Insider Reporter

Insider Report

news and views on broadcast and professional video/audio sectors, worldwide

w/e August 5, 2007 SCRI International, Inc © 1984 - 2007


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FCC approves airwave auction

The Federal Communications Commission voted to approve rules for a big airwaves auction that would require the winner to make them accessible to any cell phone or other device. The sale is set for December or January and the government expects it to raise at least $10 billion. The airwaves are being returned by television broadcasters as they move to digital from analogue signals in early 2009.

The access requirement would apply to 22MHz of the 62 MHz of spectrum to be sold. Two Republican FCC commissioners, who expressed reservations about the idea, stressed it would not apply to existing airwaves held by carriers like AT&T and Verizon Wireless.The agency stopped short of a broader requirement sought by potential bidder Google that would force the winner to resell access to its network on a wholesale basis.

Currently, wireless carriers restrict the models of cell phones that can be used on their networks. They also limit the software that can be downloaded onto them, such as ring tones, music or Web browser software.


Hauppauge Digital, manufacturer of TV tuner products for PCs, is introducing a £99 (E147) TV tuner card that allows owners to watch free-to-air HD content on their PC or linked TV. The Hauppauge WinTV-NOVA-HD-S2 card plugs into a PCI slot inside a desktop PC and connects to a satellite dish to provide live HD TV on the PC.

KT IPTV service in Russia

Korea Telecom (KT) plans to launch an IPTV in Russia before doing so in Korea. KT President Nam Joong-soo said "Trial service will begin in August in Russia's Maritime Province ahead of a full launch next year."

KT currently offers an Internet TV service in Korea called Mega TV, but it's considered only a halfway service as legal limitations bar real-time broadcasting. Nam said, "We received overseas offers to launch IPTV services which we delayed in order to launch it first in Korea, but we couldn't wait anymore."

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Murdoch Buys Dow Jones and WSJ

Rupert Murdoch's News Corporation announced that it would buy Dow Jones & Co Inc. for $5.6 billion, adding the Wall Street Journal (WSJ) to its worldwide media empire. The deal is a triumph for Murdoch, Chairman and Chief Executive Officer of News Corp, who managed to overcome dissent within the Bancroft family, which controls voting interest in WSJ publisher Dow Jones & Co.

In a joint statement, Dow Jones and News Corp. said Bancroft family members holding about 37 percent of Dow Jones's voting power agreed to support the deal. That level of support represents more than half of the 64 percent voting shares held by the family, according to a Reuters report.

Under the terms of the agreement, which has been approved by the boards of both the companies, Dow Jones shareholders will receive $60 in cash for each share of common stock or Class B common stock that they own, the companies said.

For Rupert Murdoch, it has been a decades-long dream of his to run the venerable financial daily. The WSJ and other Dow Jones properties is a nice addition to Murdoch's sprawling media empire and it is expected to aid the launch of a Fox business channel later this year.

Rupert Murdoch said in a statement:
“I am deeply gratified at the level of support we have received from the Bancroft family and its trustees. Given the Bancrofts’ long and distinguished history as custodians of Dow Jones, we appreciate how difficult this decision was for some family members. I want to offer the Bancrofts my thanks, and an assurance that our company and my family will be equally strong custodians.”

M. Peter McPherson, Chairman of the Board of Dow Jones, said:
"Having thoroughly reviewed News Corporation's proposal, the Dow Jones Board has overwhelmingly voted to approve the definitive merger agreement. This decision has been difficult and emotional for a great many people because of the long history of this great institution. The board has concluded, with a great deal of family support, that the proposal provides outstanding financial value and provides excellent opportunities to the extraordinary Dow Jones franchise. Also, we wish to thank the Bancroft family for their years of faithful stewardship. The editorial independence agreement proposed by the Bancroft family is a strong agreement about which all can be pleased."

Mr. Murdoch added:
“Dow Jones is a vibrant company and one of the world’s greatest media franchises, with a portfolio of brands that has no equal in financial information and business journalism. In combination with News Corporation’s assets, The Wall Street Journal and the other Dow Jones operations will be even more formidable competitors as we profitably extend their invaluable information across our print, broadcast and digital platforms around the world.”

