Insider Reporter

Insider Report

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

w/e October 19, 2008 SCRI International, Inc © 1984 - 2008


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CEA wants mobile TV group

The Consumer Electronics Association (CEA) of the US seeks participants in a new Special Interest Group to address A/153 - the mobile/handheld addition to the Advanced Television Systems Committee’s (ATSC) broadcast digital television standards in the United States. The ATSC is working to complete the new standard which will allow digital television (DTV) broadcasts beyond the living room. The new capability, called ATSC Mobile/Handheld (M/H), allows TV broadcasters to use part of their signal to deliver services that can be reliably received by handheld receiving units and receivers in moving vehicles.

“CEA is organising this Special Interest Group for ATSC M/H to assist the consumer electronics community in understanding the technology and market dynamics,” said Brian Markwalter, CEA vice president of technology and standards. “CEA is excited to work with members to accelerate this innovative extension to our DTV system.”

Mobile TV 5 years away according to new report

A new report from StrategyEye, 'Mobile TV – Separating Hype from Reality', concludes that receiving television on our mobile phones will not be an everyday reality for at least another five years. “Despite the hype, mobile TV will remain a digital media pipedream for at least five years,” concludes Thomas Warren, StrategyEye Digital Media Analyst and report author. “Currently, no credible financial rewards combined with a lack of broadcast and handset technology standardisation have hamstrung the sector.”

The StrategyEye report examines why, despite its potential, the sector is impeded by numerous hurdles. Since its inception in Korea in 2005, watching broadcast TV, interactive TV and video on our mobile phones has been an alluring concept and the mobile TV sector has seen some steady growth in Asia and moderate or lesser growth in Europe and the US. Widespread and large-scale investment has taken place across all three continents, but the sector is yet to yield profits and users experience a high level of technical frustration.

“There are about six different standards of broadcasting around the world and, without standardisation, mobile TV is hard to roll out," says Thomas Warren. "If you add to this the fact that few handsets are able to receive broadcast TV, then you start to see the scale of the problems facing the Digital Media sector.”

StrategyEye maintains that it will take government legislation to force broadcasters and handset suppliers to comply with standardisation.

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Leading VC Predicts Bad Downturn

Silicon Valley’s most successful VC Sequoia Capital called an emergency meeting for its portfolio companies and is bringing back messages it sent to entrepreneurs in 2000. Sequoia partners presented a long analysis of how the United States economy got to this point. It is not a “normal crisis,” they warned, and it will take a long time to emerge from it. They reminded entrepreneurs that tech spending depends on the economy and that e-commerce and advertising are already deteriorating.

They made sure that entrepreneurs understand the new realities they face, like smaller fund-raising rounds, customers that are slow to sign on to new services, fewer acquisitions for smaller sums and a very long road to an initial public offering of stock. They repeated their advice to start-ups: cut costs, get profitable and “spend every dollar as if it were your last.” They said it would be the survival of the quickest — as in, the quickest to slash expenses.

Viacom cuts forecast

Viacom cut its full-year profit forecast as the softening economy has clouded its ability to make accurate advertising projections. CBS also expects full year profit to fall in the mid-teens range and it will write down the value of its licenses by $14bn. Later, National Amusements, an entity that controls executive chairman Sumner Redstone’s interests in Viacom and CBS, said it planned to sell $400m in aggregate of the two companies’ non-voting stock to pay down debt to comply with its debt covenants.

The news triggered a 17.83 per cent decline in Viacom shares and a 20.12 per cent plunge in CBS stock, worse than the broader sell-off of US media stocks. “Given the rapid softening of the economy and the uncertainty this creates in forecasting advertising growth, we are taking the prudent step of moderating our near-term targets,” Viacom chief executive Philippe Dauman said.

Viacom’s anticipated shortfall could continue into next year as the cable advertising market is seen declining in 2009 for the first time in history, according to UBS estimates. Separately, CBS is viewed as one of most vulnerable major media companies due to its reliance on local and national broadcast television advertising.

Viacom, which owns MTV Networks and the Paramount movie studio, says it now expects 2008 adjusted earnings per share from continuing operations to rise in the mid-single to low double-digit percentage range, down from an earlier three-year projection of earnings per share growth of low-double digits.

Content, not Platform, according to Viacom CEO

Viacom CEO Philippe Dauman has identified new media as an area where the company was breaking new ground but stressed that the content had to come first, not the means by which it was distributed. "Our focus is on utilising digital platforms not to replace the TV experience but to extend and deepen it," he told MIPCOM delegates. Delivering a keynote speech on creativity in the digital world, Dauman admitted that as Viacom depended on advertising for only a third of its revenue, the downturn would not hit the company as hard as it will other media groups. Its growing investment in consumer products, live events and video gaming would also soften the blow, he said. He identified franchises and brands as the central pillars supporting the company's business going forward. "If you centre your slate on your franchises and brands, and you supplement that with films like ‘The Curious Case of Benjamin Button’, you have the possibility strategically of building a sound business," Dauman said. "Controlling distribution allows us to control the destiny of our product."

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Sinclair Q3 Hit by Volatile Economy

Sinclair Broadcast Group reported preliminary net broadcast revenue results for the three months ended September 30, 2008. On September 22, 2008, the Company revised its third quarter outlook for net broadcast revenues to be approximately flat to third quarter 2007 net broadcast revenues of $149.4 million, including $8.0 million of political advertising revenues.

