From Airwaves to the Interweb, Part II

By Andrew

Last week we looked at the segmentation of the television marketplace and discussed its impact on local broadcasters and advertisers. This week we look at a solution.

What can a poor local affiliate and its advertisers do in a time like this? There are a couple of answers. The most obvious is developing an arrangement in which the networks sell shows to local affiliates at reduced rates. Because the networks make money from such a variety of sources, they aren’t dependant on dollars from the local affiliates that license their shows. Therefore, offering the local affiliates programming at reduced rates would give them an opportunity to recoup some of the losses created by segmentation without significantly impacting the network’s bottom line. While this model makes sense from the outside, I somehow doubt the networks will see the advantage in this arrangement. So it’s off to Plan B for the local affiliates: Enhanced Broadcast Quality.

All sources of television, apart from Over The Air Broadcast High Definition (OTA HD), have some form of compression applied to them. This means that between the studio and your television or computer monitor, the signal’s quality is somehow reduced. High Definition Cable and Satellite broadcasts are slightly compressed due to the bandwidth restrictions of the satellites they’re broadcast from and the cables they flow through. DVD’s are compressed from true HD resolutions to fit on their discs, though this could change when HDDVD and Blu-ray are fully adopted. Online downloads are compressed to get from the server to your computer quickly and affordably. This means that the best way to use the capabilities of your new 60” Plasma TV isn’t to pay $80 a month for cable or satellite, but to simply attach it to an antenna on your roof and enjoy free OTA HD broadcasts. The picture will be crisper than a DVD, Satellite Dish, or Cable channel ever could.

As the limitations of broadcasting HD over Cable and Satellite become more apparent, and more customers buy HDTV’s and expect HD content, I expect that local over-the-air broadcasters will see a resurgence of viewers. Along with that resurgence of viewers will come a resurgence of advertising dollars. Local advertisers may never be able to afford sponsoring a download of Desperate Housewives on ABC.com, but reaching large segments of local viewers on local HD broadcasts seems like an ideal solution.