Insider Reporter

Insider Report

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

w/e October 18, 2009 SCRI International, Inc © 1984 - 2009


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FCC Mobile Broadband Agenda

FCC Chairman Julius Genachowksi has outlined what he called his new Mobile Broadband Agenda, for an industry he says could be the key supplier of broadband going forward.

That plan will include reallocating spectrum from other users, and applying network neutrality standards to wireless broadband, though probably with a different standard for network management from that applied to wired networks.

Its four principals include three carrots to the industry and one stick. The carrots include freeing up spectrum, including reallocating it from current users; "removing obstacles" to deployment of 4G broadband; spurring competition; and (the stick): open internet principles, though the chairman said they would take into account differences between wired and wireless broadband.

DTH market growth forecast

The global DTH market for subscribers is likely to pass the 200 million mark by 2018, according to a report by NSR. A total of 99 DTH operators beamed over 13,800 channels to 114 million subscribers and generated over $65 billion in subscription revenue as of the end of 2008.

The report spans 10 regions and finds both similarities and differences that have made the whole DTH market greater than the sum of its parts. North America, Western Europe and East Asia dominate all channel, subscriber and revenue counts, and growth in these regions comes from premium services such as HD and PVRs.

Central & Eastern Europe, South Asia and South America, on the other hand, are very much on the growth track, but in their case, plain vanilla DTH subscribers are the biggest drivers. NSR’s multi-regional presence with analysts in five distinct regions of the world provides for both local perspective and global coverage of these trends.

Primary research, in the form of extensive interviews, has confirmed that the economic impact has been cushioned as operators try to cash in on the "stay at home" phenomenon. Another trend that defines the mature markets is that of fierce competition as cable and satellite battle it out, and the threat of IPTV looms large in countries such as France and the the US.

NSR expects the number of channels to grow to more than 21,000 in 2018 at a compounded annual growth rate of 4.6 per cent. Basic DTH service subscribers are on their way to being matched by premium subscribers, as 114 million DTH subscribers are expected to grow to 209 million by 2018.

Mobile Broadband Growth Forecast

Mobile subscriptions will rise to 4.6 billion by the end of this year, boosted by a continuing mobile phone boom in emerging economies, the International Telecommunication Union (ITU) said.

That represents about two mobile subscriptions for every three people in the world, although in developed economies many people have more than one subscription. Mobile broadband subscriptions would top 600 million in 2009, with fixed broadband subscribers at 500 million, the United Nations telecoms body said.

ITU said its latest statistics highlighted major regional discrepancies, with mobile broadband penetration rates still low in many African countries and other developing nations. There is one fixed broadband subscriber for every 1,000 inhabitants in Africa, compared with Europe where there are some 200 subscribers per 1,000 people.

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New Entertainment & Media Model from PwC

David Lancefield, Entertainment & Media (E&M) partner, PricewaterhouseCoopers (PwC), has suggested that innovative, new measurement models are required to harness the power of cross-platform advertising and content monetisation for E&M.

"The combination of the worst cyclical downturn in decades, with the structural transition to online, has resulted in a burning platform for change for the E&M industry," he says. "Incumbent organisations have seen a significant decline in their core business and advertising revenues have fallen substantially, with many advertisers taking money out of the market or switching to online media."He suggests that senior management recognise that their businesses need to change and fast - but they are struggling with the question: "What does the media organisation of the future look like? And it's personal too - how will their roles evolve in this new world?"

"Expect to see more open, networked organisations, dipping into the insights, skills and relationships of others," he predicts. "Strategic partnerships will become an increasing feature of this landscape, as a way of tapping into new revenue streams whilst not taking on too much risk, and new applications for technology will surface in the quest to monetise content. For example, cloud computing and behavioural algorithms offer new ways to manage content and leverage the vast databank that flows from digital activity.

Innovative, new measurement models are required to harness the power of cross-platform advertising and content monetisation for E&M. Success requires collecting, analysing and reporting financial information across all channels in order to calculate the return on investment per brand. Understanding the interaction of brands across channels, particularly the potential for cannibalisation and synergies, is a priority. As is willingness to pay and the factors driving uptake and churn. In practice, these interactions are often under-analysed even when new decisions are taken on which brands, services or platforms to invest in, close or reposition."

