Cut cord

© / Jiri Hera

I often write about one form of  inherent tension in over-the-air TV broadcasters’ messages. On one hand, they accurately portray themselves as community servants and disaster lifelines. On the other hand, if they don’t get their ever-higher retransmission fees from their cable viewers (via the cable company), then they’re very willing to turn off their signals and walk away.

Over at TVNewsCheck, Harry A. Jessell pointed out another, related question that OTA broadcasters have to address: How much cord-cutting is a good thing? On one hand, a certain percentage of OTA-only households make stations look more attractive to ad buyers trying to reach the widest audience. On the other hand, every cord that gets cut is one fewer subscriber paying retrans fees. What would be the most profitable percentage of OTA viewers? As Jessell puts it, broadcasters “need to find the sweet spot.”

Another complicating issue is that if retrans fees get too high and OTA antennas get too simple, maybe cable systems will add them to set-top receivers and not pay anything. Jessell goes into a lot more detail about these and other topics, so just go read it!

Media Signpost Shows Internet Television Newspapers Magazines And Radio

© / Stuart Miles

Yesterday, I highlighted a long story by Ned Soseman of Broadcast Engineering in which he discussed the reasons why broadcast TV was bound to change. But into what? Soseman didn’t really say. So let me fill in the rest of that story – some wild speculation about what broadcast TV might look like 20 years from now.

What will happen to broadcast TV when a new generation of viewers becomes too used to always getting content on demand? For an answer, let’s look at the last time a major media source was forced to overhaul itself. Let’s look back at the late 1950s, when TV ended episodic programming on radio.

I wasn’t there, but every indication is that radio was really hot stuff when it was first commercially available. Newspapers, which were also still around, ran radio program listings the way the internet lists TV network listings now. Dramas, comedies, musical variety shows, even kids’ programming followed half- and quarter-hour schedules that look like most network TV schedules today.

Then came TV, and families discovered that it was more fun to watch Jack Benny and company than it was to listen to them. Episodic, block-formatted radio withered. Todd Storz, Gordon McLendon and others invented the Top 40 radio format, sometimes called contemporary hit radio. Listeners could tune in at any time and stay as long or as briefly as they wanted without feeling as though they missed something. Other stations picked up other genres, and by the end of the 1960s, radio had turned itself into the music and talk service it is today.

Maybe that’s the eventual destination for broadcast TV – as an as-needed, available-anytime service. A few digital sub-channels already indicate some possibilities such as music videos, weather forecasts, and 24-hour news. Viewers can check in for a few minutes without worrying about the program schedule. As a side-benefit, these formats are DVR resistant; few would want to watch a recorded block of something when the same stuff is on now, only fresher. The public stations might continue to serve up educational fare much as National Public Radio stations broadcast today. And there would be other formats that aren’t used yet, like a 24-hour sports talk channel with highlights and the occasional live event.

There you have it, my conclusion to Soseman’s fine article. Will broadcast TV really turn into something like 1970s radio? We’ll know more in about 20 years.

RandomSouthHall“Broadcasters haven’t reached a fork in the road; they’ve reached a tangled multi-spoke hub. In one direction is the well-traveled old-school way, over-the-air broadcasting. … But that idea seems to be withering under the intense heat of the Internet.”

That’s just one small part of a long report by Ned Soseman, writing in Broadcast Engineering. Soseman uses the occasion of the NAB Show to summarize the current state of the broadcast industry. “The one point nearly everyone seems to agree on is that NAB isn’t just for broadcasters,” he wrote. Video technology advances apply to everyone because anyone can be a broadcaster, if you count the internet.

From the customers’ perspective, there’s the stuff that’s available for free over the air, and there are the channels we actually watch, and there’s the huge cable/satellite bill that supports them. There’s Senator John McCain’s a la carte bill (going nowhere, by the way) and a cable spokesman’s claim that a la carte wouldn’t lower cable bills. Soseman summarizes the way it all looks today and then sums it up by saying, well, broadcasters need to try something different. It all reads like something I would have written, except that I would have tried for some crazy guess about the future. Anyway, I’m happy that Soseman did the work, and that it gives me an excuse to run one more NAB Show photo. Now go read it!

Coins dropping into a TV set

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DirecTV announced this week that it was exploring the possibility of adding an over-the-air receiver to its set-top box. That part isn’t new; some DirecTV boxes had OTA capabilities over a decade ago, and my Dish Network receiver has an OTA adapter. What’s new is the reason DirecTV is re-exploring this addition: It wants to avoid retransmission fees.

As TVBlog writer David Goetzi wrote, this tactic would be unquestionably legal, although that doesn’t mean the broadcast networks wouldn’t question it. And as Goetzi put it, this should be a scarier prospect than the Aereo streaming service that’s got the networks filing lawsuits. If every cable and satellite company started using OTA to circumvent retransmission fees for a large percentage of its viewers, those networks might find themselves cut off from revenue they’re now depending on.

If this scenario ever looked imminent, what would the networks do? My guess is that they would pull back on their retransmission fee increases in exchange for promises to keep OTA out of the cable set-top box. Surely cable companies would prefer a known, lower retransmission payment rather than the upfront cost, uneven OTA experiences and service calls that would result from thousands of OTA antennas. Still, a new upper limit on retransmission money would wreck some of the business plans networks have been showing investors.

The deeper question is whether retransmission fees are appropriate. Broadcasters have a monopoly on the public airwaves they occupy. The ability to send ads, with a few intervening programs, over the air to every TV set used to be quite valuable all by itself. When cable companies made it easier to pick up OTA channels, broadcasters wanted a piece of that cable bill, and they persuaded Congress to see it their way. Now at each renewal, each station gets to wrestle with each cable system, often as part of the inevitable parent company’s desire to add more of their cable channels to the lineup at higher prices. That doesn’t sound like it’s in the public’s interest.

Just imagine if anyone was free to retransmit any OTA signal using the Canadian model of royalty payments. With today’s connected world, soon anyone would be able to watch any station. Royalties would flow to the content producers according to the popularity of their programming whether they’re in New York or Billings MT. The viewing public would benefit from an incredible cornucopia of choices. The only folks who would get less money would be those folks who negotiate ever-escalating retransmission agreements. Everybody else would be happy. Wouldn’t that be nice?