CBS Corp. Q2 Earnings Up

CBS Corporation reported results for the second quarter ended June 30, 2007.

"CBS Corporation has delivered yet again," said Sumner Redstone, Executive Chairman, CBS Corporation. "With smart, strategic acquisitions and selective investments, Leslie and his team are positioning the Company for the future while doing a terrific job managing CBS's world class assets. I am proud of all we have accomplished and confident that we'll continue to capitalize upon the unique set of opportunities that lie ahead."

"We had solid second quarter results with mid-teens EPS growth on an adjusted basis, as well as strong free cash flow which continues to allow us to return value to our shareholders," said Leslie Moonves, President and CEO, CBS Corporation. "I'm pleased with our underlying revenue performance, coupled with the excellent showing by the CBS Television Network in the Upfront marketplace, which underscores the strength of our network television business. At the same time, we continue to adjust our portfolio of assets, moving this quarter to complete the sale of several television and radio stations and investing in new digital properties. Together with a host of other strategic investments, our acquisition of during the quarter adds a compelling interactive extension to all of our content properties and is helping us advance our overall strategy of building communities around our industry-leading content."

DreamWorks Animation Q2 Profit Jumps

DreamWorks Animation SKG Inc. posted sharply higher second-quarter profit propelled by global box office grosses of $720 million for its "Shrek the Third" animated sequel, sending shares up nearly 5 percent, according to a Reuters report.

Net income jumped to $61.8 million, or 60 cents per share, from $13.7 million, or 13 cents per share, for the year-earlier quarter.

Revenue rose to $222.5 million from $74.9 million a year ago. Analysts, on average, expected net earnings of 36 cents per share on revenue of $151.2 million, according to Reuters Estimates.

Excluding some items, DreamWorks profit was 45 cents per share, topping Wall Street's average target by 11 cents.

DreamWorks President and acting Chief Financial Officer Lew Coleman attributed 15 cents of the earnings per share to a one-time reduction in its home video reserves and an ongoing tax-sharing arrangement with a shareholder.

In an interview, Chief Executive Jeffrey Katzenberg described the quarter as "spectacular" and said the film's performance was in line with the company's and investors' expectations.

RealNetworks Reports Record Q2 Revenue

RealNetworks( announced results for the second quarter ended June 30, 2007.

"We are pleased to again deliver record revenue and solid financial performance this quarter," said Rob Glaser, chairman and CEO of RealNetworks. "We also released a new version of our flagship RealPlayer product to widespread acclaim. The new RealPlayer makes it easy for consumers to download and record video from thousands of Web sites."

For the second quarter of 2007, revenue grew 52% to $136.2 million compared to $89.4 million for the second quarter of 2006. For the second quarter of 2007, revenue in the Consumer Products and Services segment was as follows: Music revenue was $36.8 million, a 22% increase over the second quarter of 2006; Games revenue was $24.9 million, a 17% increase over the second quarter of 2006; and Media Software and Services revenue was $25.4 million, a 3% decrease from the second quarter of 2006. In the Technology Products and Solutions segment, revenue was $49.1 million, a 310% increase over the second quarter of 2006, due to the acquisition of WiderThan. Foreign currency exchange rate fluctuations positively impacted 2007 second quarter revenue by approximately $1.2 million compared to the second quarter of 2006.

Sinclair Q2

Sinclair Broadcast Group reported financial results for the three months and six months ended June 30, 2007.

Commenting on the quarter, David Smith, President and CEO of Sinclair, stated, "We have now successfully closed on multi-year retransmission consent agreements with all of the major multi-channel video programming distributors in our markets, covering approximately 90% of the subscribers in our markets. We now estimate that our 2007 revenues from our retransmission consent agreements will be approximately $60.5 million, as compared to $25.4 million last year, a 138% increase. For 2008, we expect this number to grow to approximately $66.0 million based on what we have under contract today. This estimate does not include the remaining 10% of the subscribers in our markets for which we do not yet have longer-term contracts in place and excludes revenues from our retransmission consent agreements for WGGB-TV, the sale of which we expect to close in the fourth quarter 2007."

