Big Picture Worries - Industry Trend or Event

Execs wrestle with who's on first

When the smartest observers of the media business acknowledge they're not sure what's going on in today's world, you know you've got a problem.

Some of the media industry's top executives -- AOL's Steve Case, Disney's Michael Eisner, Viacom's Sumner Redstone, CBS's Mel Karmazin, NBC's Bob Wright and Comcast's Brian Roberts -- gathered at Schroders/Variety's Big Picture conference last week, and it was apparent it was a lot safer for them to talk about their own parochial worlds than to predict exactly where convergence is headed.

That's because the Internet and advances in technology turn everything upside down, making it difficult for companies to get their bearings. As Excite@Home's George Bell said, today's rapid changes outstrip a traditional media company's ability to mold content applications into new areas.

Try this one on for size. Bell said Excite@Home debuted its Click Video videostreaming feature a month ago. The company's received 1,000 "home videos" that Excite@Home users have created and downloaded throughout the service.

Never in a million years did Bell think content self-provisioning would dominate early Click Video traffic. The audience is creating its own content to distribute to other online audience members, Bell said. That stands the typical content delivery model on its head and should scare every content supplier out there.

No wonder FCC chairman William Kennard said, somewhat delightfully, "We're dealing with a sector where everyone is grappling with change, and everyone is nervous and paranoid because no one knows where it's all going."

Change also means traditional alliances are getting flayed at the seams. Look at how the broadcasters are wrestling with digital video downloads to PCs, perhaps not something on the average cable operator's radar screen. But it should be.

Two different companies, iBlast and Geocast, have been formed and will allow broadcasters to send video signals to PCs using digital spectrum that was earlier earmarked for HDTV.

Both camps have lined up a sizable number of broadcast ownership groups. But no one has heard from the networks, until last week. First NBC president and CEO Bob Wright threw cold water on the subject at The Big Picture conference. "It's a one-way transmission. There are certain limitations. You need a cable or phone link back. There is nothing so exciting by itself to pour hundreds of millions of dollars into it."

CBS has sent letters to its affiliates cautioning them about giving away beachfront digital property to these groups. Said Peter Chernin, chairman and CEO of the Fox Group: "Our perspective is not to give it to someone else to put it into a cooperative."

Of course the networks don't want affiliates using that spectrum for silly digital PC downloads when it could be used for network HDTV, if that day ever arrives.

This is not just at internecine war within the TV industry. It's got broad ramifications for cable. The networks and TV affiliates already are deeply divided over station compensation.

iBlast and Geocast widen the divide between affiliate and network. These are the guys who typically present a united front in retransmission consent negotiations.

Suppose in the next round of retransmission consent talks, operators offer to "carry" the broadcasters' digital download service as part of the system's high-speed content offering? Instead of carrying yet another new cable network from a broadcast company, the operator could carry, on the high-speed cable plant, the TV station's digital spectrum content meant for the PC. The broadcaster could cross-promote the high-speed content and perhaps drive modern sales. It's just the kind of negotiating leverage operators love to dream about.

Finally, it's always interesting to see what scares top media executives. Disney Chairman Michael Eisner used his Schroders forum to warn against, of all things, the stealing of intellectual copyrights. He made his point by showing a five-minute clip from Disney's upcoming Dinosaur movie.

Not only did he blast iCraveTV,, but he took shots at Internet guru Esther Dyson, who points out in her copyrighted newsletter that content should be free, according to Eisner. That's an oxymoron, he said. And Eisner criticized Cisco Systems, which routes billions of bits of Internet traffic, for being neutral on unauthorized use of content.

For CBS's Mel Karmazin, it was the little guys who concern him. "The climate has changed out there," he said, citing Yahoo!, TiVo and Replay TV. "I get more worried about these smaller companies. They are very lean, very hungry, and they move fast."

Sometimes, like AOL, they can get large, yet maintain their swiftness and overrun a traditional media business. It's always the guy you can't see in the rear view mirror who's worth worrying about.

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