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w/e July 6, 2008 SCRI International, Inc © 1984 - 2008
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DTT Standard in China
China Electronics Technology Group Corporation (CETC) has revealed on July 28th a draft standard for terrestrial digital television sets will be circulating among related enterprises and municipal broadcasting bureaux. The standard will be non-compulsory and may or may not be promulgated prior to the Olympics.
Konka, Changhong, Toshiba, and LG have already produced integrated TV sets using this standard. In order to increase the suitability of their equipment for multiple regions, the same companies are installing single and multiple carrier chips in the TV sets. The cost of these television sets is much higher than that of non-integrated systems, however.
Yu Yueyu, head of the marketing office at the Guangzhou Pearl River Mobile Multimedia and Information Company, has signalled his firm will start broadcasting terrestrial digital television six months after digital television broadcasts start in the six leading Olympic cities.
Strong TV Revenue Growth for Western DMAs
TV markets in California, Arizona and Nevada are expected to generate the most revenue growth over five years, according to research from Kagan.
Overall, TV revenues are expected to rise at a compound annual growth rate of nearly 4 percent between 2007 and 2012, “despite a 2007 decline of 8.5 percent generated by the writers’ strike and advertising migration to the Internet,” Kagan stated in the announcement of its report, “Radio/TV Station Annual Outlook.” TV revenues are expected to rise nearly 9 percent this year on the strength of political advertising.
With regard to individual markets, the Charlottesville, Va., media research firm put Las Vegas, Nev., at the top of the list, projecting a CAGR of 6.2 percent from 2007 to 2012. San Diego, Calif., was pegged at No. 2 with a projected CAGR of 6.1 percent. Los Angeles was third, with a projected CAGR of 5.7 percent, while Phoenix, Ariz., came in at 5.6 percent, as did the San Francisco designated market area.
In the Great Lakes states, slow retail growth and auto industry layoffs are expected hold broadcast TV revenues to a CAGR of 2.7 percent, 2007-12. Central Southern states, particularly those affected by Hurricane Katrina, are expected to peg slow growth, with a projected CAGR of just under 3 percent.
Mid-Tier Mobile Phone Segment to Feel the Squeeze
The most significant growth in wireless handset markets will occur at the top and bottom ends of the price and features range, as the smartphone and low-cost handset categories expand at the expense of the mid-range models commonly called "enhanced" phones. The enhanced phone sector is currently the largest in terms of shipments: 2007 saw 854 million units shipped. But it will be overtaken by both other classes in 2013, with just 441 million shipping.
According to ABI Research director Kevin Burden, "As we see more user sophistication and demand for high-end features, handset manufacturers will continue to push functions of high-level smartphone operating systems further down their product lines. Their smartphone portfolios will grow, and with them, the entire smartphone market."
Operators want more smartphone users too, because they generate higher ARPU. And operators like phones with standard operating systems that are optimized for their content delivery platforms.
Meanwhile, driven by the huge emerging markets in countries such as China, India, and Brazil, the low-cost and ultra-low-cost handset categories are set to become the largest classes of mobile phones by 2013 in terms of shipments, though not in terms of revenue. "While the unit shipments of ultra-low-cost handsets will be dramatic over the forecast period, the device class is only expected to account for 6% of the market's overall revenue," notes Burden. "But vendors will continue to pursue these markets for the sake of brand-building and the prospect of eventual upward migration by users."
Since no single mobile device will serve the needs of everyone, a number of other form factors will compete for users' mobile computing cycles. In particular, MIDs (Mobile Internet Devices) and UMPCs (Ultra-mobile PCs) show promise for wider consumer acceptance. Prices will be moderate (eventually under $200 for many MIDs) and they'll deliver a superior mobile Internet experience.
TV sets preferred over TV websites
Despite the growing popularity of viewing television content online, most adults (94 per cent) who subscribe to cable or satellite television services prefer to watch television on traditional TV sets, according to research conducted by The Nielsen Company for the Cable & Telecommunications Association for Marketing (CTAM).
One-third of the adult broadband users (35 per cent) surveyed for the study said they had watched at least one television programme originally shown on TV via the Internet. Of those who sought out video content online, 87 per cent watched television programmes directly from a TV network website. Further, 82 per cent of those who watched video content online reported that they went online to find a specific television programme that they had missed when it first aired on TV. This indicates the critical importance of strong marketing for the initial TV showing and the success that major networks are having by taking popular programmes to the online platform.