NBCU rebrand

NBC Universal plans to rebrand its five global channels in a multi-million dollar exercise that emphasises the Universal brand and heritage. NBC Universal’s stable of international channels – now called Universal Networks International– will now comprise Universal Channel (general entertainment), 13th Street Universal (crime and suspense), Syfy Universal (science fiction), Diva Universal (women’s entertainment) and Studio Universal (movies).

The company said it would support the rebranding with significant investment in new, first-run, original content and a stronger web presence for Syfy in particular. Syfy Universal will initially be rolled out in France in January next year, with Studio Universal to follow in Latin America in February.

NBCU is subject to speculation that Vivendi is about to sell its 20 per cent stake and this will trigger a deal between the other parent GE and Comcast.

Canwest bankrupt

Canada’s largest media company, Canwest Global Communications, has filed for bankruptcy protection as it struggles to unearth itself from a C$4 billion (£2.4bn) mountain of debt.

The sprawling empire owns a range of broadcasting and print businesses. Canwest's chief executive, Leonard Asper, said business would carry on as usual despite the legal process: "We are firmly committed to moving quickly to restructure the company and emerge from creditor protection financially stronger and more competitive."

Canwest's bankruptcy filing in an Ontario court this morning covered the National Post and television channels including Global Television, MovieTime and DejaView. But other parts of the company were left out, including papers such as the Montreal Gazette and the Calgary Herald, plus a joint venture with BBC Worldwide to run BBC Canada.

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Wegener Corp Refinances and Shifts Top Management

Wegener Corporation, a provider of equipment for television, audio and data distribution networks worldwide, announced that WEGENER has entered into a financing arrangement with The David E. Chymiak Trust Dated December 15, 1999 (the "Trust"), as assignee of the Bank of America, N.A.'s Loan and Security Agreement with WEGENER. As a result, Wegener Corporation concluded the strategic alternatives exploration process.

On October 8, 2009, the Bank of America, N.A. assigned its rights (the "Assignment") under the Loan and Security Agreement with WEGENER (the "Loan Agreement") to the Trust. The Loan Agreement was dated June 5, 1996 and had been subsequently amended eleven times. In connection with the Assignment, the Trust paid all amounts WEGENER owed to the Bank of America, N.A., a total of $2,941,000 (the "Bank Payoff Amount"). Therefore, WEGENER no longer has a lending relationship with the bank.

Immediately before becoming such assignee, the Trust entered into a twelfth amendment to the Loan Agreement with WEGENER, dated October 8, 2009 (the "Twelfth Amendment"), such Amendment becoming effective immediately upon the consummation of the Assignment. Accordingly, by virtue of the Assignment, the Trust succeeded to all the rights and obligations of the Bank of America, N.A. under the Loan Agreement, except as otherwise provided in the Twelfth Amendment.

Among other things, the Twelfth Amendment provides WEGENER with a maximum loan limit of four million dollars (the "Loan Limit"), which excludes interest. It extends the term of the Loan Agreement for up to 18 months from the starting date and provides for automatic renewal for successive twelve month periods. However, the Trust may terminate the Loan Agreement with 90 days notice anytime after an initial 15 month period is complete. The Twelfth Amendment changes the interest rate on the loan to twelve percent. The Bank Payoff Amount applies against the Loan Limit. Currently, approximately $809,000 of the Loan Limit is available to WEGENER. A copy of the Twelfth Amendment is filed as an exhibit to a Form 8-K which Wegener Corporation is filing with the Securities and Exchange Commission today.

In addition, on October 1, 2009, David E. Chymiak loaned WEGENER two hundred and fifty thousand dollars ($250,000). The loan has an interest rate of 8.0% per year and is due and payable in one lump sum on October 31, 2009.

Based on its completion of the financing arrangement with the Trust described above, Wegener Corporation Board of Directors has voted to conclude the Strategic Alternatives review process and disband the Strategic Alternatives Committee of the Board.

