Lack of adequate programming, low returns hurting transition to high definition

A shortage of high-definition (HD) television programming combined with the high costs of converting traditional broadcasts don’t bode well for a slate of six new over-the-air transitional digital TV licensees. Faced with an uncertain environment for HD programming, even the recipients of the new licences question the short-term prospects for the digital versions of their existing analog channels. Barbara Williams, general manager of Craig Media’s Toronto One station, says that despite receiving such a licence, the company hasn’t yet decided when it will launch a digital version of the station. "I think that the most challenging thing about the whole business model in high definition (HD) is that you can’t plot it all on a graph and say at this point, it’s all going to click. It’s the whole game of being ready but not overextending, of not going too far, too fast. I think we are all doing that dance," she tells Canadian Communications Reports. Carol McLean, senior director of CTV Specialty Television Distribution, also notes there is no financial incentive currently for converting. CTV has already done so with its CFTO-TV Toronto signal (CCR Update, Nov. 19/03) and launched digital versions of two of its specialty channels, TSN and Discovery. McLean says the decision to go digital was for practical reasons, such as securing the necessary bandwidth and establishing a position on the dial with distributors, as well as establishing a reputation with consumers as a destination for HD programming. "If you talk about a business reason (for going digital and HD), from a financial perspective, there is none. In fact, if you want to see your CFO twitch, go to them and tell them you want to start broadcasting in HD at 50% increments to less than 20% of TV homes," she notes. "(The decision to go digital) wasn’t done for the short term; it was done for long-term strategy to simply be there when the industry ultimately goes high definition." In issuing the transitional digital TV licences on January 30, the CRTC gave broadcasters 24 months from the decision date to launch, unless a request for an extension is approved. On that date, the commission granted transitional digital TV licences to Crossroads Television, CTV Television Inc. for its Toronto and Vancouver stations, Craig for its Toronto One station, and the Canadian Broadcasting Corp. for its CBLFT Toronto and CBLT Toronto stations (CCR Update, Feb. 5/04). Late last year, TQS received a transitional digital TV licence for its Montreal station (Broadcasting Decision 2003-621), while CHUM Ltd. was the first to receive such a licence in January 2003 (CCR, Jan. 16/03). According to CRTC policy, broadcasters can air 14 hours of HD programming that is unique from their analog signals, provided that 50% of it be Canadian content (CCR, June 21/02). But delegates and participants at the Canadian Satellite Users Association (CSUA) conference in Toronto on February 2-3 lamented the fact that very little Canadian programming is being shot in high definition. As well, broadcasters say that U.S. suppliers are reluctant to release the rights to HD content, partly due to concerns that it will be pirated and streamed over the Internet. Peter Miller, VP of planning and regulatory affairs of radio and television at CHUM Ltd., tells CCR that HD programming has become harder to acquire from U.S. suppliers than when Citytv launched a digital version of the channel a year ago. A lack of Canadian HD content was also lamented at last year’s CSUA conference (CCR, Feb. 28/03). During the licensing process for the latest transitional digital channels, the Canadian Cable Television Association (CCTA) requested that the CRTC establish clear minimums for the broadcast of enhanced or HD programming and that those minimums be imposed as conditions of licence. The commission asked CTV to comment on a potential requirement that all simulcast programming on the channel aired during the evening broadcast period produced in HD be broadcast in HD. CTV responded that while an HD version of a program may exist, it may not always be possible to acquire the broadcast rights to that version. The CRTC ruled that, "In the circumstances, it would be inappropriate to impose conditions of licence requiring that all simulcast programming produced in the widescreen format be broadcast in that format, or that all simulcast programming during the evening broadcast period that is produced in HD be broadcast in HD." The problem is that many of the Canadian channels that have launched HD versions have little high-definition programming on them, conference speakers seemed to agree. Michael Lee, VP of product management and development at Rogers Cable Inc., indicated that Rogers’ subscribers are so starved for HD content that they watch the cableco’s HD barker channel. "I get more negative feedback from people when we bring down the barker (channel) than when we do anything else in HD…It is not the most compelling content, but it is meaningful for those customers dying for HD content. They are a customer base that will watch anything. They don’t care. They just want something to fuel that TV that they just bought to show off to their friends," he said during a session at the CSUA conference. He noted that cable has relatively low HD penetration rates, with HD and widescreen viewing being mostly about home theatres and DVDs. He pressed for more HD content on the HD channels, so that a business case can be built for the higher quality pictures. "We get zero revenue back right now (from the HD channels). But we have to get the programming to a level where the quality and quantity is high enough that we can go to customers and say we’d like $1 for that content," he said. "When that happens and we can start to show return on that usage, we will be more willing to devote more spectrum to those customers." Labeling a channel as a high-definition option doesn’t make it HD, unless there is sufficient HD content, Lee added. "Just calling something high definition, doesn’t cut it," concurred Terry Snazel, VP of technology at Bell ExpressVu LP. Even the broadcasters agreed. "You can’t get consumers to go and invest a few thousand dollars in a new TV and a tuner if there is nothing to watch. It’s got to be stuff that’s worth watching in HD, and lots is not," said Williams. Michael McEwen, president of Canadian Digital Television (CDTV), predicted at the conference that Canada was looking at 2010 or 2012 for the shutoff date of analog signals. The CRTC has mandated that distributors can cease to carry the analog versions of specialty and conventional channels once penetration of the digital version reaches at least 85% of their subscribers (CCR, Nov. 14/03). "Right now, it’s mostly American services where product is and I think that we’re going to have to address that very quickly in the context of the Canadian market," he said.

Lack of adequate programming, low returns hurting transition to high definition

News | 02/13/2004 5:00 am EST

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