March 1999 Update

Michael McGregor & Thomas Spann

CONVERGENCE

Convergence (p. 5) of the electronic media continues. In February USA Networks Inc. announced plans to combine its Home Shopping Network and Ticketmaster service with World Wide Web search engine provider Lycos, Inc. Lycos is the third most popular search engine "destination" (after Yahoo and Excite) on the web and USA Networks looks at the merger as a way to move the company forward as a powerful online seller of consumer goods. Analysts say the merger will provide an opportunity for Lycos to promote itself on cable while USA Networks can promote its programming on the web. The value of the deal was originally estimated at about $22 billion but price fluctuations of Internet-based stocks during the last month make a current value estimate speculative.

Yahoo, the most popular Internet search engine "destination," announced it will buy GeoCities, a popular Internet personal publishing company, for more than $3 billion. In addition, Yahoo struck a cross-promotion deal with News Corp. This means Yahoo will receive promotion on all Fox media outlets. Broadcasting & Cable magazine says the Yahoo-News Corp. deal is worth $15 million. Yahoo cross-promotion deals with other cable channels such as CNN and the Discovery Channel are being rumored as well.

The FCC approved the ATT/TCI merger last month, subject only to a requirement that TCI sell its interest in a wireless phone venture with Sprint Corporation. TCI has already agreed to this condition. The proposed merger must also be approved by several states and many municipalities across the country. (Most local cable TV franchises require approval from the city if the ownership of the cable system changes.) Several cities have already rejected transferring ownership of the local cable systems to the new merged company, and this may lead to court battles between the cities and the company. If the merger ultimately is approved, ATT hopes to provide local telephone service through TCI's cable system plant. ATT reports that it will begin trial phone service in 10 cities by the end of the year and most TCI markets will be served by the end of 2000.


TECHNOLOGY

One spin-off of the move to digital television (DTV) is an improvement in video graphics at lower hardware and software costs. Stations are looking for ways to produce graphics for high definition television (HDTV) and they're turning increasingly to computer-based systems running operating systems such as Windows NT rather than traditional dedicated graphics hardware. The new computer-based systems use a template approach that is resolution independent which means a user can produce graphics for standard NTSC video now and then easily upgrade to DTV as needed. Advancements in computer-based systems along with lower costs also mean viewers will be seeing more dramatic three dimensional (3-D) rather than 2-D graphics in the future as graphics become even more important production elements in broadcast and cable programming.

We've reported broadcaster's dissatisfaction with the Emergency Alert System (EAS) in previous updates. Now they have another reason for complaining. Quad Dimension, Inc. is billing broadcasters $15 a month for using technology built into EAS equipment that QDI claims to have patented. It seems the FCC thought the technology had been developed by the National Weather Service, not a private company, when the FCC mandated use of the EAS by broadcasters in 1994. Late last year the U.S. Patent and Trademark Office reviewed QDI's claims and reaffirmed QDI's patent. Broadcasters say they've already dumped $2,500 into each EAS system they've purchased as required by FCC rules and don't think they should now have to shell out additional money to QDI for using a system they don't think works very well anyway. The FCC says it's looking into the situation and the National Weather Service is asking the patent office to reconsider QDI's patent yet again. QDI just wants payment from somebody for what it says is its technology.

What's the "next big thing" in consumer electronics technology? New Media magazine says it may be small "information appliances." The magazine predicts there will be a dramatic increase in the number of people wanting to surf the net using palm-size devices, with perhaps as many as four million tiny gadgets sold this year with some capability to send and receive information through cyberspace. The magazine notes, however, there are still no industry-wide hardware and software standards for these information appliances, although most major electronic equipment manufacturers and software providers have a product in the market or on the way. The prediction may, therefore, be premature. Anyone remember Apple's Newton or Sony's MagicLink?


COMMERCIAL OPERATIONS

The FCC recently published its report on the value of communications services in the United States. Revenues for all communications services in 1998 totaled $395 billion, up from $356.6 billion in 1997. You can peruse the entire report, with exciting facts listed for each segment of the communications industry, at the FCC's web site, http://www.fcc.gov/Reports/trends.pdf

ABC didn't cover the Winter Olympics this year, but the network is "going for the gold" this month with its coverage of the Academy Awards. ABC is asking $1 million for each 30-second commercial in the telecast. Reports say ABC should generate about $58 million in advertising for the evening and the network is making no guarantees to advertisers about audience size. ABC plans to keep all the loot, even if the cast has lower than expected ratings. But the Awards broadcast has been an outstanding ratings success in recent years. Last year an estimated 87 million people watched at least part of the show, many of them women in key demographic categories. For purposes of comparison, this year's Super Bowl pegged spots at $1.6 million per 30-seconds.