Additionally, Robert Placek has chosen to step down as CEO of Wegener Corporation but will remain as Chairman of Wegener Corporation's and WEGENER's Boards of Directors. C. Troy Woodbury Jr., current CFO of Wegener Corporation and WEGENER, has been unanimously named CEO of Wegener Corporation by Wegener Corporation's Board of Directors and CEO of WEGENER after having been nominated for the positions by Mr. Placek. James T. Traicoff has been appointed CFO of Wegener Corporation and WEGENER. Mr. Woodbury's and Mr. Traicoff's appointments are effective immediately. Ned L. Mountain is leaving WEGENER in pursuit of other business interests and has resigned from the Wegener Corporation Board of Directors.

About his appointment as CEO, Mr. Woodbury stated, "My focus as CEO will be to stabilize and grow the company; first by correctly sizing the company and continuing to maintain strict cost controls. Our primary goal will be to return the company to profitability through a strong focus on serving current customers and developing new business. We appreciate the opportunity our shareholder, David Chymiak, has given our company through the Trust and are very mindful of our responsibilities to him and the other shareholders of Wegener Corporation. I am totally committed to improving the performance of the company and I look forward to working with the WEGENER team as we move forward."

Kudelski renews offer for OpenTV

The Kudelski Group is renewing its attempt to take full ownership of OpenTV with a higher offer valuing the interactive TV software maker at $215 million. The deal offers OpenTV shareholders $1.55 per share for the 108 million outstanding shares that Kudelski does not already own.

In February, Kudelski, which currently owns 27 per cent of OpenTV's shares, offered $1.35 per share but OpenTV's board rejected it, saying it was inadequate.

Kudelski argues Open needs to be put together with its subsidiaries such as Nagravision in order to have the scale to compete with the likes of NDS. OpenTV says its software is built into 133 million digital set-top boxes and televisions worldwide.

ZillionTV lays off staff

ZillionTV, the streaming video set-top box-maker backed by Disney, Fox, Sony and Warner Bros, has laid off an undisclosed number of staff. A former employee reports that the company let go roughly a third of its 100-member workforce; ZillionTV would only confirm that it "realigned its resources," as part of a shift in its overall business model.

The company emerged from stealth mode in March, with the idea that it would provide an ISP-supported IPTV service, complete with a rewards programme that encouraged viewers to watch ads. Customers would only pay an "activation fee" for the free ZillionTV box; with no subscription revenues, the goal was to get users to upgrade to higher data plans with their ISPs (and likely get a rev share). Investors clearly bought into the idea beforehand: After raising a $4 million first round from VCs in early 2008, ZillionTV added around $19 million more from backers like Visa and the big media companies, including an $8.8 million add-on earlier this year.

At some point in the past few months, though, ZillionTV concluded that the ISP-supported route wasn’t sustainable on its own. It pushed the launch back into the latter half of 2010, and said it would also offer a direct-to-consumer version of its box.

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Adobe and Turner Broadcasting Expand Alliance

Adobe Systems has expanded its strategic media technology alliance with Turner Broadcasting, initially announced in March 2009. This expansion of the alliance is focused on efforts to take advantage of the extensibility of Adobe’s video production toolset to create a cross-location editing environment that is faster and more efficient and format capable than today’s broadcast industry workflows. The initial goal of the extended alliance is to leverage Adobe’s video editing solutions, including Adobe Premiere® Pro CS4 software, to advance the speed and efficiency of video editing workflows at Turner, including Turner’s news production environments.

“Turner had earlier formed a strategic technical alliance with Adobe because of our shared interest in creating and maintaining metadata to enhance and accompany our digital media distribution. This has led us to a further shared interest in digital media workflows within our production environments, including our news environments,” said Scott Teissler, chief technology officer at TBS, Inc. “We are finding that Adobe’s product infrastructure and our workflow experience and other integration partners are combining to produce an ingest-to-edit-to-air architecture up to our fairly demanding performance requirements.”

RealNetworks to appeal over DVD copying software

RealNetworks is appealing a court ruling barring it from selling its RealDVD copying software and a set-top device in development that copies DVDs.

