I predict!

Dec 30, 2002  •  Post A Comment

Phillip Swann
What a year. Technology stocks dropped faster than Mike Tyson did in the Lennox Lewis fight. TiVo, the digital video recorder service, generated more news stories than subscribers. And Gemstar founder Henry Yuen discovered he could read an on-screen guide but not the handwriting on the wall: partner News Corp. forced him out after a series of missteps and accounting problems.
Thanks to the down economy, in 2002 every day was Friday. Black Friday.
But we are entering a new year with new optimism. Economic experts-if there really are such a thing-say the U.S. economy should return to health by mid-2003 if not sooner.
In addition, new TV technology companies in cable and satellite are planning to launch or expand a variety of new services, such as video-on-demand, high-definition TV and digital video recording.
With everyone’s spirits soaring-and I don’t mean from last week’s egg nog-I will boldly make some predictions for “The New Television” in the coming year.
Here goes:
Rupert Murdoch’s News Corp. will buy DirecTV: Murdoch, who also owns Fox (“Malcolm in the Middle”) and The Los Angeles Dodgers (weak up in the middle), will likely make an offer for the satellite TV service in early 2003. The deal will be sealed next year, but I predict that things won’t go smoothly.
Murdoch, who lobbied against the EchoStar-DirecTV merger, is still bitter that Hughes (DirecTV’s parent) rejected his offer in 2001. Now with EchoStar out of the picture, Murdoch will try to bully Hughes into accepting a low-ball offer.
Hughes will resist, of course, which could lead to protracted talks and possible alternative bids from companies such as Liberty Media.
More companies will merge or sell out: This recession has taken a bigger toll than the Garden State Parkway. Small TV tech companies, whose stocks have plunged along with their bottom lines, are struggling to make ends meet. By 2003 many of them will concede the point and initiate merger and/ or buy-out talks. Which brings us to …
A large media company will buy TiVo: I predict that a company such as Sony will purchase the DVR service in 2003. Despite having fewer than 600,000 subscribers, TiVo has done a tremendous job of promoting the company’s name. Many Americans who don’t even own a DVR-or plan to buy one-now know that when you “TiVo-ed” something, it means that you recorded a TV show.
However, TiVo’s cash reserves are dangerously low and the company faces stiff competition from several new unbranded DVR services. TiVo needs a rich daddy-and soon.
Hollywood and the tech industry will reach a digital TV compromise: The networks and studios have been lobbying Congress for a law that would block the consumer’s ability to make digital copies of certain shows. Hollywood is concerned that some viewers might make thousands of copies and illegally sell them on the black market.
Entertainment and consumer electronics officials have been trying to reach a compromise that would protect the studio’s copyright without making current digital TV sets obsolete. (If the law is passed, it could make it impossible for current HDTV owners to record any digital feed.) I predict that the two groups will reach a compromise in 2003. The agreement will ensure that consumers will not be able to make an unlimited number of copies without paying a fee.
However, it will protect the consumer’s right to make a recording for his or her own use in the home. Many Americans have been reluctant to buy a current HDTV until this fight is settled. However, the agreement should eliminate that concern for most.
Sports will drive HDTV sales: For some reason, most retail stores broadcast HDTV nature shows on display sets. I have never understood this. No one is going to spend several thousand dollars to get a clearer view of the Albanian bumblebee, particularly men, which is the target audience for the HDTV manufacturers.
The stores should broadcast Mark Cuban’s HDNet sports channel because sports can-and will-drive HDTV sales. For instance, in 2003, ABC will broadcast the Super Bowl in high-def, and ESPN plans to begin HDTV broadcasts of NBA games. When sports fans see these games in high-def-either at retail or someone’s home-they will be hooked.
There’s a precedent for this. DirecTV began its meteoric rise in the mid-1990s when it added the NFL Sunday Ticket, the exclusive package of pro football games. Sports can create the same effect for the HDTV industry.
Phillip Swann is president and publisher of TVPredictions.com. He can be reached at Swann@TVPredictions.com.