related workflow is number one on the list of items to be considered when moving to new equipment let alone a completely new format like high definition. JVC was the first manufacturer to understand the coming HD transition and what it was going to mean from a quality and economic point of view for broadcasters. We realized the cost to convert to HD would be an enormous burden to stations considering the need for switchers, monitors, editing solutions and needed infrastructure upgrades necessary to complete the HD build-out and that it was an economic fact of life that the days of $20K to $30K cameras was over.
A BIT OF HISTORY
JVC technology used to produce our latest ProHD broadcast cameras predates back to the very first affordable HD camera produced by JVC. Introduced in June 2003 the revolutionary JY-HD10U camcorder utilized high quality MPEG2 encoding and native 1280×720 resolution. The development of this advanced technology was nurtured by customers with broadcast needs and a vision of the future economic reality broadcasters were facing with the transition to HD. Our customers today, benefit from nearly 10 years of product development of MPEG2 and smaller advanced image processors that have developed beyond expectation. Today MPEG2 is utilized in ENG/EFP cameras from JVC, Sony and Canon and supported by leading editing manufacturers including Apple, AVID, Adobe and Edius. JVC’s vision and years of experience have provided the basis for todays advanced JVC ProHD cameras that have been adopted by the top broadcasting groups and stations throughout the United States.
WHAT MAKES JVC VALUABLE TO YOU
On Air, On Time, On Budget is the nexus that brings JVC ProHD value to our broadcast customers. On Air refers to the broadcast quality imaging that’s provided by JVC ProHD cameras. On Time refers to our native workflow that allows fast editing without the need to ingest or copy files from one media type to another wasting precious time when a story is breaking and On Budget provides broadcasters with both HD studio and ENG cameras that are affordable from a capital expenditure and daily operational perspective.
EXCLUSIVE PRODUCTS FOR BROADCASTERS
Broadcasters working directly with JVC have access to products tailored especially for their needs. The GY-HM700LL, GY-HM750LL and GY-HM790LL, three of our most popular cameras have JVC’s exclusive LoLux feature, enabling them to capture pictures in extremely low light environments. LoLux was developed to assist television journalists when it is not possible to use external lighting. LoLux goes beyond the normal gain boost to produce broadcast acceptable imagery in the most challenging situations.
JVC BROADCAST IS DEDICATED TO SERVE YOU THE BROADCASTER FIRST
At JVC Broadcast we endeavor to provide a blanket of security to your operations to complement our ProHD cameras and monitors with the following:
- JVC owned & maintained hot-swap onsite loaner cameras (for those stations that adapt ProHD)
- Dedicated Broadcast Service Depot offering quick turnaround
- Free overnight shipping into and out of our Broadcast Service Depot (within warranty period)
- Broadcast dedicated & password protected asset tracking website that includes:
* Model purchase history with asset tracking by serial number including service history of camera fleet* Free electronic service manuals, schematics, parts lists, instruction manuals & supplemental Information*Electronic repair request and auto printing shipping label to our Broadcast Service Depot
- Affordable extended factory warranties
- Free Initial Setup and training of all station personnel that utilize ProHD cameras & monitors
JVC Broadcast is dedicated to serve our broadcast customers to insure they receive the full value and security that only JVC Broadcast can deliver. We understand urgency and limited resources and how this can affect your operation and reflection on your station and group. Our entire organization is dedicated to your support from the moment you make the decision to adapt ProHD as your HD equipment choice.
Our website is not just pages with product information. It’s a combination of product information and active blog articles that hopefully bring relevance to your operation and timely topics within the industry. We hope you find our website informative and interesting and please, contact me directly if you have any comments or suggestions. In the meantime enjoy the latest informative addition to our blog, The future is wireless mobile news and with the introduction of our GY-HM600 series, JVC again leads the way with the first wireless ENG camera.
FCC’s “DTV Spectrum Grab” and Auction … and HD News?
Public policy must support national economic expansion, but not damage local employment. HD News operations employ the vast majority of broadcast personnel in major local TV markets.
The Shrinking TV Broadcasting Spectrum
One year ago (March 15, 2010), the FCC submitted the National Broadband Plan (NBP) to Congress and made the 300+page report public. Although the NBP in the preamble talks about broadband in terms of both wired and wireless, it quickly turns into a National “Wireless” Broadband Plan where the word spectrum is the key common denominator in nearly all detailed discussions in the report, and largely meaning “wireless spectrum”. There is NO MONEY for Uncle Sam in the “wired spectrum”, as FTTH spectrum cannot be auctioned off!