Net broadcast revenues from continuing operations were $161.4 million for the three months ended June 30, 2007, a decrease of 1.4% versus the prior year period result of $163.8 million. Operating income was $41.9 million in the three-month period as compared to $47.2 million in the prior year period, a decrease of 11.3%.

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Avid Reports Q2 Net Loss

Avid Technology reported revenue of $225.3 million for the three-month period ended June 30, 2007, compared to $222.2 million for the same period in 2006. GAAP net loss for the quarter was $6.0 million, or $.15 per share, compared to GAAP net income of $2.7 million, or $.06 per diluted share, in the second quarter of 2006.

Avid also announced the appointment of Joel Legon to serve as the company's vice president and chief financial officer. Since joining Avid in March 2006, Legon had served as vice president and corporate controller. He had additionally served as acting chief financial officer since March 2007.

“I am pleased to report a solid Q2, with revenue and profit that were in line with our expectations,” said David Krall, who will be stepping down as president and chief executive officer on July 31. “Our Video division recognized several large deals out of backlog, including France 24, one of the largest orders in our history. In Audio, which is our most consistent and profitable segment, revenue was flat organically and up 3% year-on-year including revenue generated from Sibelius. In our Consumer segment, lower sales of the TV viewing line in Europe were counterbalanced by strong sales and market share growth of our flagship Studio 11 consumer video editor.”

“With a strong balance sheet, innovative products and world-class customers, Avid is well positioned as a leader in the media and entertainment industry,” said Nancy Hawthorne, who will take over as interim chief executive officer on August 1. “Our customers are looking to Avid to extend that leadership into new areas as their businesses evolve. By aligning ourselves more closely with our customers’ business opportunities, and taking a fresh approach to our own business processes, we believe we can deliver more value to both our customers and our shareholders.”

The company also announced a strategic realignment that will result in restructuring charges of between $8 and $10 million, $1.5 million of which was recorded in Q2. This action includes the transition of video server engineering from Mountain View, CA to existing Avid facilities in Edmonton, Canada and Tewksbury, MA; a reduction in space within certain facilities; and a reduction in force of approximately 150 positions, primarily, but not exclusively, in the company’s Video business unit.

Revenue for the six-month period ended June 30, 2007 was $444.2 million, compared to revenue of $440.3 million for the same period in 2006. GAAP net loss for the first six months of 2007 was $6 million, or $.15 per share, compared to GAAP net income of $6.0 million, or $.14 per diluted share, for the same period in 2006. GAAP net loss for the six-month period ended June 30, 2007 includes $24.8 million of amortization, stock-based compensation, restructuring charges, legal settlements and related tax adjustments. Excluding these items, non-GAAP earnings per share were $.45 per diluted share for the first half of 2007. GAAP net income for the six-month period ended June 30, 2006 includes $24.6 million of amortization, stock-based compensation, restructuring charges, in-process research and development and related tax adjustments. Excluding these items non-GAAP earnings per share were $.71 for the first half of 2006.

Harmonic Agrees to Acquire Rhozet

Harmonic Inc. announced that it has entered into a definitive agreement to acquire Rhozet Corporation, a privately-held company based in Santa Clara, California. Rhozet offers software-based universal transcoding solutions that facilitate the creation of multi-format video for Internet, mobile and broadcast applications. The addition of Rhozet’s software transcoding technology is expected to enable Harmonic’s existing broadcast, cable, satellite, and telco customers to seamlessly create and deliver high quality Internet and mobile video programming. It is also expected to expand Harmonic’s presence into the online video service provisioning market, where Rhozet’s transcoding solutions are today in use by leading Web video content providers including, MSN and Yahoo!.

Harmonic Q2 Net Sales up 34%

Harmonic Inc. announced its preliminary results for the quarter ended June 29, 2007.