Station trading seems to have leveled off following the record year of 1996 (p. 189). According to Broadcasting & Cable (Feb. 15, 1999, p. 33), in 1997, 1067 deals involving transfers of broadcast stations totaled $23.44 billion. 1998 showed a small decline in both the number of deals made and the amount of money that changed hands, 950 and $22.8 billion, respectively.


PROGRAMMING

Radio "shock jocks" (p. 267) often get rewarded for pushing the limits of public acceptance in their programs, but sometimes they go too far even for the anything-goes talk radio program genre. Washington D.C. station WARW fired Doug "Greaseman" Tracht for a comment he made after playing part of a song by Grammy award winning singer Lauryn Hill. Tracht is reported to have said "No wonder people drag them behind trucks," a comment linked to the death of a Texas black man dragged along a country road by white supremacists. Many people applauded Tracht's dismissal, but history suggests he may find work on-air elsewhere. In 1996 WABC in New York fired Bob Grant for making a derogatory remark about the death of Secretary of Commerce Ron Brown in a plane crash. Brown was black. Grant had previously called blacks "savages" on the air. Grant soon found work at a competing New York station after leaving WABC.

TV critics have long complained about the violence in fantasy programming. During the last decade they have become increasingly concerned about non-fantasy "reality-based" shows (p.260). Shows such as "Cops" and "A Current Affair" encourage the blurring of lines between news and entertainment programming that bothers many in journalism, and criticism of such programming continues. Now critics are shifting their focus to such programs as "World's Most Dangerous Animals," "When Good Pets Go Bad," and "When Animals Attack." While critics concede that many of the savage acts in these programs are "real" events that occur in nature, they say the producers and distributors are motivated solely by the desire to offer viewers cheap thrills with horror and shock, not for any educational value the depictions might provide. The targets of the critics say they are only showing "reality" and that the ratings for their programs prove people like them.

Court TV (pp. 257, 320, 368) got into a bit of trouble when it began on-air promos for its "Wives with Knives Super Bowl Sunday" counter-programming effort. Court TV's five-hour block running against the Super Bowl featured trials of battered women accused of killing or injuring their husbands. The promos featured a woman in a kitchen cutting sandwiches, looking like she'd enjoy using the knife on her football-crazed husband who could be heard in the background. Court TV executives received complaints and pulled the promos, saying they apologized for appearing to take the issue of family abuse and marital violence less than seriously. In spite of (or perhaps because of?) the negative publicity surrounding the promo, the show itself pulled higher ratings than Court TV's typical Sunday evening programming.

The plethora of talk shows (p. 248) on TV scrambling for ratings makes their marketing and promotion critical. In what may be a strange paradox, it seems many talk show hosts are promoting their shows by appearing on another talk show. A Chicago Tribune article reports that since the first of this year Larry King has appeared on Charlie Rose's program and Conan O'Brien has been the guest of Maury Povich; Howie Mandel has been on Jay Leno's show and Bill Maher's "Politically Incorrect" as well as on shows hosted by Leeza Gibbons and Roseanne. Roseanne, in turn, has been on Mandel's program. The talk show hosts say the guest appearances give them the opportunity to promote their shows, books or other "products" on a different channel at a different time. Talk show producers say who better to be a witty and personable guest than someone who is a "professional talker"?

In last month's update we noted that ABC was trying (with apparently some success) to pump up the ratings of its morning program, "Good Morning America," by bringing in popular personalities Charlie Gibson and Dianne Sawyer as hosts. Now the word from ABC is that the network plans to cancel the Sunday morning edition of the program this month. Stay tuned?


RATINGS

The broadcast networks continue to lose viewers to cable, the Internet, and other media. This includes the kids (see Section 9.4). Nielsen reports an overall decline in kids' TV viewing of 8 percent this season with the four broadcast networks' combined Saturday morning kids' ratings down 13 percent. Fox and The WB took the biggest hits, 21 and 23 percent respectively. ABC was down 11 percent and NBC was down 12 percent. Only CBS showed a healthy increase (20 percent) but it started from practically nothing and still lags behind the other networks in this demographic. Even the dominant ratings leader in children's programming, cable's Nickelodeon, is either flat or down this season compared to last.


REGULATION

The publishers of an anti-abortion web site took a double hit last month. First a federal jury awarded a group of doctors $107 million. The doctors claimed that the site, dubbed "The Nuremberg Files," created a "hit list" that incited violence against them. Later, a federal judge banned the site from publishing "wanted" posters and personal information about doctors who perform abortions. Claiming their first amendment rights are being violated, the publishers of the site vow to appeal both rulings.

On the copyright front, several major computer and electronics firms have announced a new standard to protect digital programming from piracy. The new "watermark" for digital productions will be embedded on every frame of a digital recording. The mark will prevent illegal copying of copyrighted material.

And that's it for this month.