`Tricky transformation’ to digital TV looms

May 28, 2001  •  Post A Comment

An embattled Eddie Fritts defended his National Association of Broadcasters here last week as a necessary check on government intervention and a helpmate to broadcasters, who must find a way to use a new digital spectrum to their economic advantage.
The NAB president and CEO, who is reeling from the recent defection of CBS, NBC and Fox from the group, said the big issue for broadcasters is “the transition to digital television.”
“Our very future rests on completing this tricky transformation,” Mr. Fritts said in a keynote speech last week at the Broadcast Cable Financial Management Association’s annual conference.
Although there are 195 stations in 65 markets transmitting digital signals to 68.5 percent of U.S. television homes, Mr. Fritts said few consumers are tuning in.
That is why the NAB is calling for government-mandated digital must-carry, TV sets manufactured with digital tuners, and digital broadcast and cable interoperability.
“One year from now, every commercial television station is required to have a digital signal on the air. In light of the unresolved issues, this is a very unrealistic deadline,” Mr. Fritts said.
During this time of economic uncertainty and advertising softness, small broadcasters in particular “face a huge investment without any guarantee that the investment will pay off for a very long time,” he said.
Mr. Fritts’ remarks stood in sharp contrast to sentiments expressed by analysts on an opening-day panel who questioned whether broadcasters, even under the best circumstances, could be prepared to capitalize on their digital spectrum in a year.
James Marsh, analyst at Robertson Stephens, says broadcasters’ interests have quickly turned from how to use their digital spectrum to focusing on their core business in “a retrenchment mode.”
Interactive services through direct broadcast satellite and wireless devices loom with competitive near-term offerings.
“I see the window closing for broadcasters. Cable and direct broadcast satellite are making a lot of headway. I think the window’s going to be slammed shut before they [broadcasters] can even get their act together,” Mr. Marsh said.
Mark Fratrik, vice president of BIA Financial Network and the former head of research at the NAB, blames broadcasters’ general complacency on having a safe, reliable and unchallenged franchise. “Broadcasters have not been forced to think outside the box and to be entrepreneurial,” he said.