David Smith, President and CEO of Sinclair, commented, "The deepening economic turmoil that has recently thrown the financial markets into a state of crisis, diminished equity market values, dried up liquidity, and slowed advertising spending levels, has caused us to reconsider our value opportunities. During the third quarter, we repurchased in the open market 2.7 million shares of our class A common stock, $22.3 million face value of our 8% senior subordinated notes and $12.0 million face value of our 6% subordinated convertible bonds."

Mr. Smith continued, "Due to the on-going volatility in the marketplace and its impact on advertising budgets, we are expecting net broadcast revenues for the fourth quarter 2008 to be down mid to high single digit percents as compared to the fourth quarter 2007. During the fourth quarter, we are expecting to receive an approximate $17.2 million Federal income tax cash refund. While we invested $11.4 million, net of cash distributions, in various ventures in the third quarter and expect to invest approximately $27 million in the fourth quarter, we are reducing our expectations for additional investments in 2009."

Hulu goes international

Hulu, the online web video joint venture between News Corp and NBC Universal, is set to rollout internationally and some local versions may launch before the end of the year. News Corp president Peter Chernin says it hopes to roll out a number of joint venture sites in local markets. "Hulu will eventually be the leader in premium online TV worldwide - that's the aim. We are working on going international and you will see this in the future. We will probably look to do a series of joint ventures in local markets to roll out Hulu internationally," he said.

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Devices key to mobile media

The entry of a broad range of new mobile devices able to display video will have a profound effect on the mobile video market, reports In-Stat. The reach of new device choices will provide more markets for mobile operators, mobile broadcasters, advertisers and other content owners, accridng to the IS report.

“Even though cellphones and smartphones will remain the predominant method of viewing mobile video, over 160 million other devices that provide mobile video over networks now in exclusive use by cellphones will be sold in the next five years,” says David Chamberlain, In-Stat analyst.

Recent research by In-Stat found the following:

  • Shipments of 3G video-capable cellphones will increase at 11.2 per cent annual growth, reaching over 641 million by 2013.
  • The number and types of devices using digital mobile broadcast networks such as ISDB-T, DVB-H, MediaFLO, and DMB-T will expand to nearly 127 million in five years.
  • China’s CMMB will make up over 12 per cent of those devices.
  • More than a half-billion devices capable of viewing Internet video over 3G networks will be sold in 2013. Cumulative sales will approach 2 billion units

    Set-Top Box Market to Remain in Flux

    Although Set-Top Boxes (STBs) have been around in one form or another for more than 30 years, the industry is far from settled down. Whether looking at the technology or the business aspects, STBs should remain one of the most dynamic areas of the electronics industry for at least the next decade, and quite possibly beyond, according to iSuppli Corp. The form that the STB may ultimately take is uncertain, but what is certain is that the next decade’s version will look and function quite differently from the box sitting in most people’s living rooms today.

    Over the next few years, much of the STB market will be driven by expanding box capabilities. For millions of consumers worldwide, High Definition (HD) and Digital Video Recording (DVR) have become technological necessities of life that they just can’t do without. In fact, HD and DVRs are becoming such a part of consumer lives that by 2012, more than 70 per cent of digital Set-Top Boxes (STBs) shipped are expected to integrate support for one or both of these technologies, up from about 35 per cent in 2007 according to iSuppli Corp.

    “DVRs are cheap to integrate into STBs because Hard Disk Drive (HDD) costs have plummeted so much,” said Jordan Selburn, principal analyst for set-top boxes for iSuppli during a presentation at iSuppli’s North American Briefing here last week. “With the street price of storage just pennies per gigabyte and falling daily, the time is not far off when video storage hardware, whether at home or remote, will be both essentially limitless and virtually free. With cable or satellite companies only charging $5 or so a month for DVR support, who wouldn’t want the ability to record their shows and movies?”

    “HD falls into a similar category as DVRs,” Selburn said. “HD video processing chips are migrating to 65-nanometer semiconductor manufacturing technologies, causing their incremental costs to drop compared to standard-definition devices. HD display prices are falling rapidly as well. iSuppli forecasts that more than 125 million of these displays will ship in 2008, and customers will demand HD content to watch on their new televisions.”

    Web video on cable TV

    Time Warner Cable and ActiveVideo Networks announced the deployment of a new television experience that will bring Web content and interactivity to the TV.The new service, which is being launched in Oceanic Time Warner Cable, intelligently streams traditional and Web-based content to any digital set-top box. ActiveVideo combines the personalized, dynamic, socially-connected experience that viewers have come to expect from the Web with the quality, immediacy and remote-control navigation that is expected of television.

    Initial channels include interactive games from TAG Networks; home shopping from HSN; and news, sports and children’s versions of P:Mosaic, an intuitively personalized video navigation system that allows consumers to view, customize and navigate through their favourite channels at a single glance. In addition, the ActiveVideo service enables Oceanic Time Warner Cable to create Web-based channels that are specific to the market.

    “With studies continuing to show that the television remains the device of choice for viewing video content, we’re seeing dramatically increased interest in ActiveVideo solutions that bring the Web experience to television through existing STBs and CE devices.” said Jeff Miller, president and CEO of ActiveVideo Networks

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