"Tracking how consumer behaviour is changing as a result of new television viewing platforms is critical to our business," said Char Beales, President and CEO of CTAM. "As preferences are made clear through research, cable companies and content providers evolve the product mix to best suit viewers’ needs and desires."
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Hollywood actors strike?
Hollywood is preparing for another strike after the largest actors’ union failed to agree on a new contract with the US entertainment industry’s key studios and networks . The 120,000-member Screen Actors Guild has been locked in talks with the studios for several weeks.
Failure to reach agreement will pave the way for a repeat of the strike by Hollywood screenwriters that began last November and paralysed the industry for three months.
Broadcast TV may take advantage of tough economy
The Hollywood Reporter reports that Broadcast TV has had a hard time catching a break this past year.
What was supposed to be a rebound 2007-08 season after the ratings slump of 2006-07 was derailed by the Hollywood writers strike and ended with a whimper in May. And, as if dealing with the 100-day stoppage and viewer erosion was not enough, the networks were hit by a slowing economy.
In the first quarter, when the effect from the strike was the worst, ad spending on network TV was down 3% vs. last year.
But then, in the past few weeks, amid recession fears and worries about a possible actors strike, there finally was some good news: The five broadcast networks bagged a better than expected $9.23 billion in "upfront" commitments for ad slots during the 2008-09 season.
"When times are tough and each marketing dollar has to work as hard as it can, (advertisers) go to what works, and television absolutely benefited from that," ABC ad sales chief Mike Shaw recently said.
Meanwhile, the Conference Board's most recent survey painted a bleak picture of consumers' buying intentions for the next six months. For instance, only 2.1% are planning to purchase a house, the lowest percentage in more than a quarter-century.
In contrast, the share of consumers planning to buy a TV set in the next six months hit an all-time high of 12.2 percent in May.
For those putting their dreams for a new home and car on hold, a flat-screen TV seems like a comforting alternative. It is also practical, with gas prices hovering above $4 a gallon.
"Households now seem bent on cocooning by staying at home to watch television rather than drive to the local theater and shell out more than $11 to watch a film (and an extra $5 on gas to get there)," Merrill Lynch economist David Rosenberg wrote recently. "Travel plans have sunk to their lowest in 30 years, so what else is there to do but stay home and watch TV?"
In other words, in uncertain times, Americans cling to their TVs.
During the Great Depression, at 27 cents a ticket, everyone was going to the movies to escape the harsh economic realities. These days, the price of going to the movies is part of the harsh economic reality.
So, people will sit down to turn on their cool new TVs. But will they go to broadcast television?
For the past few years, TV audiences have slowly gravitated to cable, a migration accelerated by the writers strike. In the first quarter, while broadcast was down, cable ad spending was up 13 percent.
During the May sweep, when local stations use ratings data to set their ad rates, there was great news for the TV industry: 4 percent more viewers in the coveted adults 18-49 demographic watched TV than last year. But they largely went to ad-supported cable, which collectively was up 12 percent in the key demo while the broadcast networks were down 13 percent.
Also responsible for the broadcast networks' continuing rating woes: the increasing penetration of digital video recorders, now at 25 percent. With more people turning to TV for entertainment in a sluggish economy, that percentage will continue to rise. A couple of weeks ago, DVR maker TiVo surprised Wall Street with an unexpected first-quarter profit driven by higher sales of HD boxes.
The transition to digital television in February creates even more competition for broadcast as many people who had watched only free over-the-air analog channels are switching to cable. Time Warner Cable recently beat first-quarter expectations with 55,000 new subscribers.
Still, for now, broadcast TV remains the top dog, bringing families together for major sporting and entertaining events.
In August, many proud owners of fancy new TV sets will give them a test drive with the HD telecasts of the Olympics. While there will be wall-to-wall coverage on all NBC Universal cable networks, the main attractions will be on NBC.
That is good for everybody. During the Athens Summer Olympics in 2004, overall TV viewing rose 10 percent allowing all networks to pick up some of the viewers drawn to broadcast TV by the Games.
Such a bump will be a godsend for broadcasters as they head into the make-or-break 2008-09 season.
With no relief in sight for the country's economic woes and skyrocketing oil prices, families, popcorn in hand, are gathering around the TV looking to be entertained.
And that might be just the break broadcast TV has been waiting for.