The NBP outlines a goal for the FCC to re-assign (or make available) an additional 500 MHz for mobile broadband use within 10 years, of which 300 MHz (in the spectrum from 225 MHz to 3.7 GHz) should be made available within 5 years.
But the real troubling statement for TV broadcasters is FCC’s recommendation on page 76 stating that: “The FCC should initiate a rule making proceeding to reallocate 120 MHz from the broadcast television (TV) bands”.
Look at this Chart. Subject to the FCC being successful in reallocating 120 MHz, the TV broadcasters will have lost 312 MHz or 75% of its UHF channel spectrum from 1982 to 2012. In 1982, 84 MHz was given to the cell phone industry. The 700 MHz band (108 MHz) was removed from the TV broadcast spectrum over several years with completion in 2009 (DTV transition). And now the proposed 120 MHz GRAB and auction in 2012, with proposed transition by 2015. (Recall that UHF channel 37 has been assigned to radio astronomy for many years, and it is located in the FCC Grab 120 MHz spectrum. Thus there are only 17 UHF channels remaining if Ch.37 does not count in the specified 120 MHz FCC Grab.)
The FCC moves to eliminate “Over-the-Air DTV Spectrum” for 682 TV Stations
There are about 1784 “full power licensed” DTV stations operating in the U.S. in 2011, which by spectrum currently breaks down as follows:
Presuming that the FCC is successful in reclaiming the “600 MHz band” (UHF Ch.31—Ch.51 consisting of 120 MHz of spectrum, not counting Ch.37 assigned to astronomy), 682 currently operating full power DTV stations need to be relocated or shut down This is more than 50% of all operating UHF stations.
To relocate all 682 stations to the remaining VHF/UHF DTV bands is a technical impossibility under the current DTV broadcast regulations. This Issue 4 shall not attempt to detail possible long term technical solutions to this problem. Those discussions are for another day.
The solution in the mind of the FCC seems to be to ask TV stations to voluntarily give up their OTA spectrum in exchange for unspecified compensation. Under a full compliance scenario, and where the current OTA ATSC format is maintained, including all current DTV OTA channel assignments below Ch.31 without “squeezing” in more OTA channels in the remaining DTV spectrum, 682 TV stations must “voluntarily sell” their spectrum to the FCC or vacate by other arrangements.
In this scenario, a total of about 1100 ATSC TV stations will be able to remain OTA after the proposed 2015 transition.
Public Spectrum Policy must favor important local economic activities, after nation-wide priority
The FCC creates a definite serious spectrum shortage in the OTA DTV broadcasting field, as a direct consequence of preventing a possible (even unlikely) shortage of wireless broadband spectrum. The Author does NOT believe that we are soon facing a wireless broadband spectrum shortage. As a matter of record, the forecast rapid growth of mobile television/video watching over wireless broadband, used by FCC partly to justify the GRAB of 120 MHz of the DTV UHF spectrum, is so far not materializing. And just consider Qualcomm’s shut down of FLO TV and the very slow adoption by broadcasters to put Mobile DTV on the air.
FCC states in the NBP that the relocation of 120 MHz from the DTV broadcast spectrum to wireless broadband providers will greatly benefit the society and create economic growth in the future years. That is FCC’s primary driver of the spectrum relocation proposal in the NBP. It is obvious that public policy must prefer economic growth over stagnation or inefficient allocation of public spectrum resources.
FCC knows that any major spectrum auction (like the 700 MHz band auction in 2008) is only for larger rich companies. Of the $19 billion in proceeds in 2008, Verizon and AT&T counted for $16 billion or 84%, and #8 (Cellular South) on the winners list paid $191 million for several local spectrum. FCC administers public policy by getting maximum for the spectrum, which shuts out small business.
Public policy obviously trumps equal opportunity for small business in spectrum cases, now that TV OTA spectrum will no longer be in ample supply.
It then follows that, in any given local television market, a larger successful “full service newscast” TV station with 100, 200 or even 300 employees is much more important to the local economy than the “infomercial-rerun” TV station without significant local content delivery and perhaps less than 10 employees. Based on local employee ratio, the “full service newscast” TV station may be over 10 times economically more important than the infomercial-rerun TV station.
