CUBAN BIDS BROADCASTERS IGNORE HOLLYWOOD ON RIGHTS MANAGEMENT

“I guarantee that if we just ignored the copy protection issue and just sell boxes, Hollywood will follow the money,” Cuban said in response to contention that studios wouldn’t make prime video content available for DTV: “If they don’t, there are thousands of content producers who would be happy to take their place.” In fact, Cuban said, there’s enough content for him to plan to launch up to 3 new HDTV channels in the next few months. He said piracy concerns weren’t main reason Hollywood wasn’t making movies available for DTV; main reason, he said, was that studios already had sold programming for regular broadcast and didn’t want success of high-definition content to devalue standard definition program libraries.

Consumers don’t need HDTV to get copies that they consider acceptable, said David Workman, COO of DTV retailer Ultimate Electronics. For example, he said, DVDs are available for most programming, meaning digital versions are easily available: “I am not sure why this [copy protection] is an issue.”

Meanwhile, consumers are “voting with their pocketbooks” in favor of DTV, Workman and others said. CEA Pres. Gary Shapiro said consumers had spent $5 billion on DTV products in 5 years, higher dollar value even after adjusting for inflation than for any previous consumer electronics product in same time period. He acknowledged that much of spending was for DTV-capable display devices without actual DTV receivers, but said products created good base of potential viewers.

Even recession and Sept. 11 haven’t significantly affected DTV sales, speakers said. Workman said DTV was “one of the few areas of CE that proved to be relatively recession-proof,” and sales actually have accelerated. Shapiro said, for example, that Feb. DTV sales were up 83% over year ago.

As long as price points for DTV keep dropping, “nothing else matters,” Cuban said. He said parties to DTV transition always wanted to blame something such as content control issue or govt., but “if enough sets are sold, content will follow.” Shapiro said DTV prices were dropping average of 2% per month, and others predicted trend would continue. For example, Zenith Vp John Taylor said Zenith will begin shipping fully integrated 32” HDTV set in next 2 months priced under $1,500. Set keeps price down by using 4:3 aspect ratio. In response to question, Taylor said $500 DTV set might be available in 2-3 years.

Just cutting prices isn’t enough, however, Workman said. He said if price dropped before consumers became aware of value of DTV, “it won’t drive demand.” Key, he said, is educating consumers.

Since only 14% of DTV display devices are sold with DTV receiver, that means that fewer than 1% of U.S. households still have full DTV capability, said NAB Senior Vp-Technology Lynn Claudy: “That is not a viable market for broadcasters. I'm not interested in display devices that are used primarily for DVD.”

Speakers generally endorsed FCC Chmn. Powell’s DTV plan (CD April 5 p1), though some still had quibbles. Shapiro said “the devil is in the details,” particularly requirement for DTV tuners in analog TV sets, which he called “a big stretch.” Claudy said “there will be plenty of time to nitpick this to death” and success of plan would depend on what alternatives were to voluntary cooperation by all parties: “No big sticks were waved.”

Broadcasters, as usual, mostly criticized lack of cable carriage of DTV channels. Shapiro said political winds “are not blowing in our direction” in favor of DTV must-carry, but it’s “critical.” However, panelist Joe Macione, gen. mgr. of WCYB-TV Bristol, Va., acknowledged he might be heretic, but “if we have good content, must-carry is virtually unimportant. They [cable] want good content.”

Recent U.S. Appeals Court, D.C., decision requiring FCC to fully justify public interest rationale for ownership limits (CD April 3 p1) is likely to affect Commission, which already was leaning against dual-carriage requirement, said Richard Chessen, head of agency’s DTV Task Force. He said decision “made it clear that the FCC will be held to a pretty high standard” for justifying rules based on public interest. NAB Assoc. Gen. Counsel Valerie Schulte said she believed broadcasters already had met that standard.

More than 800 TV stations seeking waivers of DTV transition deadline should be kept in perspective, Chessen said. He said 95% of big-network stations in top-30 markets, where half of population lives, already had begun DTV, and service was available to nearly 80% of population. Paul Karpowicz of LIN TV, chmn. of NAB TV board, said that’s one of reasons NAB didn’t seek blanket waiver of transition deadline. He said blanket waiver would be unfair to those who had invested in DTV by providing “cover” for those who hadn’t.

Big DTV problem is artificial goal of 2006 for DTV transition, speakers said repeatedly. As usual, they said nobody ever believed deadline was realistic, but it had driven policy decisions. Shapiro said transition would be lengthy, especially since consumers still were buying VCRs and b&w TV sets. In fact, more than 25 times as many analog TVs were sold last year as DTV devices.

Analog spectrum won’t become available for nonbroadcast uses anytime soon, even if 85% penetration rate were reached, NAB Senior Vp-Govt. Relations John Orlando said. He said even if 85% were reached “Congress is not going to turn off analog for 15% of its constituents,” let alone households with 2nd and 3rd TVs that relied on analog broadcast signal.

Despite that, “government intervention looms” if parties don’t follow Powell plan, said Richard Wiley, chmn. of FCC’s Advanced TV Advisory Committee. He said House Commerce Committee Chmn. Tauzin (R-La.) had been meeting with industries to spur transition and had made “considerable progress.” More action is likely if Powell’s use of “bully pulpit” doesn’t work, Wiley said: “There’s no turning back.”