AT&T Ends Deal With Dish Network
DISH Network, the US satellite television provider, said it has received notice that phone operator AT&T is ending their agreement at the end of the year to sell TV, phone and Internet packages. AT&T and DISH have had a joint marketing agreement since July 2003 to sell the "triple-play" package in AT&T regions.
AT&T said it provided the required six-month notification for non-renewal of its current contract with DISH. "We continue to discuss options with DISH," it said in a statement. In early April, AT&T said it had expanded its partnership with DISH in territory previously covered by BellSouth Corp, which AT&T acquired in late 2006, and had stopped marketing a similar package with DIRECTV Group Inc, the No. 1 US satellite TV operator.
That move prompted speculation that AT&T had entirely dropped DIRECTV in favor of a DISH partnership. But AT&T has repeatedly said it was still talking to both about a long-term partnership for bundled phone, Internet and video services, and that a final decision was due by the end of the year.
Equity Media Completes $18.5 Million Sale of RTN
Equity Media Holdings has completed the sale of its Retro TV network to a group created by the company’s largest shareholder and its former CEO. Luken Communications, led by Henry Luken III, purchased RTN for $18.5 million in cash.
Under deal terms, Little Rock, Ark.-based Equity retained the option to repurchase RTN through Dec. 24, for $27.75 million plus the amount Luken sinks into the network during its ownership period. Retro was launched specifically to provide TV stations with a secondary network for digital multicasts. It has 73 affiliates and reaches 38 percent of U.S. TV households.
Equity is working with Thomas Weisel Partners, a private equity firm in San Francisco, on the repurchase, potential strategic alliances and possibly starting more diginets using Equity’s centralized production and master control hub.
In addition to the network, Luken also bought $1.5 million in warrants to buy up more than 8 million shares of Equity for $1.10 a share. Equity is currently trading for around 75 cents. The warrants are good through early September.
Luken also put down a $5 million prepayment for several Equity TV stations affiliated with Univision and Telefutura, and located in Amarillo and Waco, Texas; Fort Myers, Fla.; Minneapolis; Oklahoma City and Tulsa, Okla. Another $12.5 million is due pending completion of the sale--subject to Univision’s first right of refusal and FCC approval.
Equity will use a portion of initial proceeds to pay off a $17.5 million credit facility, leaving it with a separate $38.5 million credit facility.
Media General Sells Station
The University of Georgia has agreed to buy the CBS affiliate in Toccoa, Ga., from Media General. According to an announcement issued by both parties, the University of Georgia Research Foundation will purchase the assets of WNEG-TV for an undisclosed sum.
The deal is subject to regulatory approval and expected to be completed in the third or fourth quarter of 2008.
WNEG represents the fourth station in a group of five that the Richmond, Va., TV group is divesting. Media General (NYSE: MEG) sold WTVQ-TV in Lexington, Ky., to Morris Network, Inc. on May 13, and has agreed to sell WMBB-TV, the ABC station in Panama City, Fla., and KALB/NALB-TV, a NBC/CBS station in Alexandria, La., to Hoak Media Corp.
Marshall N. Morton, president and CEO of Media General, said the sale of the fifth station, WCWJ-TV in Jacksonville, Fla., “is progressing.”
When the sales of all five stations are completed, Media General expects to realize total proceeds of $100 million to $105 million, which will be used to reduce debt by $60 million to $65 million after considering estimated taxes to be paid. All five stations were included in discontinued operations in Media General’s first quarter 2008 results.
Sinclair To Buy Raycom Station for $85 Million…
Sinclair Broadcast Group is buying the CBS station and selling its Fox station in the Richmond, Va., market. Sinclair agreed to buy WTVR-TV (CBS 6) from Raycom Media for $85 million, and simultaneously sell the license assets of WRLH-TV (Fox 35) to Carma Broadcasting for an undisclosed sum.
Raycom acquired WTVR last year when it bought the TV properties of Lincoln Financial Media, which ended up with the station when it bought the Jefferson-Pilot Corp. in March 2006. Raycom already owned the NBC affiliate in Richmond, DMA No. 59, and could not have a second top affiliate in the market under FCC ownership rules.
Sinclair will continue to provide sales and non-programming related services to WRLH following the sale.
The transactions are subject to FCC approval and are expected to close late in the third quarter.