Again, it naturally follows from there that, if there currently are twenty (20) OTA (over-the-air) full power DTV stations in a given larger DMA, and IF there are only ten (10) OTA channels available after the FCC has “grabbed the 120 MHz”, the ten (10) largest local economic activity DTV stations should be allowed to continue OTA while the ten (10) smallest local economic activity DTV stations should be OTA de-licensed. This approach seems on its face to be in the best interest of the local economy, by avoiding to interrupt the DTV stations with the highest local employment level. The TEST is purely (local) economic based: What is your annual local payroll? Not program or ethnic oriented. Not whether it is a commercial station or a public station. Not whether news DTV station A is better than news DTV station B.
The only reason for the TEST is that the public spectrum is to be used for maximum positive impact on the local DMA economy in the shorter and longer term. What will the losing DTV station do? (In addition to possible sue?) Accept a mandate that the de-licensed DTV stations must be carried by the local cable or satellite TV system for a minimum time period, and/or device a delivery scheme to deliver their signal by broadband.
Local HD-News operations enable TV Stations to lead local economic growth
A major market TV station with “large scale” HD news operations may contribute to the local economy, just in annual payroll terms, in excess of $20 million, while a smaller “infomercial-rerun/non-news” station’s annual local payroll may only be 10% of that, or even less. It is obvious that the “large scale” HD news stations are much more essential in protecting and growing the local economy than the “infomercial-rerun/non-news” stations. In addition, the HD news stations generally serve a significantly larger local audience OTA in rating terms than do the non-local-news stations. And OTA reach to local TV households is generally materially superior for the much larger HD news stations operating at maximum ERP and HAAT at the long established common TV transmitter location, while the smaller non-news stations may be disadvantaged (by choice) in ERP, HAAT and transmitter location.
Today’s successful and profitable “large scale” newscast TV stations make smart decisions when it comes to replacing the old standard definition camcorders, cameras and newsroom systems, as the recent developments in HD news acquisition, file-based editing and play-out equipment and systems have greatly improved time-to-air, ability to do live HD ENG, and producing for the 3 television screens while capital and operating costs are declining. Just look at the market leading solutions from JVC, where the ProHD camera/camcorder line-up is the choice of more Group TV Station Owners than any other local broadcast-oriented HD product line.
The Los Angeles DMA:
The Nation’s #1 spectrum grab headache
The Author resides in Los Angeles (DMA #2) where the FCC says there are currently 26 full power licensed DTV station on-the-air, of which 16 are transmitting on a “doomed channel” in the range Ch.31 through Ch.51. Remember the saying “you cannot get there from here”? That’s the size of the Los Angeles spectrum problem. The 10 DTV stations NOT on a doomed channel includes KABC-7 (Ch.7), KCAL-9 (Ch.9 partial duopoly with KCBS-2), KTTV-11 (Fox Ch.11), KCOP-13 (MyFox Ch.13 in partial duopoly with KTTV=11), and the recent ex-PBS station KCET (Ch.28).
A large market duopoly operation (like KCBS/KCAL and KTTV/KCOP in Los Angeles) may each employ 200 to 300 persons, and a large portion of those positions are good paying jobs in the talent, newsroom and technical fields. At the other end of the spectrum are the automated infomercial-rerun (non-news/non-local-content) TV stations employing very few, perhaps at lower pay, and not significantly contributing to the local economy. The local infomercial TV stations may run mostly national infomercial programs with much less economic benefit to the local community.
The major Los Angeles TV stations needing relocation (which perhaps should “worry”) include KCBS-2 (Ch.43), KNBC-4 (Ch.36), KTLA-5 (Ch.31), KMEX (Univision Ch.34), KWHY (Telemundo Ch.42), and then KTBN (Trinity religious station on Ch.33) and KOCE (the major/full service PBS affiliate on Ch.48). This means that at least five (5) major commercial newscast stations, all of which are believed to operate at or near maximum allowed ERP, need to relocate to below Ch.31, in addition to KOCE and possible KTBN if it passes the “high-local-employment” test.
