• by Joe Mandese , August 16, 2007

In some recent posts, I focused on the potential dislocation that will occur in U.S. TV usage as a result of the federally mandated conversion to digital broadcast spectrum on Feb. 17, 2009. We even added a countdown clock to the TV Board home page to serve as a constant reminder of days, hours, minutes and seconds ticking off, as much of the TV industry appears to be sitting idly by. I also coined a goofy shorthand code -- Y2K+9.13 (the year 2000 plus nine years and 48 days until Feb. 17, 2009) -- to suggest that the transition has every bit as much drama for the TV industry that the new millennium's Y2K effect had on the computer industry.

But there is another potentially dislocating date looming on TV's horizon that could cause similar hiccups for TV viewers -- especially those who rely on cable TV as the source of their transmissions: Dec. 31, 2008. That's the deadline for broadcasters to finalize their digital spectrum "retransmission agreements" with cable operators. And some observers think it could be every bit as disruptive as the spate of retransmission deals that were struck in 1992, when the FCC first allowed broadcasters to negotiate terms with cable operators for carrying their signals.

Back then, broadcasters employed divergent strategies that yielded equally divergent results. NBC wisely bartered its broadcast retransmission rights in exchange for valuable analog cable channel space that was used first to launch America's Talking, and which was ultimately reallocated to launch MSNBC. On the other end of the television spectrum, CBS dug in its heels, demanding cash licensing fees from cable operators to carry the CBS broadcast signal, a demand they unanimously refused, ending in a stalemate that yielded Black Rock nothing more than, well, the right to retransmit its broadcast signal over coaxial cable lines.

This time around, broadcasters are not seeking cash in exchange for the right to retransmit their signals. What they're looking for is the right to retransmit their signals -- in their entirety. For some broadcasters, that may mean robust, bandwidth-hungry HDTV quality spectrum. For others, it may mean the right to multicast a variety of conventional quality broadcast signals in the equivalent of that broadband space. The problem is that regulators have not mandated what cable operators must do, and have left it up to the invisible hand of the marketplace to work it out. That's a problem, because cable operators regard their bandwidth capacity the way broadcasters regard their signals. They believe it is their shelf space, and that they have a right to stock it the way they want, and to extract whatever terms they care to from their programming wholesalers. That may mean down-converting HDTV signals into analog equivalents, or it may mean discarding multicast broadcast channel options, or even pushing them to remote digital "tiers" that will garner lower subscriber reach. Ultimately, cable operators should be governed by the interests of their most important stakeholders: subscribers. And in theory, the channels most prized by the majority of cable TV subscribers are still the major broadcast TV channels.

There's plenty of Nielsen data to prove that. And it just makes common sense. But nobody really knows how much those preferences are due to broadcast channels' programming, or their position on the digital set-top boxes owned by cable and satellite TV operators. Would ABC's signal, or its top-rated shows like "Grey's Anatomy," be just as popular if pushed down to a digital tier?

Needless to say, it's highly unlikely that any operators would actually do that. Mainly because they know that their subscribers truly value ABC and "Grey's Anatomy" -- and the backlash they'd receive by doing that wouldn't be worth the risk. There are other risks at play in this dicey renegotiation of signal transmission rights. What if some operators really did have a fallout with a broadcaster and bumped their signal altogether? It's a different world than when CBS tried to strong-arm the cable industry in the early 1990s. Programmers have other ways of distributing their content. And consumers have other ways of finding it.

Consider what I learned in April when we invited some students from Ball State University to discuss their media habits during MEDIA magazine's Outfront '07 conference in New York. Over dinner the night before, I asked each of the students -- contributors to MediaPost's "Notes From The Digital Frontier" blog -- what their favorite media content was and how they actually consumed it. Interestingly, popular network TV shows like "Grey's Anatomy" were right at the top of their lists. What was not, was the conventional way most people access those shows. Instead of watching them in pattern via broadcast or cable TV, or even time-delayed via video-on-demand or DVRs, these young adults are watching network TV shows via DVDs or via various Internet downloading and file-sharing methods.

OK, so they're not necessarily representative of the Great Unwashed Media Masses. But they are probably more indicative of the way media will be amassed in the future than many may think. And it might just take a watershed like some big cable or satellite operator to bump one of America's favorite channels to find out exactly what lengths people will go to in order to access the content they truly want. And it's not just consumers that have leverage in this new media equation. Think what might happen if a major broadcast network bypassed cable altogether and made its top programming available strictly via broadcast over the Web?

Internet-bypass-television strategies aren't new, but nobody has really tested them to this magnitude. There have been some interesting developments, though. And it's not just the Internet. In one of the more ingenious alternative TV distribution plays I've observed in the past year, Comedy Central made HDTV versions of its popular "South Park" series available via Microsoft's Xbox videogame system. It was an interesting move for several reasons. One, obviously, is that Xbox users are the kind of people likely to be big fans of "South Park." Another is the fact that Comedy Central could not garner favorable terms, or could not technically get HD bandwidth from operators to distribute "South Park" in HD. So it did the only sensible thing it could. It found an alternative means of distributing it. I haven't seen any results from Comedy's effort, though I'd love to if anyone out there knows what they were. I suspect the actual usage was still relatively low, given the novelty of this distribution scheme. But I can't help wondering what would happen if someone tried it on a really big scale.

Of course, we may never know. It's unlikely that we will see any fallout of that magnitude between broadcasters and cable operators, but in the back of my mind, I'm kind of hoping something like that might happen. For one thing, it would be a hell of a story to cover.