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Telestream FlipFactory Drives Down Price of HD Encoding http://www.scri.com/press99_tel70108.shtml
XM, Sirius cost saving prediction
Amid the latest rumours that FCC approval for the deal is imminent, Sirius has provided a first look at the financial future of the company after the proposed merger with XM Satellite Radio. Sirius said that savings from combining with XM would total $400 million (E254m) next year, net of costs. Sirius also said that the combined companies would earn $300 million in 2009 before interest, taxes, depreciation and amortization.
Sirius said that if its pending merger with XM goes through, free cash flow would be positive in 2009 before factoring in capital expenditures. Synergies, earnings and cash flow would continue to improve in subsequent years, said Mel Karmazin, Sirius's chief executive. He said the company would provide more detail in coming months
NBC Universal Prepares for Online Olympics Coverage
Online viewership is expected to be high for the Games of the XXIXth Olympiad. Each Games since the Sydney Olympics in 2000, the International Olympic Committee has incrementally increased the ability of rights-holders to stream live programming online.
For 2008, rights-holders are making the greatest use of their Internet platforms thus far.
NBC Universal plans to offer more than 5,000 hours of Olympics programming through its NBCOlympics.com site; around 2,200 hours of that programming will be live, including 25 sports that will receive little to no coverage on air. And that doesn’t include the Spanish-language coverage being streamed by the Telemundo division of NBCU.
NBCU is powering its online coverage with Microsoft Silverlight 2, Redmond’s answer to Adobe Flash. Silverlight is a cross-browser, cross-platform plug-in for media and Web applications.
For the Olympics, the Sliverlight platform allows NBCU to offer users a variety of playback customizations, including picture-in-picture and several layers of text and metadata overlays, such as statistics, athlete biographies and analysis. It is also implementing a social networking aspect that allows viewers to see what other people are watching.
In China itself, CCTV.com, the Internet division of the state-run China Central Television, is partnering with Sohu.com and PPS.TV to deliver on-demand and live streaming of the Games.
Throughout the Games, PPS.TV will simulcast CCTV broadcasts of Olympic matches to an estimated 100 million viewers via its proprietary media player software network.
Since late 2005, Sohu.com has been the Official Internet Content Service Sponsor of the Beijing Games, but it was recently that the inked an agreement with CCTV to offer live Webcasts of the Games.
Like NBCU, Sohu.com is using Silverlight to power its video coverage.
According to a press release announcing the agreement, Sohu.com plans to have a staff of more than 700 experts organizing pictures, videos, blogs, forums, etc., working during the Olympics.
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NewTek Now Shipping TimeWarp External Replay Controller
NewTek Inc. announced it has begun shipping TimeWarp, an external replay controller for the NewTek family of TriCaster products and VT. TimeWarp is a desktop controller that provides clip selection, marking and playback at selectable speeds, with complete external control of two digital disk recorders (DDRs).
TimeWarp replay controller extends live production capabilities by providing a dedicated operator for video playback, and even allows for the flexibility of instant replay without requiring an additional replay box.
TimeWarp, which requires Software Update 2.0, enables producers to:
Improve production quality by adding a dedicated replay operator
Record a selected TriCaster or VT input with instant access to that footage
Surpass audience expectations with instant replay & slow motion at any venue
Provide clients with productions that look more professional
Mark in, Mark out, cue and play back clips without distracting the director
TimeWarp is available internationally for $995 US.
Apple Updates Final Cut Pro, Final Cut Server, Pro Apps
Pro Applications Update 2008-02 addresses installation issues, compatibility updates, and general performance issues and improves overall stability. According to Apple, there are no new features in this release.
Applications included in the update: Final Cut Pro 6.0.4, Compressor 3.0.3, and Final Cut Server 1.1.
Focus Enhancements Announces Media Server for Sony XDCAM EX
Announced by Focus Enhancements, and designed with Sony to meet the needs of XDCAM EX series camera users, this solution enables workgroups to store, query, and view video while preserving the native Sony XDCAM EX metadata and file structure. This fully integrated solution combines PX Media Asset Management software with professional grade server hardware to provide an affordable turnkey media asset management system that can easily grow as your needs evolve.
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PEOPLE IN THE NEWS
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SCRI RESEARCH NEWS
Broadcast/Pro Video Product Sales Top $10 billion -- read more
2008 - 2009 Broadcast/Pro Video Product Reports
2008-09 Broadcast/Pro Video Macro Industry Overview Report
2008-09 Broadcast/Pro Video Micro Quantitative Product Data Report
HDTV / Digital Trends Report
IPTV / Mobile TV Report
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