There happens to be five (5) non-major/non-news DTV channels currently in operation in the remaining UHF band (Ch.14—30) which are likely to be classified as NOT being material in local economic terms, and all of which are carried by cable. The Author will not mention call letters. As in many other major markets, relocation and possible de-licensing will be a very difficult and messy undertaking. In the LA DMA, there is no OTA transmission on the VHF-low band. The four (4) TV stations transmitting on VHF-high band are all major HD news operations (KABC-7, KCAL-9, KTTV-11, KCOP-13) which will presumably stay where they are. Thus we can presume that the only OTA spectrum in the LA DMA where the “high-local-employment” TV stations can relocate to is UHF Ch.14—30, but only after “low-local-employment” TV stations have “voluntarily sold out” to the FCC or having been de-licensed by other FCC authority.
The Los Angeles DMA impossibility:
Fitting 16 pounds in a 6-pound bag
A total of sixteen (16) TV stations operate OTA in the spectrum to be reclaimed (Ch.31—51) of which at least five (5) have major news operations, one (1) is a large religious station (KTBN), and one (1) is the major PBS network affiliate (KOCE). If we add the ION “movie station” (KPXN), at least eight (8) DTV stations would probably not “voluntarily sell out” to the FCC, but rather be reassigned to the Ch.14—30 UHF band if channels become available.
BUT … there are ONLY six (6) UHF channels licensed in the spectrum Ch.14—30 for the LA DMA, of which three (3) transmit from Mt. Wilson main LA TV antenna farm (Ch.18, 28, 29) while the other three (3) transmit from Ventura County (Ch.24), San Bernadino (Ch.26) and Twenty-nine Palms (Ch.23). Adjacent channel interference is minimized between Ch.24 and Ch.23 as they are about 150 miles apart. Note that co-located adjacent DTV channels (in the same antenna farm, i.e. on Mt. Wilson) generally do not produce adjacent channel interference, thus Ch.28 and Ch.29 are co-existing.
Let’s say that five (5) “low-local-employment” TV stations end up vacating their spectrum for “carrots or sticks” in the Ch.14—30 band, while at least eight (8) stations are “competing” to fill those five (5) channels. The “Local Economic Importance Test” says that the five large commercial HD news stations (most important to the local economy) will be assigned to the five available channels, absent any other “technical solution scheme” by the FCC.
Possible Scenario: The Los Angeles DMA will be served by only ten (10) OTA ATSC DTV stations after the FCC proposed 2015 transition, requiring sixteen (16) currently operating DTV stations to be de-licensed and go off the air. Of the 10, four (4) may be unchanged in the VHF-high band (KABC-7, KCAL-9, KTTV-11, KCOP-13), but who will be re-licensed on the current UHF assignments of Ch.18, 23, 24, 26, 28 and 29? KCBS, KNBC, KTLA, KMEX, KWHY and KOCE are the TV stations with likely highest score on the “Local Economic Importance Test” assigning local public interest priority.
“Common Ownership” FCC Rulemaking:
Only ONE of the Duopoly OTA?
OR Duopoly share ONE OTA channel?
Here is an interesting “discussion point”: In the Los Angeles DMA, there are currently two major duopolies occupying four (4) full power OTA channels: KCBS-2/KCAL-9 and KTTV-11/KCOP-13. Their local news operations are significant, using common resources and in-part talent. In an environment of severe spectrum shortage, is it fair and good public policy to allow both TV stations in the duopoly to maintain separate full power OTA channels? The FCC may NOT think so, particularly when both stations in each duopoly are carried on local cable and satellite TV.
As KCBS-2 needs to vacate Ch.43, a possible FCC “common ownership” mandate for KCBS is to share Ch.9 with KCAL as technically provided for in the ATSC DTV rulebook. Both KCBS and KCAL are currently using 1080i, which, in a 50/50 share of the available net 18 Mbps (gross 19.4 Mbps in one 6 MHz DTV OTA channel), will give each station only 9 Mbps encoded 1080i in MPEG-2 ATSC. This is NOT sufficient to transmit KCBS in network quality HD OTA. “Forced” by the FCC, perhaps owner CBS decides for KCBS to transmit OTA on Ch.9 and for KCAL to just be on cable? Perhaps the FCC will give CBS two options: (1) Both KCBS and KCAL on the same Ch.9, OR (2) KCBS to assume Ch.9. FCC may dictate NO “proceeds share” to CBS, as NO OTA channel is freed up for a third party?
