iBlast’s new $10.2 million funding from its strategic broadcast partners signals the company is alive and well despite an economic and advertising slowdown that is dampening TV stations’ interest in going digital.
While the slowdown has pushed back iBlast’s timetable nine months, the Los Angeles-based company continues to prepare for a national wireless digital distribution network rollout next year, according to Michael Lambert, co-founding chairman and CEO.
EM: How have you used your initial $40 million in funding from partners such as Tribune Co., Gannett Co., Cox Broadcasting, The Washington Post, E.W. Scripps, Meredith Corp. and McGraw-Hill Co.?
Mr. Lambert: The original funding allowed us to build out the fundamental technology that allows datacasting to take place. That culminated in a five-market test for about three months in which we delivered files end-to-end from our operating center in Beverly Hills by fiber-optic down to Marina del Rey [Calif.], where we used a British Telecom uplink to broadcast to the Pan Am Sat Galaxy satellite. We received the signal at stations in Orlando [Fla.], Phoenix, San Diego, San Jose [Calif.] and Los Angeles, and then rebroadcast it, mixing the data stream with the digital pictures.
Since that successful alpha test, we’re now building applications on top of the network. We’re making it possible for companies to provide specific content to support game, music and video-on-demand services. The new funding will allow us to launch a modest commercial service by mid-2002.
EM: How are you being hurt by a weak economy and ad market?
Mr. Lambert: We are being affected by more sluggish financial markets and economics that are making everyone in our industry more risk-averse. While we have the funding we need, we find that other companies we would engage with aren’t so quick to take the risks. Consumers are not as ready to jump on new services or devices as they used to be.
EM: How ready are broadcasters for your service?
Mr. Lambert: There are 160 stations broadcasting digitally today in the U.S. We have about 60 member stations already built out and broadcasting digitally. That’s plenty for us right now. We wish we had customers to receive it. We have 14-year agreements with stations that are intact.
Our expectations are more modest now. Originally we expected that the adoption of digital television would take place faster than it has. We thought the makers of digital receiving equipment would be more aggressive than they are. There has been a slowdown because of the standards issue and the economy. So we are nine months to a year behind plan because of it. The raising of this new round of funding is protection against several years of a difficult economy.
So we still hope for a modest, targeted launch of a service that will be profitable in about 31/2 years.
EM: Could the struggle of smaller broadcasters-some of them your own members, such as Ackerley and Cosmos-further hinder your progress?
Mr. Lambert: There is room for another wave of industry consolidation among some of the smaller, independent television companies. There eventually will be fewer, larger groups that will be better partners because they will be better able to finance the digital build.
EM: What will your rollout service look like?
Mr. Lambert: It will be a multimarket, over-the-air service that will allow you to receive content in a PC in specific categories. We are talking to two different companies about delivering end-to-end services. But we’re not ready to announce that or the markets yet. Other companies will be targeted to provide our service through a set-top box.
EM: Did the demise of Geocast have an impact on iBlast?
Mr. Lambert: We bought a lot of their equipment and acquired a good many of their underlying assets. We’re very respectful of Geocast. They started three years ago, when it was harder to do this. They invented it from scratch, and now a lot of the same technology is available on the shelf from third parties.
This is an example of yet another technology whose time, we think, is about to come. We’re panning for gold and we’re trying to find ways for broadcasters to make money off their new digital spectrum.