[opendtv] Re: Destruction of the OTA Broadcast Franchise

  • From: "John Willkie" <johnwillkie@xxxxxxxxxxxxx>
  • To: <opendtv@xxxxxxxxxxxxx>
  • Date: Mon, 24 Nov 2008 09:41:18 -0800

Craig;

The version I am familiar goes "Do not ascribe to conspiracy that which is
better explained by incompetence."  It's also important to keep in mind the
difference between efficiency (doing the job right) and effectiveness (doing
the right job.)

Also, I do believe that the NAB knew, at the beginning of the ACATS process,
that 1) digital was around the corner and 2)broadcast tv was mature.

ATSC was founded in 1982, with NAB, SMPTE and others as founders.

I'll leave beer and the rest of the history lesson to you, and I don't agree
with your analysis or that of cable-needy bert on much, so ...

But, I am happy to see this diverted from confusion, conspiracy and similar
thoughts in which the untutored were wallowing.

John Willkie

-----Mensaje original-----
De: opendtv-bounce@xxxxxxxxxxxxx [mailto:opendtv-bounce@xxxxxxxxxxxxx] En
nombre de Craig Birkmaier
Enviado el: Monday, November 24, 2008 9:23 AM
Para: opendtv@xxxxxxxxxxxxx
Asunto: [opendtv] Destruction of the OTA Broadcast Franchise

I have change the subject for what is becoming an interesting and 
relevant thread...


At 7:43 PM -0800 11/23/08, John Willkie wrote:
>It occurs to me that you guys are largely confusing "creative destruction"
>with "destruction."
>
>It was plainly the case that a forced conversion to digital television from
>analog (the U.S. implementation of same) was going to change "television
>broadcasting as we knew it."
>
>This is running alongside the accretion of what used to be the whole
>enchilada to the wider selections of cable and satellite. 
>
>I would offer that if the transition hadn't been launched, that television
>broadcasting would be in worse shape now than it is.  There is uncertainty
>in the transition, sure.  There is also the power and flexibility of one or
>more toolkits to make television something that it could never be in the
>analog world.
>
>And, it's plainly ridiculous to assert that the NAB intended, through the
>transition, to destroy television broadcasting.  They clearly represent the
>views and intentions of television broadcasters.  Sure there are unintended
>consequences, but the greater risk was doing nothing.


I have been reminded many times that we should "Never ascribe to evil 
intent that which can be adequately explained by stupidity."

Perhaps "stupidity" is not the best word to use here. For this 
discussion I think it would be more appropriate to replace stupidity 
with "opportunism."

There is little doubt that the "original intent" of the NAB proposal 
to develop an ANALOG high definition TV service was an offensive 
tactic to protect the broadcast spectrum from those evil land mobile 
interlopers. The need for HD was viewed as a way to permanently tie 
up the spectrum using an analog augmentation scheme. I doubt 
seriously that the any broadcaster, or the leadership of the NAB, had 
a clue that DTV was lying just around the corner. These folks 
believed that the sheer size of the problem - enlarged by the move to 
HDTV - would protect video technologies from the threat of 
digitization for decades. OK, so I guess you could say this was 
stupidity...

But in the late '80s I believed that too. Pcube was an acronym for 
the Personal Picture Processor, a computer based controller - with a 
graphical user interface - that would rely upon videotape machines 
and hardware-based image processing to create content.

Like the broadcasters, the first demonstrations of "broadcast 
quality" digital video compression in 1990 caught me by surprise. But 
that revelation also forced me to rethink virtually all of my 
assumptions about the future of video processing, the evolution of 
video production tools, and the way video would be distributed. I 
immediately latched onto video compression as the core of my new view 
of the world, and made a career out of helping real innovators 
develop the computer-based tools for content creation we all use 
today.

Broadcasters collectively yelled - "Oh Shit" - and started building 
roadblocks to the digital transition, even as Al Sikes told them to 
develop and transition to a DTV standard. First they co-opted the ISO 
MPEG process, entrenching all kinds of unnecessary IP into the 
standard so that they could use interlace as a barrier to 
"convergence." Then they formed a Grand Alliance to drag out the 
process by an addition three years. Whether they intentionally 
saddled broadcasters with a dysfunctional modulation standard is open 
to debate. Having been there and participated in this phase of the 
development of the standard i would simply ascribe this to 
Intellectual Property opportunism.

For broadcasters, the DTV transition has been a necessary evil to 
keep the service viable a bit longer while they cash out on the real 
deal.

Bert has it exactly right - when broadcasters were granted the right 
to negotiate for retransmission consent payments from cable in 1992, 
the value proposition of the OTA broadcasting franchise was 
dramatically transformed. Unfortunately, most local broadcasters did 
not understand how they were being used by their networks to 
undermine their future viability. For most it did not matter; they 
knew that their precious franchise would remain highly profitable for 
another decade or two, and they they could plan a comfortable 
retirement.

Network affiliates turned over the keys to their future, allowing the 
networks negotiate the first round of retrans consent contracts. The 
networks - other than CBS - used this leverage to rebuild their 
empires, creating new outlets for sports, news, and off-network 
programming. By the end of the '90s the five media conglomerates (the 
four networks and Time Warner) controlled 90% of everything we 
watch...again.

With control of content once again, the media conglomerates used 
retrans consent to get out from under affiliate compensation. Soon 
they will be demanding a cut of the cash the stations get from the 
current round of retrans consent payments. And any hope for success 
for the new mobile service is likely to be linked to what the 
stations will have to pay for the rights for content for this service.

As for the news franchise, it is dying. It is amazing that multiple 
stations in a single market are still in the news business. Multiple 
newspapers in a market died generations ago, and now the future for 
newspapers seems certain...death.

The only reason that TV news - in its current form - has survived is 
the high profit margins that network affiliates enjoy in major 
markets. It is difficult to image having more than one large news 
organization in a market a decade from now.

As for the NAB, it is finally losing its leverage in D.C. The 
spectrum is more valuable to the politicians as a source of new 
revenue.

One need only look at the raw numbers for the networks and local 
broadcasters to see why the politicians are drooling, and why the 
networks want to cut out the affiliate middlemen.

Local broadcasters haul in nearly half of the total revenues of the 
broadcast industry; if you add the revenues from network operations 
and a networks O&O's it may represent about two thirds of broadcast 
revenues. The networks want all of that revenue, and the politicians 
look at what they gave away and say "we want it back," or at least a 
decent cut. Auctioning the spectrum for new uses is the easiest way 
to get that cut, AND they get the money up front to spend NOW.

I saw a story today that the Obama administration is not likely to 
re-introduce the Fairness Doctrine - it might muzzle everyone, not 
just talk radio. Instead, the FCC may place very significant localism 
demands on all broadcasters. This would serve two purposes:

1. To reduce or eliminate a significant portion of national content 
from the networks and syndicators.
2.  To make the business unattractive from a profitability viewpoint, 
making it easier to reclaim the spectrum.

All in all brewing beer seeks much less risky, although the 
regulations and licensing are a major barrier to profitability.

Regards
Craig


 
 
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