Fox’s KTTV-11 is OTA on Ch.11 while duopoly partner KCOP-13 is on Ch.13. Same FCC two options to Fox: (1) Both KTTV and KCOP on Ch.11, OR (2) KTTV to remain alone on Ch.11 (while KCOP is just on cable). In this case, Fox may receive “proceeds share” as Ch.13 is freed up for a third party.
Fox TV stations are 720p, thus it is possible to operate two HD signals simultaneously at 9 Mbps OTA each maintaining good quality ATSC MPEG-2 transmitted HD signals for both KTTV and KCOP, however, the HD duopoly will consume nearly all of the 19.4 Mbps gross channel bitrate, leaving NO space for Mobile DTV.
Again, the Author points out the apparent advantage of 720p60 over 1080i60, as 9 Mbps encoding is sufficient for progressive 720p60 to deliver fair HD OTA quality, while it is NOT sufficient for interlaced 1080i60.
What about Public Television OTA?
The Los Angeles DMA has four (4) non-commercial public television full power licensees: KOCE (Ch.48—now the exclusive full service PBS affiliate in the LA DMA), KCET (Ch.28—NO longer the PBS affiliate, just resigned), KLCS (Ch.41—Los Angeles Unified School District), and KVCR (Ch.26—San Bernadino Community College District). Obviously, the only full service PBS network affiliate KOCE must have priority OTA, thus it may make sense that one (or both) of the other two (2) PBS stations in the remaining UHF OTA band must surrender their license to first benefit KOCE, and, second, to benefit a commercial station with significantly higher score on the “Local Economic Importance Test”, and the two vacating PBS stations shall then receive a “share of auction proceeds”.
FCC giveth and FCC taketh away:
The 600 MHz Band Spectrum Auction
TV OTA broadcasting over UHF began in 1949, but did not become commercially viable until 1965 when the FCC implemented the regulation that all TV sets sold in the US must be capable of receiving UHF channels 14 through 83 OTA, in addition to the VHF channels. FCC authority was given when Congress passed the “All-Channel Receiver Act” in 1961.
In March 2008, FCC conducted what was labeled the most successful spectrum auction to date, selling 52 MHz (of the 62 MHz offered) in the 700 MHz DTV band for $19 billion. The 700 MHz band (Ch.52 698 MHz—Ch.69 806 MHz) was finally vacated by the broadcasters in June 2009 (the final DTV transition).
FCC’s NBP (National Broadband Plan) released a year ago proposes yet another “spectrum grab” from the broadcast spectrum in the 600 MHz band (Ch.31 572 MHz—Ch.51 698 MHz) for a total of 120 MHz. (Note that Ch.37 is not a DTV channel but has been assigned to astronomy for many years, thus 572 to 698 MHz is actually 126 MHz.). FCC’s logic seems to say that if the 2008 52 MHz auction brought in $19 billion, then a 120 MHz auction in 2012 will bring in proportionally $44 billion. The Author does not think so …
Permitted usage for the 700 MHz (and 600 MHz) band is broad and flexible
We quote FCC’s statement of Permissible Operations for the 700 MHz band as posted on the FCC website:
“The 700 MHz Band licenses may be used for flexible fixed, mobile, and broadcast uses, including fixed and mobile wireless commercial services (including FDD- and TDD-based services); fixed and mobile wireless uses for private, internal radio needs; and mobile and other digital new broadcast operations. These uses may include two-way interactive, cellular, and mobile television broadcasting services.”
“Fixed broadcast uses” and “digital new broadcast operations” are permitted.
There are additional technical requirements, but considering that Qualcomm operated their FLO TV nationwide (primarily in major markets) multi-channel mobile television service on a UHF Ch.55 utilizing a cell-based single frequency network (SFN) of transmitters with ERP up to 50 kW, obviously conforming to FCC technical requirements, “digital new broadcast operations” is permitted. FLO TV is closing down as this is written for lack of public interest. AT&T has agreed to purchase the Qualcomm Ch.55 nationwide spectrum (including related 700 MHz spectrum) for $1.9 billion last month. In round numbers, it appears that one nationwide UHF TV channel (6 MHz) is valued at about $1 billion by this deal.