The company has filed a notice with a Circuit Court of Appeal that it intends to appeal a preliminary injunction preventing it from selling RealDVD or its Facet set-top.

In August, US District Court ruled that RealDVD and the Facet device in development circumvent CSS, the copyright protection used on commercial DVDs, violating the Digital Millennium Copyright Act.

FLO TV Personal Television

Qualcomm subsidiary FLO TV is introducing a new consumer device for receiving its live mobile TV service, which is transmitted digitally on UHF Ch. 55 spectrum. The new "FLO TV Personal Television" is the latest effort from FLO TV, formerly known as MediaFLO, to expand its subscription mobile TV broadcasts to platforms beyond mobilephones. The company, which has been marketing its 12-14 channel, $8.99-per-month subscription service through wireless carriers Verizon and AT&T, announced at the CES show last January a partnership with Audiovox to create FLO TV-enabled displays for automobiles. Those aftermarket in-car systems, with displays up to 10 inches, are expected to be available later this year.

The new palm-sized FLO TV Personal Television, which was designed by frog design inc. and is being manufactured by HTC, should be available on retail shelves by the holiday shopping season for a suggested list price of $249. It has a 3.5 inch diagonal screen and measures 4.4 inches by 3 inches by .5 inches and weighs just over 5 ounces, and offers a battery life of more than 5 hours of mobile TV viewing or 300 hours standby. Viewers will be able to access the FLO TV service by buying one or three-year pre-paid subscription plans, with the $8.99-a-month plan available with a three-year commitment.

Fujitsu IP-900 MPEG-4 Encoder / Decoder for Remote Applications

Fujitsu announced the general availability of the IP-900 series of compact MPEG-4 AVC encoders and decoders for efficient, real time transmission of high-definition (HD) and standard-definition (SD) content over IP networks. The IP-900 is highly suited to mobile and transportable applications in news gathering and other remote event applications. The Fujitsu IP-900 significantly reduces the cost of transporting digital content over satellite and terrestrial links. The new advanced technology IP-900E encoder and IP-900IID decoder solution are available now and provide low latency with best-in-class video and audio fidelity at the lowest possible encoded data rates. Fujitsu will demonstrate IP-900 series and other leading-edge video broadcast technologies at the HD World Conference & Exposition (booth #918), October 14-15, 2009 at the Javits Convention Center in New York.

"The ability to improve efficiency and significantly lower the cost of transporting HD or SD content from remote locations is becoming increasingly important in news gathering and live event capture, corporate communications, institutional training, defense and public safety, law enforcement, surveillance and a wide range of applications requiring high fidelity video and audio," said Kunio Konishi, director of product management media solutions, Fujitsu Frontech North America Inc. "The Fujitsu IP-900 significantly improves operational capabilities in these applications by providing customers with a compact, light-weight, low-power consumption, transportable encoding solution that offers best-in-class performance, low latency reduced cost and operational flexibility. As the adoption of IP networking in digital video and audio content continues to increase, customers equipped with industry-leading solutions like the IP-900 will have a significant advantage over their competitors."

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Ross takes Disney studio role

Disney Channels Worldwide President Rich Ross has been named chairman of Walt Disney Studios overseeing production, distribution and marketing for all of Disney’s movie labels, including Walt Disney Pictures, Touchstone, Miramax and Disney/Pixar. In addition, he’ll also head Disney’s theatrical and music groups. He reports to Disney prexy and CEO Bob Iger.

Ross succeeds Dick Cook, who left last month after a 38-year tenure, on the heels of string of B.O. disappointments including "Confessions of a Shopaholic," "Race to Witch Mountain," "G-Force" and "Bedtime Stories"

A successor to Ross at Disney Channels Worldwide will be named in the next few weeks. Meantime reports from Cannes say Disney’s international distribution arm is looking forward to creating a new window for 3D releases onto TV screens. Stephen Moore, EVP and MD for Disney’s EMEA distribution arm, says they are already having dialogue with key broadcasters about 3D.

Asked whether 3D meant another distribution window, Moore said Disney was involved in many discussions on the potential impact of 3D in terms of TV broadcasting.

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2009-2010 Broadcast Pro Video Marketplace Reports

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