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Broadcasters still fighting yesterday's battles

The prospect of widespread Internet videostreaming is shaking the foundation of most major, media industries. That was readily apparent at last week's NAB convention in Las Vegas, where dozens of videostreaming companies went looking for content.

Certainly broadcasters are very curious about videostreaming. An April 9 panel session was standing room only. But it seems clear many broadcasters are reluctant to take the plunge.

Caution is all around. Stations are unsure about HDTV. They're unsure about the network-affiliate relationship going forward. They're unsure whether using spectrum for digital downloads makes sense. And they have a host of questions about videostreaming.

Like the cable industry, broadcasters can't afford to keep their heads stuck in the sand too long when it comes to the Internet. After all, the Internet stands as the ultimate end run around everything the broadcast and cable industries have built.

Microsoft released its new Windows 7.0 Media Player at NAB. The Microsoft interactive folks reported progress because Avid, Chyron and Grass Valley Group are building tool sets for broadcasters to supply interactive TV content. Time will tell whether broadcasters will want to step up to the plate.

RealNetworks showcased new technology and content on their broadband sites. More and more, RealNetworks is transforming itself into a broadband content aggregator.

The videostreaming statistics are starting to get staggering. Yack.com CEO Jeff Morris said there are 12,000 Web sites offering videostreaming today.

Last week New Line Cinema released a two-minute video clip of its new movie Lord of the Rings. In 24 hours, the clip was downloaded 1.7 million times. That's almost double the record of one million held by Star Wars last year.

And all this is happening with barely two million broadband connections out there, or just 2% of the population. The train is coming, and it's picking up speed.

Viacom chairman Sumner Redstone told NAB attendees what they wanted to hear in is "content is king" speech. "Dotcom commandos," he said, won't overtake TV. "The advantage still belongs to broadcasters."

Yet Redstone and CBS chief Mel Karmazin are hedging their bets. Both have plowed significant amounts of money into Internet ventures. The combined company generates $11 billion in ad revenue through media vehicles that will have strong Web franchises. Make no mistake, Viacom-CBS will play a big role in the Internet.

Even NAB president Eddie Fritts, while telling the troops all is right with the world, was doing some subtle nudging. "We must rethink who we are. What we deliver is more important than how we deliver it.

There's still evidence that many broadcasters are using their energies to fight yesterday's battles. And that's good news for cable. Broadcasters are howling at the prospect that the FCC will grant low power FM licenses to churches, universities and other nonprofit groups. Broadcasters are worried about interference. The FCC is not.

"Why don't you work with the FCC to find ways for low-power FM to coexist with full power stations?" FCC chairman William Kennard asked broadcasters harshly.

Even more damning was this quote: "Why have you squandered your goodwill to fight churches and schools and community organizations?" he asked in a tone that went beyond a FCC chairman's typical words of warning.

Why isn't Kennard happy? Broadcasters whined for digital spectrum. Now they can't make it work economically. They're fighting churches even after they've been granted duopoly relief.

The broadcasters' attitude will come to haunt them during the digital must carry proceeding.

Also overheard at the show was grousing about getting DirecTV and EchoStar to pay TV stations for local signal carriage. One broadcaster said he wasn't going to let this train leave again without cash in it, a reference to the cable industry's steadfast refusal to pay for local signals.

Good luck. Maybe the DBS operators will ante up some money. They have dedicated a $5 a month service for local stations, and I'm sure broadcasters want 50 cents to $1 apiece.

But DirecTv just passed into the black, and Charlie Ergen is as tight with a nickel as anyone. Here's a case where cable operators did DBS a favor by never paying for local stations. DirecTV and EchoStar will stand behind that precedent, and I wouldn't bet against them. They've prospered for a long time without local stations, so carriage isn't that crucial.

While broadcasters fight yesterday's battles in Washington, D.C., the future is hurtling by. And the train looks like it's moving too fast for most of them to jump aboard.

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