HDTV Stymied by Local Signal Issue

Feb 16, 2004  •  Post A Comment

There’s no question that high-definition television has grown massively in acceptance and availability over the past year. But beneath the hype of the television industry’s patting itself on the back for delivering the crisp, lifelike 3-D pictures to consumers is the stark reality that the technology’s path to mass consumer availability is anything but smooth.
This year’s Super Bowl, the telecast of which was available in HD and was watched by more than 143 million total viewers, according to Nielsen-illustrated how thorny the issue of HD accessibility is. While 143 of 210 cable markets now carry HD signals reaching 70 million homes-a 90 percent increase since the beginning of 2003, according to the National Cable and Telecommunications Association-some of those cable systems have yet to reach agreements with local TV stations to carry their HD channels.
In fact, it seems unlikely that many deals will be finalized in time for March Madness, the next big televised sporting event, also to be carried on CBS. The battle could last a while.
Nearly 1,200 local stations are now offering digital signals, but only 300 of those are carried by cable systems, according to the National Association of Broadcasters. Not all of those digital signals are in HD, said NCTA spokesperson Rob Stoddard.
Some local stations, most notably those owned by Emmis Communications and Sinclair Broadcast Group, want to be paid by the cable operator for their HD signals; cablers don’t want to pay.
“We’re going to hold out until we get what we want. We want cash compensation,” said Jim McKernan, VP and general manager of Emmis-owned CBS affiliate KMTV in Omaha, Neb., which stopped providing its HD signal to Cox at the end of last year.
Mr. McKernan said only 2,500 of Cox’s 66,000-digital customer base in Omaha receive HD programming. That’s a small number now, but he believes KMTV will have more leverage as the customer count grows and consumers demand HD programming from local broadcasters.
KMTV has spent close to $3 million to upgrade its facility to handle digital transmission and plans to spend another $3 million on production equipment to produce local news and programming in HD in the coming year.
Comcast President and CEO Brian Roberts has said publicly that Comcast does not intend to charge for additional content such as HDTV and video-on-demand. Though Comcast does charge about $5 per month in the 48 markets where HD service is available, representing nearly 75 percent of its customers, that fee is for the box, not the programming, Comcast said.
HD for Free?
Comcast had agreements with local stations to carry CBS in HD in 39 of those 48 markets as of the Super Bowl.
Comcast has yet to strike a deal with Sinclair-owned CBS affiliate KOVR-TV, Sacramento, Calif., for instance. Sinclair has been adamant that it will not give its HD signals away for free.
Sinclair has spent more than $150 million to upgrade its 62 stations to digital, said Barry Faber, VP and general counsel for the station group. “Sinclair is not going to provide its digital signal to the major MSOs absent compensation,” he said. “What form that compensation will take is an open question. It doesn’t have to be cash. We’re flexible as to what it could be.”
A possibility is passing through most content in HD free of charge, and assigning a value to “premium” content such as the Super Bowl and other major sporting events that broadcasters carry, he said.
If the cable operators didn’t cave during the Super Bowl, they won’t now, said Bruce Leichtman, president of Leichtman Research Group. Local stations do not have any leverage because cable operators will simply not pay for carriage of HD channels, he said. Comcast has set the tone, and the rest of the industry is following suit, he said.
Broadcasters have traditionally lost retransmission deals, said Chris Rohrs, the president of the Television Advertising Bureau who previously served as a general manager for Meredith-owned CBS affiliate WFSB-TV in Hartford, Conn., during a retransmission round. “The broadcasters blinked and always chose not to run the risk of not being on the cable systems,” he said.
The fundamental difference now compared with the early ’90s is that satellite providers are a real competitive threat. “Now a broadcaster can feel a little bit more emboldened.
A lot of broadcasters feel very emotional because the preponderance of viewing is on broadcast and we get zero cents per sub per month,” he said.