Answers and questions: consultants review HDTV Networks application

The CRTC added to its already busy 2008 schedule last week when it announced a February 11 hearing into HDTV Networks Inc.'s application to operate an English-language high definition over-the-air television (OTA) service. Analysts say the application raises several questions, and that's before you even get past the proposed delivery method.HDTV Networks, which is backed by entrepreneur and satellite radio investor John Bitove, hopes to launch Canada's third-largest national OTA broadcaster, serving Vancouver, Calgary, Edmonton, Winnipeg, Toronto, Ottawa, Montreal and Halifax. It plans to broadcast all of its content in high definition and to air three hours of priority programming per week. Its primary source of revenue would be national commercial airtime - HDTV says it will not compete for local airtime dollars. "HD is what's driving their view, and I think they're gambling the commission will look favourably on them to give the rest of the industry a shot in that direction," says broadcasting consultant Michael McEwen. However, if the applicant is banking on its promise of all HD to aid its pursuit of a licence, it might be a little late, particularly with Canada's analog shutoff date now set for 2011. "Let's say they get the licence and they start up and get all the cities covered within a couple of years," says Nordicity Group Ltd. senior partner Peter Lyman. "Well, in a couple of years most of the broadcasters will have most of the programming in HD. So what's the difference?"One difference is that HDTV Networks will have no local programming commitments, which McEwen calls a glaring absence from its application. He says if HDTV Networks proposes to have reporters in each of these cities to feed its national system, there's no reason why it can't commit to some level of local programming. Another difference between HDTV Networks and the existing conventionals is its promise of high definition could restrict its customer base; the vast majority of Canadian households are not equipped to receive OTA HD."If they're licensed, the BDUs are going to have to carry them," says McEwen. "So that's really what they're counting on there." He points to the proposed low radiated power for delivery - 300 watts in Vancouver and 160 in Toronto - as further evidence HDTV Networks is eyeing BDU distribution as its main method of delivery. And with fee-for-carriage on the docket for this spring's BDU and specialty hearing, a newly licensed HDTV Networks could present an additional revenue stream. But if HDTV Networks became a robust OTA broadcaster and accelerated the transition to HD of other conventionals, Lyman says it would be interesting to see the reaction of consumers. Would they drop their BDU accounts in favour of Internet and rabbit ears if Canada had a more attractive OTA offering? The UK's Freeview free-to-air digital TV service has been extremely successful since it launched in 2002. But Lyman laments the relationships in Canada between consumers, BDUs and broadcasters are likely too entrenched for a major change now. Delivery aside, what will likely make or break a licensed HDTV Networks is the quality and popularity of the programming it offers. The applicant has said it will acquire programming the other major networks aren't focusing on. But that brings to mind images of failed broadcaster Toronto 1 and struggling station SunTV. The difference, however, is the applicant will be able to compete for national rights, so "they might find themselves getting some gems off the US charts depending on their budget," says Lyman. The proposed structure of HDTV Networks - calling itself a national broadcaster but only providing coverage in eight cities - actually receives the most praise from the analysts. "If it covers eight markets that's 65% to 75% of the community and maybe 90% of the national advertising interests so it's not a bad strategy," Lyman adds. But it's a strategy that will have to get past the commission. At the very least, the hearing comes at an interesting time in Canadian broadcasting policy. "I think the commission on the one hand will be interested in sustaining the economic model that's in place there now, but on the other hand will be under some pressure to create some diversity in ownership," says McEwen. "And at the same time they're committed to HD and broadcasters haven't committed to building out their transmitters. So it'll be an interesting hearing."

Answers and questions: consultants review HDTV Networks application

Broadcast | December 18, 2007

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