For the second quarter of 2007, the Company reported net sales of $71.3 million, up 34% from $53.3 million in the second quarter of 2006. For the first six months of 2007, net sales were $141.5 million, up 29% from $109.5 million in the same period of 2006. In the second quarter of 2007, the Company’s sales included significant contributions from cable, telco and broadcast customers deploying a broad range of new products and solutions. The Company also had strong bookings during the quarter, especially from its domestic and international satellite customers.

“We are pleased with our sales and earnings growth in the first six months of 2007, as well as our improved gross margins and inventory management, and our strong bookings in the second quarter of 2007,” said Patrick Harshman, President and Chief Executive Officer. “Our growing global customer base is steadily gaining a deeper understanding that the breadth and power of our new products and solutions provides them with exciting opportunities to extend their video service offerings cost effectively and reliably.”

“While we continue to capture market share among satellite operators with our powerful MPEG-4 AVC high-definition video encoding solutions, we are also seeing success with our strategy to extend our satellite solution footprint to include video-on-demand and innovative video processing. While it remains difficult to predict the timing of new telco customer deployments and subsequent service expansions, our new solutions continue to drive new business in the emerging IPTV market. As we move into the second half of 2007, we are very encouraged by the continued diversification of our business across a wider range of products and solutions.”

The Company anticipates net sales for the second half of 2007 to be in a range of $150 to $160 million and gross margins to be 44% to 45% on a non-GAAP basis, excluding stock-based compensation expense and the amortization of intangibles. GAAP gross margins for the same period are anticipated to be in a range of 42% to 43%.

Scopus Reports Record Q2 Revenue

Scopus Video Networks Ltd., a provider of digital video networking products, announced its results for the second quarter of 2007, ending June 30, 2007.

Revenues for the second quarter totaled $13.5 million, a 10.3% sequential increase from the $12.3 million revenues in the prior quarter, and a 9% increase from the second quarter of 2006. The breakdown of revenue by region was 47% in EMEA, 19% in Asia and the Pacific Rim and 34% in the Americas.

Gross profit in the second quarter of 2007 was $6.5 million compared with $6.1 million in the prior quarter, and $6.1 million in the second quarter of 2006. Gross profit in the second quarter of 2007 as a percentage of revenues was 48%.

"We have made some very solid progress in the second quarter achieving record revenues ahead of our expectations, and a strong positive operating cash flow," commented Dr. Yaron Simler, CEO of Scopus. "The second quarter was another quarter in which we saw increased order bookings as well as improved business fundamentals. Our recent focus on improving our operational efficiency, resulted in lowered inventory levels and better DSOs. As our revenue continues to grow, we expect improvement in the bottom line. I am very encouraged by the positive momentum we have built in all of our markets and expect to continue to grow our business throughout this year."

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MacBook Pro 17-inch 2.4GHz Review

This report is Heath McKnight at SCRI's online partner, DigitalMediaNet.

Apple does it again with its MacBook Pro, professional laptop computers, offering ultra-bright LED displays (light emitting diodes), faster processors, a 1920 x 1200 17-inch display option for those working in high definition aspect ratios, and much more. If you’re looking for a workhorse laptop, this is it!

First off, I want to touch upon the LED displays, which are already bright and ready-to-go once you power up the system. It’s also mercury-free, so if it gets cracked, you’ll be all right.

I also want to talk about the 1920 x 1200 display on the 17-inch model, which makes for working with HD resolutions much easier. It’s a great asset to have, after years of knowing PC users had this option. The only real downside? Font sizes are much smaller on this 17-inch, native 1680 x 1050-resolution model, so you’ll be making font sizes bigger on your Internet and Email options, if you’re eyes are like mine, even corrected. A small thing when you’re working with HD file sizes or large-format photos and graphics.

The computers are very fast, and can handle pretty much what you throw at them, however double-check your software’s minimum system requirements to ensure you have the proper system for what you’re doing. In some cases, a Mac Pro with its four- and eight-processor options are probably your best bet.

