[opendtv] Re: News: Those licenses will soon be worthless...

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Sun, 24 Apr 2005 08:58:24 -0400

At 11:18 AM -0700 4/23/05, John Willkie wrote:
>One is reminded to consider what happened to the value of the (once labeled
>as worthless) radio licenses when TV took over.  Sure, there was a dip of a
>few year's duration, but when one looks at the strip chart, it's hard to see
>the dip now, considering the essentially contiunally uphill trend in the
>value of radio licenses.
>
>As we discussed at lunch the other day: the majority of the value of
>broadcast licenses is the programming contracts, the local content, and the
derived goodwill.

Unfortunately, comparing radio and TV broadcasting is like comparing 
apples and orange elephants. These world have little in common, as 
one would quickly understand by listening to the radio promo ads - 
the ones that tell us that radio is the ONLY free entertainment 
medium today.

The dip in radio listening was primarily caused by the migration of 
entertainment programming from radio to TV. When all of the radio 
stars moved to TV so did the audience; at that point radio had to 
evolve to find its true audience. One of the most important aspects 
of that evolution turned out to be mobile/portable reception.  While 
radio still serves fixed receivers, the major source of revenues is 
drive time, when the audience is very large. The growth of talk radio 
seems to fly in the face of the long term trends for radio, as it is 
a move back to a program format (you must tune it a a specific time) 
rather than a generic vertical market format such as rock, country, 
hip-hop etc.

TV Land is very different. Back in the days when we had only 4-5 
program choices (all OTA broadcast) television thrived. But the 
ability to bypass the broadcast gatekeepers changed the TV medium 
forever. Multi-channel TV services provided something that TV 
broadcasters could not: CHOICE. And they provided something that TV 
broadcasters cannot: easy plug and play installation with a 
consistent quality of service (not as good as a perfect NTSC 
broadcast, but on average, much better than typical off-air 
reception).

This works for many reasons, but one of the most important is that 
most televisions are used in a fixed location. Portability and 
mobility are possible, but not critical to the success of the medium. 
To make things worse, TV broadcasters have become reliant on their 
competitors to deliver their programming. As a result, the use of the 
spectrum for the delivery of TV programming is now a huge waste of a 
scarce resource.

Ironically, technology has now evolved to the point that what we 
believed to be "the rules of the game" have now changed. Satellite 
radio is now beginning to challenge terrestrial radio broadcasts in 
much the same way that cable challenged TV broadcasts. The satellite 
services offer improved reception in areas that are poorly served by 
terrestrial broadcasts, and they offer improved choice and NO 
COMMERCIALS on many channels. Terrestrail radio broadcasters are 
responding in a highly visible way - with the PR ads about radio 
being free. But MORE important, they are responding in a competitive 
way, cutting back on the number of commercial minutes per hour.

Meanwhile, the technology now exists to make mobile and portable 
reception of TV and data broadcasts both feasible and reliable. This 
represents an opportunity for terrestrial TV broadcasters to serve a 
market that the multi-channel services cannot.

In the end, most of the recent criticism of broadcasting (both radio 
and TV) is centered on the business model, not the technology. Both 
media are said to be dying, because the advertiser supported model 
for paying for content is dying.

I am not among those who beleive that the advertiser supported model 
cannot be sustained. What cannot be sustained is the notion that we 
must pay twice for advertiser supported content, with the ads, and 
subscriber fees as well. We are seeing a resurgence in interest in 
terrestrial TV broadcasting in Europe, when viewers are offered 
reasonable choice WITHOUT subscriber fees.

ON the other hand, the USDTV model is predictably failing here in the 
U.S., just as On Digital failed in the U.K. There is little interest 
in a paid service that does not deliver sufficient choice. People who 
are willing to pay, will pay a bit more for a service that offers the 
content they want to watch.

Broadcasters have lived in a world that has been largely devoid of 
real marketplace competition. They still queue up to the microphones 
to plead with the Congress critters to protect them. "Make those 
satellite radio broadcasters live up to their agreement NOT to 
provide local content." "Make the cable and DBS services carry our 
DTV multicasts." And make competitors PAY for the content that we 
offer for free to consumers who are willing to buy an OTA receiver.

This is why broadcasting is dying.

Regards
Craig
 
 
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