There are 20 UHF channels available in the 600 MHz band, with permitted usage expected to be the same as for the 700 MHz band. On a nationwide basis, to get a total of $44 billion in one swoop in the proposed 2012 auction, each nationwide 6 MHz UHF channel must sell for $2.2 billion, to proportionally match the $19 billion in proceeds from the 2008 auction for the 700 MHz band. Again in round numbers, the FCC hopes to get about $2 billion for one nationwide UHF TV channel (6 MHz), or double the market value indicated by the Qualcomm-AT&T deal.
Offer it … but will they come?
And who will pay the big bucks?
A part of the 120 MHz spectrum in the 600 MHz DTV band is likely to be set a side for government communications, thus lets assume that a net of 108 MHz will be offered at the proposed 2012 auction. Wireless broadband spectrum is generally offered in paired blocks, as frequency spacing between the paired block is required to prevent interference by the downlink transmitter into the uplink receiver, generally cell tower mounted side-by-side. Accordingly, unless the FCC make special provisions for single 6 MHz spectrum blocks “upon request”, the 108 MHz band holds 18 single 6 MHz blocks, or 9 paired blocks of 12 MHz (2x 6 MHz). Fewer larger blocks may be offered by FCC, but as we are primarily in the TV business, let’s in here operate with 6 MHz “channel” blocks. As a nationwide TV UHF 6 MHz channel seems to be worth a minimum of $1 billion (established by the AT&T-Qualcomm deal) and a maximum of $2 billion (established by the 700 MHz band 2008 Auction), while paired blocks (each pair 12 MHz) seem worth between $2 billion and $4 billion. The average worth for the nationwide 108 MHz seems then to be about $27 billion, as average value per 6 MHz channel is $1.5 billion.
Although single 6 MHz blocks may be offered in nationwide packages, most wireless broadband paired blocks are historically often offered by regions (i.e. Midwest, Northeast, etc.) or by metropolitan areas. Thus any FCC auction participation for large spectrum chunks are often complicated and requiring lots of preparation.
So, who will bring the $27 billion checks in 2012?
Verizon CEO Seidenberg stated in 2010 that there may NOT be a spectrum crisis anytime soon. Seidenberg is not likely by that statement to bring any big checks, like the $10 billion he brought FCC in 2008. AT&T, expecting to just have closed the T-Mobile acquisition (see “Stop the Presses” below) and paid out at least $25 billion to Deutsche Telekom before the proposed 2012 auction, is not expected to spend big on spectrum in 2012. Sprint is not cash rich. None of the Big 3 wireless providers support a 2012 auction for the 600 MHz band. They all want to wait, in the Author’s opinion, and the FCC already recognizes this problem.
It seems to be an opportune time for the major TV broadcast networks and the likes of Google, Microsoft and Apple to buy nationwide UHF channels for a reasonable price. Even if the Big 3 wireless providers do show up collectively with $10 billion (each buying a paired block), 12 single 6 MHz nationwide channels remain for the TV broadcast networks and others to buy for $1.5 billion each (?).
Will the major TV Networks each buy a nationwide TV channel?
Imagine, to prepare for a future OFDM-based nationwide OTA TV delivery to replace the current ATSC/DTV OTA operations, ABC, CBS, Fox and NBC each buying a 6 MHz nationwide TV channel in the upcoming 600 MHz band auction? And, additionally, Univision and others may throw their hat into the ring, even some of the big cable channels? It’s possible.
Will Google, Microsoft, Apple buy a nationwide TV channel?
Google TV? MS TV? Apple TV? Collectively, these three giants have cash holdings exceeding $130 billion. Imagine a future Google TV set-top-box with a built-in OTA tuner/receiver to not only receive the new nationwide Google TV channel (or MS or Apple), but also possible future OTA OFDM TV channels transmitted by others. A partnership with the major TV networks? If Google, MS and/or Apple sell the $99 STB with built-in OFDM OTA TV receiver, such may enable a relatively rapid adoption by the TV households of a new digital OTA TV broadcast delivery of the major TV networks. It’s possible.
Will Verizon, AT&T, Sprint buy most of the 600 MHz band?
Verizon has spent in excess of $15 billion over the past 5 years on spectrum, inclusive of nearly $10 billion spent buying 700 MHz spectrum in the 2008 auction. AT&T has also spent in excess of $15 billion over the past 5 years, including nearly $7 billion in the 2008 auction and the $1.9 billion for the Qualcomm spectrum last month. Sprint has invested about $10 billion while T-Mobile has invested about $5 billion according to Author’s estimation. Not likely.
