Commentary

TV Stations Mull Digital Divide: Money Now -- Or Value Later?

by Wayne Friedman , Staff Writer, October 22, 2009

Local broadcasters have something of value other digital media companies want: the digital TV spectrum. Should they give that up?

New digital providers and the Federal Communications Commission say consumers will be increasingly starved for wireless broadband spectrum in the coming years -- especially with the growing power of smart phones and their capability for digital video and other services.

Local TV outlets could get cash for all that digital TV spectrum, most of it presently unused, according to an FCC proposal.

Here's the rub: Down the road, local TV broadcasters are hoping that mobile distribution of their video will be the savior of their businesses, when TV signals can be sent directly from their transmitters to consumers' mobile devices.

But as we all know, futurist technology can move at a seemingly glacial pace. Widespread distribution of local TV signals to cell phones could be five or six years down the road.

If local TV stations give up spectrum, they'll be limited to possibly airing one local TV signal per market -- not the estimated four to six local digital signals they could run.

Many TV stations right now are having serious problems trying to fili up all this digital shelf space with programming. Those stations also have more pressing concerns, like cutting costs and turning around their mothership stations, down 30% and more in local TV advertising revenues.

It's a tough call. Hold on for future value -- or cash in now? Right now the bulk of broadcasters' signals -- where they make the majority of their money -- is carried on cable or satellite. So their transmitter distribution value seems limited now, but full of potential should mobile video stuff really happen.

From one broadcaster's angle, this all this goes back to TV roots: with one transmitter you can do a lot. "It's much more effective to get video to hundreds of thousands of people from one transmitter than to hook them all up to the Internet," Jim Goodmon, president of Capitol Broadcasting, told TV NewsCheck. "We are the most efficient distribution system by far."

That's a pretty good financial model. It has scale -- which is what broadcasting is all about in the first place. In that vein, maybe TV stations should stick with their long-term plans.

2 comments about "TV Stations Mull Digital Divide: Money Now -- Or Value Later?".

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Douglas Ferguson from College of Charleston, October 22, 2009 at 12:08 p.m.
Let's ask the person on the street: Do you want fewer dropped calls, or would you prefer that the TV stations continue to pump out a signal (or three) to the handful of people who receive over-the-air signals?
Thomas Hazlett opines that it would be smarter to auction off the under-used spectrum and toss a life-line service of local channels, via wire or satellite, to the disaffected viewers. We're already getting rid of the Edison lightbulb in the next few years; why be wistful about "broadcasting" just because it served ably in a century gone by? To every thing there is a season, some would argue ecclesiastically.
Maybe we could pay down some of the stimulus debt with the proceeds!
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Paula Lynn from Who Else Unlimited, October 22, 2009 at 1:13 p.m.

Just what we all need - more programming, more stations, more channels, more time, more money to support it all without ROI. Wait...which one doesn't fit?