March 1998 Update

Michael McGregor & Thomas Spann

On page 145 we noted the slow development of in-band-on-channel (IBOC) terrestrial digital audio broadcasting (DAB) favored by the National Association of Broadcasters (NAB). The IBOC approach features a digital signal sharing a frequency with an analog station. Testing of IBOC technologies fell apart in 1996, but a new development team comprised of USA Digital Radio (USADR) and Lucent Technologies emerged to develop a workable system. FM band tests of the USADR/Lucent system are currently in progress in Bethesda, MD and there are plans for testing the team's IBOC AM system by summer, 1998. However, a competing IBOC system is now proposed by a new player, Digital Radio Express (DRE), Inc. The NAB welcomed DRE's entry to the competition and reactivated its DAB Subcommittee to study all proposed IBOC systems. It is unclear what effect the emergence of DRE in the IBOC arena may have on the development of IBOC terrestrial DAB. Meanwhile, American Mobile Radio Corporation (AMRC) and CD Radio continue plans for satellite delivery of digital audio radio services (DARS) using S-band frequencies acquired through auction in 1997. AMRC says it will launch its first satellite by 1999 with service beginning in 2000. CD Radio plans three satellites with two launches by fall, 1999. CD Radio says it could be offering service by the end of 1999. Reports indicate the mobile antennas needed for reception of DARS are only about the size of a human hand. Terrestrial DAB service also continues to advance around the world using L-band frequencies with the Eureka-147 transmission system. Digital audio signals are now available to about half the population of Great Britain. Other nations testing or already offering terrestrial DAB services with Eureka-147 technology include Spain, Italy, Germany, Denmark, Sweden, Norway, China, India, South Africa, Australia, Canada, and South Korea. Information about IBOC systems is available at www.usadr.com and Eureka-147 information is at www.kp.dlr.de/DAB/.

Debate continues in Congress and at the FCC regarding the "core spectrum" (see page 144) for digital TV broadcasting once the conversion to DTV is complete. The FCC favors a core spectrum of channels 7 to 51 but many VHF broadcasters want to retain channels 2 through 6. Some say the core spectrum should be expanded to include channels 2 through 51, but adding 30 MHz to the core spectrum reduces the frequencies available for auction once the transition to DTV is completed. The alternative core spectrum (channels 2-46) discussed on page 144 remains an option. The FCC has repeatedly delayed a decision on the core spectrum issue and some say the delay may cause broadcasters to miss their deadline of November 1, 1998, for the start of DTV broadcasts. Information about digital broadcasting is available at www.atsc.org and www.nab.org.

We said (see page 249) the Olympic Games are major TV sports attractions, but not this year for CBS. The games typically win every half-hour of prime time programming, but competing shows on other networks beat CBS on several nights the first week of Olympic competition. Not since 1968 have ratings for the Olympic Games been so low. CBS promised advertisers a rating of not less than 19, but first week ratings averaged less than 17. Observers noted poor weather, the early disappointing performances of U.S. competitors, and the time differential between Japan and the U.S. as major factors contributing to the poor ratings. Others say CBS's handling of the coverage did little to improve the situation. NBC's coverage of Super Bowl XXXII faired better, averaging a 44.5 rating for the broadcast.

The definition of high definition television HDTV (see Section 5.7) as a screen of 1080 lines scanned in an interlaced pattern (1080I) may be losing ground. Reports indicate both ABC and NBC are considering 720 lines scanned progressively (720P) as the new standard for "high definition" TV broadcasting. Only CBS remains committed to 1080I, but there is speculation even CBS is reconsidering its position. Supporters of 720P say it provides equal or better resolution than 1080I while allowing networks and stations to simultaneously broadcast a second standard definition (SDTV) program. Recent adoption of 720P as a "legitimate" HDTV format by industry and political leaders makes redefinition of "high resolution" more likely. Many of the world's equipment makers, however, have worked toward development of HDTV using a 1080I format. Information about high definition digital television is available at www.atsc.org and www.fcc.gov.