Stop the Presses:
AT&T is acquiring T-Mobile for $39 billion
AT&T announced on March 20, 2011 it is buying T-Mobile USA from the German parent for $39 billion, subject to regulatory approvals. It may take as much as one year to close the deal. At least $25 billion will be in cash, with balance paid in AT&T stock such that Deutsche Telekom will own between 5 and 8% of AT&T. This acquisition will seriously affect AT&T’s cash position and lines of credit, thus it is likely that AT&T will come to the FCC’s proposed 2012 auction with “limited cash” to spend. As a matter of speculation, AT&T may quietly (behind the scenes) push any 600 MHz auction out to 2013 or even 2014 which may also suit Verizon.
FCC to share auction proceeds with 682 “doomed” TV stations?
We have established that 682 licensed full power DTV stations (of a total of 1,784) must be taken off the air in order to maintain the current ATSC-DTV 6 MHz assignment of 12 VHF channels (54—72/76—88/174—216 MHz) and 17 UHF channels (470—572 MHz) without any efforts to repack or squeeze in more ATSC-DTV channels than the current 1,102 DTV licenses assigned those remaining 29 channels nationwide. To significantly expand the number of VHF OTA licenses is not a viable option, and channel sharing will reduce HD OTA picture quality and eliminate bits for Mobile DTV (unless a whole new OTA OFDM transmission scheme is implemented, which will take a decade).
The value of voluntarily relinquishing full power DTV licenses:
It is not important whether the 682 DTV licenses to be “voluntarily relinquished or recaptured” come from below Ch.31 (the remaining VHF/UHF channels) OR from above Ch.30 (the 600 MHz band to be auctioned), OR from a combination of below and above. In a given DMA, the “relinquish value” of a “below Ch.31 license” and a “above Ch.30 license” should perhaps be the same. A DTV license relinquished on Ch. 24 means that a DTV licensee above Ch.30 wishing to remain OTA may relocate to Ch.24. However, the value of a 6 MHz slice of spectrum in Los Angeles (DMA #2, 5.7 million TV Households) is multiple times higher than the value for the same slice in Johnstown-Altoona (DMA #102, 294,000 TV Households).
Sharing Proceeds DMA-by-DMA:
A wholesale reassignment and repacking of DTV licenses across the U.S. will be very costly, complicated and time consuming. Time is of the essence, thus DTV channel vacation and reassignment should first be attempted DMA-by-DMA.
Chicago (DMA #3—16 licensed DTV stations) has eight (8) DTV stations located above Ch.30, while New York (DMA #1—23 licensed DTV stations) has eleven (11), and Los Angeles (DMA #2—26 licensed DTV stations) has the most of any DMA with sixteen (16) DTV stations located above Ch.30 probably making it the most difficult DMA to clear just with “incentive proceeds sharing”. With only ten (10) currently operating DTV licenses below Ch.31, sixteen (16) DTV OTA licenses must be retired to maintain the “status quo” of ATSC-DTV in Los Angeles. This is a local problem which must be solved locally, as a “voluntary vacation” of a DTV station anywhere else will NOT help Los Angeles. It will take a lot of incentive funding to have 16 DTV stations (out of a total of 26) in one DMA surrender their licenses. That is why each DMA must be handled as a separate issue, but with sharing of nationwide proceeds proportional to size of the DMA and to number of licenses requiring to be retired. The top “DTV OTA spectrum problem DMAs” are:
NO sharing of proceeds with DTV stations in DMAs where NO station occupies any channel above Ch.30?
To share in the auction proceeds should be limited in each DMA to the number of DTV licenses required to clear the 600 MHz DTV spectrum for that DMA. The logic and fairness here is that there is no local need for any vacated 6 MHz spectrum. 28 DMAs are void of “above Ch.30” licenses, with the highest rank being Corpus Christie, TX at DMA #129. This will eliminate a lot of administrative services and frivolous compensation for voluntary license surrender where such surrender does not result in another station remaining OTA. The exception is if such surrender will enable a neighboring DMA to use the channel.
Will Congress act in time?