MacBook Pro options include:

  • 15.4-inch (1440 x 900, native) or 17-inch (1680 x 1050, native) displays with Intel Core 2 Duo dual-core processors, with the 15.4-inch supporting speeds of both 2.2 Ghz and 2.4 Ghz, while the 17-inch display has only the 2.4 Ghz speed option.
  • For no extra cost, you can select glossy or non-glossy displays. Glossy can help with graphics, animation, color correction/finishing and more.
  • The 17-inch model comes with the option of a high-resolution screen for $100 more, giving you 1920 x 1200 resolution. The keyboard illuminates when a room you’re in is dark. If the ultra-bright display is too much with the keyboard illumination, you can turn down both easily on the keyboard.
  • The graphics card in all three models include an NVIDIA GeForce 8600M GT, though the standard 15-inch 2.2 Ghz model has 128 Mb of SDRAM, the 2.4 Ghz models have 256 Mb of SDRAM.
  • You can select a hard drive that’s up to 200GB on the 15-inch model and 250GB on the 17-inch model. You can pack up to 4GB of RAM on all three models. I highly recommend getting as large a drive as possible and as much RAM as you can afford.

    These are workhorse laptops, so I’m sure you’ll be doing a lot of work and putting the systems through their paces.

    The newest MacBook Pros are perhaps the best workhorse laptops Apple has put out yet, packing in new features including an LED display that’s automatically bright when you hit the power button. More RAM off the bat, faster speeds and bigger hard drives make this a must-have system.

    Two New Panasonic HD Camcorders

    Panasonic announced two new High Definition video camcorders that match the growing demand for large-screen, high-image-quality TVs and the continued evolution toward High Definition video. The new HDC-SD5 and HDC-SX5 camcorders employ cutting-edge imaging technology to capture video recordings that are breathtakingly clear and vibrant, especially when viewed on a high-quality, large screen TV.

    Both the HDC-SD5 and HDC-SX5 use the AVCHD format to record full-HD video with 1920 x 1080 pixel* resolution. They both employ Panasonic's original 3CCD camera system, a professional broadcast feature, which renders vivid, true-to-life colors, outstanding detail and rich gradation. Both camcorders also boast Panasonic's new Advanced O.I.S. (Optical Image Stabilizer) minimizing the effect of hand shake. This technology helps produce crisp, clear images, which is especially important for viewing on large-screen high resolution TVs where image imperfections are easily visible.

    The HDC-SD5, which records video onto SDHC/SD Memory Cards, debuts as the world's smallest palm-style 3CCD full-HD camcorder**. It is even smaller than its predecessor model, HDC-SD1, giving the SD5 superb portability. The SD5 also features a new USB Host function that significantly improves data storage and playback ease. With an optional newly released DVD burner, model VW-BN1, users can copy or play back video recordings in the original AVCHD format to deliver the ultimate High Definition viewing experience on a large-screen TV.

    The HDC-SX5 can record full-HD motion images onto both SDHC/SD Memory Cards and DVD discs. It can record up to 180 minutes*** of video on an 8GB**** SDHC Memory Card (available September 2007), and up to 60 minutes*** on a 3-inch DVD-R dual-layer disc. The combined media captures up to 240 minutes of full-HD recording. The SX5 can also copy recorded video from an SDHC/SD Memory Card to a 3-inch DVD disc internally with the touch of a single button, without connecting to a PC. Video can also be recorded on a DVD disc in standard definition (MPEG2) format for playback on a DVD recorder/player.

    "Panasonic's first generation of HD camcorders with the AVCHD format made history in the diffusion of HD, but these new models make Living in High Definition even more of a reality for even more people," said Rudy Vitti, national marketing manager, Panasonic Consumer Electronics Company. "Recording Full HD is easy and convenient with these compact models, so everyday events can be recorded in HD and enjoyed in HD. It's as simple as putting an SD Memory Card into a Plasma TV or sliding a mini DVD into a Blu-ray Disc player."

    Both HD camcorders will be available in September, with a suggested retail price of $999.95 for the HDC-SD5 and $899.95 for the HDC-SX5. SRP of the VW-BN1 DVD burner will be $199.95.

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