Many critics believe some reporting following news of President Clinton's alleged sexual encounters with intern Monica Lewinsky failed to meet professional journalistic standards (see page 271). Some say newscasters simply repeated previous reports on other media, without checking sources independently. Some accuse TV of taking video (such as Clinton happily chatting with Lewinsky at a public event) out of context, or using such video repeatedly to suggest a closer relationship than may exist. Others say increased competition from cable channels and "tabloid" news/talk shows caused traditional broadcast news operations to deal with the story in a sensational manner. A number of critics, many within the industry, say producers and anchors put live reporters on the spot, asking them to speculate beyond the facts then available. Regardless the ethical issues involved, the allegations generated significant rating increases for the broadcast network news programs and, especially, the cable news networks. CNN's ratings, for example, almost doubled. The broadcast and cable news organizations also saw a large increase in the number of people visiting their Web sites.

The Radio Advertising Bureau reports that radio advertising rose to $13.65 billion in 1997, a 10% increase over the $12.4 billion recorded in 1996. $10.74 billion of the 1997 totals came from local radio ad sales. (Compare to 1995 revenues noted on page 168).

Sales of radio and television stations dropped slightly in 1997 from record levels in 1996 (page 189). 1,067 sales deals were recorded in 1997, totaling $23.44 billion dollars.

Microsoft has teamed up with PBS to produce electronic plush toys that interact with PBS children's programs (p. 208). Barney was the first toy marketed in the venture, and Arthur the Aardvark and his girlfriend D.W. are scheduled to make their appearance in September. The toys come to life at various points in the programs when they receive signals transmitted through the television station's vertical blanking interval (p. 103). All this fun comes at a cost to parents of around $100 per toy.

And speaking of Microsoft, that company also is teaming up with Nielsen Media Research to develop a media measurement service for computers (p. 298). The new service will be designed to track viewership of so-called "intercast" programming transmitted over the Internet. Meanwhile, Internet news sites experienced peak usage levels when the Bill Clinton/Monica Lewinsky story broke in late January. CNN reported up to 12.5 million page views per day at the height of the news frenzy.

We noted in chapter 12 (page 339) that no comparative hearings for broadcast station licensing have been conducted since a court ruling in 1994. Since that time thousands of applications for new radio and television stations have piled up at the FCC. To help clear the logjam, the Commission recently waived its rules (the rules generally do not allow one applicant or an outside party to buy off other applicants) and allowed anyone interested in the stations to reach agreements with the applicants and buy them out. When the deadline for deal-making expired on January 30, settlements were reached among applicants for approximately 50 television stations and almost 800 radio stations. Among those buying television stations was Bud Paxson, who, as mentioned in last month's newsletter, is acquiring stations to support his new television network PaxNet.

We noted at page 356 that sometimes regulation delays new competition for telecommunications services. So do legal battles over that regulation. After the FCC issued rules designed to promote competition in the $110 billion local telephone business, local exchange telephone companies sued, arguing the rules were unfair. The U.S. Court of Appeals for the 8th Circuit agreed and threw out many of the FCC's regulations. This prompted the FCC and several long-distance telephone companies (who generally supported the FCC's rules) to appeal the decision to the Supreme Court. Last month the Supreme Court agreed to hear the case. Much of the hoped-for competition cannot begin until the Supreme Court renders its decision.

During his State of the Union speech, President Clinton argued that politicians should get free broadcast airtime to help reduce the cost of election campaigns. The next day, FCC Chairman William Kennard indicated that the Commission would commence a proceeding to require television stations to give free time to candidates. This has become a partisan political topic, with many Republicans - including the two Republican members of the Commission - arguing that such a requirement should come from Congress, not the Commission. Meanwhile, as part of its Democracy Project (p. 206), PBS announced that it would provide free airtime for congressional candidates in the 1998 elections. You can check out the Democracy Project's web site at www.pbs.org/point/democracy.