The 112th Congress convened on January 3, 2011. At least three (3) Spectrum related bills introduced in the prior 111th Congress expired at the end of that term, as they were never voted on. The following new and re-issued spectrum bills have been introduced since late January:
- S.415 (The Spectrum Optimization Act). A 4-page bill by Sen. Warner (D-VA), it would give the FCC the authority to conduct auctions of voluntarily relinquished spectrum, and proceeds being shared with relinquishing licensees
- H.R.911 (The Spectrum Inventory and Auction Act of 2011) introduced by Rep. Barrow (D-GA), requiring FCC to conduct a “spectrum inventory and public report” before any auction.
- S.455 (The Reforming Airwaves by Developing Incentives and Opportunistic Sharing Act – “RADIOS Act”). A re-issue bill by Sens. Kerry (D-MA) and Snowe (R-ME) which original bill died in the prior Congress. By far the most detailed, at 51 pages.
It is now April. Congressional campaigning for the November 2012 federal elections (including the presidential election campaign) will start by November 2011 (just about six months away), after which no congressional candidate will commit to difficult political positions. There are still millions of voters getting free TV OTA! A candidate’s support for future elimination of free TV OTA will not be a beneficial position in any campaign. Congress is not likely to act in time, as the major commercial interests including trade organizations on the telecom side may not want a 2012 auction after all.
Read my lips: NO 2012 Spectrum Auction
The Author believes that there will be no 2012 600 MHz Band Spectrum Auction, for the following reasons:
- Congress will NOT pass any bill in time this year permitting the “spectrum grab” and any immediate 2012 auction (in part due to the Republican-controlled House not wishing for the Democrat-controlled Senate and Administration to get “2012 election brownie points” for possibly bringing in many billions of dollars to the Treasury)
- Verizon is not likely to bring any really big checks to any 2012 auction, because CEO Seidenberg stated in 2010 that there may not be any (wireless broadband) spectrum crisis anytime soon. (Verizon has 32 MHz of 700 MHz band spectrum near nationwide)
- AT&T is not likely to bring any really big checks to any 2012 auction, because AT&T will just have paid out $39 billion in early 2012 to close on the acquisition T-Mobile USA, after a long governmental approval process, and because AT&T just acquired nationwide 700 MHz spectrum from Qualcomm which lifts AT&T near nationwide 700 MHz spectrum holdings to 32 MHz, equal to Verizon’s.
- Sprint may wish to buy some 600 MHz spectrum, but, with less cash available, may not see fit to spend the many billions of dollars required to buy enough to make sense, and Sprint’s investment in Clearwire/Clear enables Sprint to use part of the 150 MHz owned by Clear in the 2.5 GHz band
- Google may come to the table if there is an 2012 auction, but is not likely to encourage the FCC for a 2012 auction. (Microsoft and Apple may be less interested in acquiring nationwide spectrum)
- The major TV networks may come to the table if there is an 2012 auction, but will not encourage the FCC to hold a 2012 auction
When will the 600 MHz auction happen? Probably in 2013, and with still time for the TV broadcasters to lobby Congress and the FCC. It always takes longer to restructure major government-licensed industry segments. FCC proposes a final 600 MHz band transition to wireless broadband by 2015. The Author suggests 2020, and the “spectrum overhaul” includes provisions for a new “free-over-the-air” TV delivery system for homes and mobile.
Eight (8) more years of ATSC:
Let’s presume that the TV broadcasters and the FCC agree on one issue: The ATSC 8-VSB OTA format will stay as is through this decade, to protect the many billions of dollars worth of television sets with built-in OTA ATSC tuners so far purchased by the consumers (and still being sold) and to prevent the waste and consumer headaches associated with yet another “NTIA set top box coupon program”. And if they don’t agree, it will take through this decade anyway before a new OTA broadcasting format is implemented. We have eight (8) more years of ATSC 8-VSB OTA, so let’s use the remaining OTA spectrum (after any FCC DTV spectrum grab) in the best possible way: “In the Public’s best local interest, according to Public Policy by applying the Local Economic Importance Test”.
Local HD News earns OTA channel?
The overall local TV station business model for success does not change. Maximum audience share requires local HD news, live HD-ENG, weather and traffic. And the substantial payroll required for a large local TV station doing full newscasts, often with hundreds of employees, wins the Local Economic Importance Test (as compared with the infomercial/re-run station) and thus gets priority for the limited OTA channels available. It’s clearly Public Policy at the local level.