Minds in Media Article

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MINDS IN MEDIA
In ATV Broadcast Consulting's 22 years of service to the broadcast industry, the most common uni­versal complaint among broad­casters lodged against the cable industry is that cable built its success on the backs of broadcasters. Multicasting provides an opportunity to reverse that role to enable broadcasters to build sound businesses on the backs of cable. It also creates an environment where broadcast­ers can move from a one?dimensional for­mat to a mtiltifaceted presence in each respective market in a short period of time.

For the first time, the historically distrusting relationship between the two communication giants may be charac­terized as symbiotic. Multicasting also taps in to the local broadcasters' strengths in programming, promotion and advertising prowess allowing the broadcaster to extrapolate and gradu­ate new business progressions with a programming model that is tried true and comfortable.

What constitutes a qualified mul­ticast channel? A worthy multicast channel is one that provides propor­tional incremental revenue for the spectrum, requires a small chunk of the megabytes, offers local advertising avails or equivalent value, incorpo­rates cross?promotional opportuni­ties, includes an Internet component and, ideally, may offer the broadcast affiliates a chance to have an equity position in the network. The content should also be of a nature that makes sense to be a part of a broadcaster's digital spectrum with due consideration given on passing FCC decency muster.

Initially, the contemplated multi­cast networks may be news, weather and UPN. Emerging nets expressly made for this new digital revolution, such as The TUBE Music Network and others will extend the choice of avail­able

options to stations likened to the menu choices of syndicated programs.

When a station considers that it has the ability to generate new revenue streams for every multicast channel it carries, associated incremental profits will follow in the short?term. These new revenue streams can be used to opti­mize past capital expenditures for digi­tal equipment, and future investments into businesses created for the digital universe. Multicast channels are also compatible with future wireless cable models acting as a bridge for broadcast­ers while waiting for further develop­ment. In fact, in following the model established by the large O&O's, the local affiliate now can have "skin" in the local wireless cable game benefiting from the content side of the equation.

From now to 2008, TV stations employing a multicast business model can take the necessary time to mature the local multicast business. With a package combining the primary HD channel and additional unique multi­cast nets coupled with competitive pressure from satellite, the prospect for future cash compensation for car­riage from cable becomes more proba­ble opening up attractive new revenue, streams.

    Now is the time to acquire the digi­tal cable real estate as a place to build networks with full digital cable distribu­tion. The stations that have the clout in the local markets to negotiate retrans­mission consent for carriage of the entire 19.4 Mbps should be locking up that inventory now in their retransmis­sion deals. Serious time and attention should be granted to creating your mul­ticasting models before the FCC grants digital "must?carry." At that time, all sta­tions will be on the search for exclusive multicast network content and the ideas you are eyeing today may be contractually encumbered.

Ruggiero Quote

Mike Ruggiero is CEO of ATV Broadcast Consulting, a 27 year old firm that has assisted hundreds of broadcast televi­sion stations in negotiating carriage agreements of value with cable TV and satellite companies during the entire Retransmission Consent era.