TELEVISION BROADCASTERS’ ADOPTION OF DIGITAL MULTICAST AND

204 Pages·2008·0.64 MB·English

TELEVISION BROADCASTERS’ ADOPTION OF DIGITAL MULTICAST AND
ANCILLARY SERVICES: AN ANALYSIS OF THE PRIMARY CORE, SUPPORTING, AND
ENVIRONMENTAL DRIVERS

By

TODD ANDREW HOLMES

A THESIS PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
MASTER OF ARTS IN MASS COMMUNICATION

UNIVERSITY OF FLORIDA

2008
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© 2008 Todd Andrew Holmes

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To all who have inspired my intellectual curiosity and academic pursuits, and to all who have
supported me in reaching this milestone

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ACKNOWLEDGMENTS
First and foremost, I would like to thank my chair, Dr. Ostroff, for the enormous amount of
time and guidance he gave to me in helping me to complete this research study. His support and
direction were absolutely critical in the successful completion of this paper. I also would like to
thank the members of my committee, Dr. Chan-Olmsted and Dr. Brown, for their thoughts and
ideas concerning my research topic.
Second, I would like to thank the nine television executives who took time out of their
busy schedules to meet with me and who very openly and willingly shared with me their
thoughts on the research topic. Their help was absolutely vital to the completion of this study.
Third, I would like to thank my parents who continued to keep me moving along on the
thesis through their inquiries and encouragement. Their own academic achievements have
continued to inspire me throughout this process.
Lastly, special thanks go to all my friends, the Gator Guzzlers and many others, who heard
me talk about this thesis for months and with whom I had to skip out on a lot of activities. I
appreciate their understanding and their always entertaining comments regarding this research
study.

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TABLE OF CONTENTS

page
ACKNOWLEDGMENTS...............................................................................................................4
LIST OF TABLES.........................................................................................................................10
LIST OF FIGURES.......................................................................................................................12
ABSTRACT...................................................................................................................................13
CHAPTER
1 INTRODUCTION..................................................................................................................14
Digital Television Rollout is Far Reaching............................................................................14
Broadcasters Face Competition from Various Sources..........................................................15
Origins of Digital Television..................................................................................................16
Early High-Definition Broadcasts..........................................................................................18
Consumer Adoption of Digital Television Technology.........................................................19
Comparison of Adoption of High-Definition TV to That of Color TV..........................20
Consumer Adoption of Interactive Services....................................................................21
High-Definition Gains Momentum.........................................................................................22
Consumer Education...............................................................................................................22
Current Figures on Consumer Understanding of Digital TV..........................................22
Consumers Not Very Familiar with Interactive TV........................................................23
Voluntary Actions to Increase Awareness......................................................................24
Public Safety Concerns...........................................................................................................25
First Responders Need Analog Spectrum........................................................................25
Over-the-air Television Critical During Emergencies....................................................26
New Digital Technologies Enhance Consumer Safety...................................................27
Purpose and Value of This Research......................................................................................27
Conclusion..............................................................................................................................29
2 LITERATURE REVIEW.......................................................................................................30
Proposed Framework of New Media Adoption by Media Firms...........................................32
Core Factors.....................................................................................................................32
Firm characteristics..................................................................................................32
Media technology characteristics.............................................................................35
Supporting Factors...........................................................................................................38
Strategic networks....................................................................................................38
Perceived strategic value..........................................................................................39
Managerial knowledge of and incentives to seek alternatives.................................39
Environmental Factors.....................................................................................................39
New Media Technology Adoption..................................................................................40
Social Movement Theory.......................................................................................................41
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Broadcasters and Their Entry into the Digital Age................................................................43
Regulation/Federal Communications Commission Rulings...................................................44
Three Key Recommendations of the U.S. General Accounting Office..........................45
Mandate for all TV sets to be digital over-the-air compatible and digital cable-
ready.....................................................................................................................46
Certain date for cable carriage to switch from analog to digital..............................47
Debate Over Dual Carriage by Cable Systems................................................................49
Broadcasters and Cable Industry Square Off on Issue of Multicasting...........................49
Broadcasters’ viewpoint...........................................................................................49
Cable operators’ stance............................................................................................51
Broadcasters Denied Carriage of Multicast Channels.....................................................54
Lack of Public Interest Programming..............................................................................55
Coalition of Consumer Activists Enter Debate...............................................................55
Retransmission Consent and the 1992 Cable Act............................................................56
Major Network Digital Initiatives..........................................................................................57
National Broadcasting Company (NBC).........................................................................57
American Broadcasting Company (ABC).......................................................................58
ABC AccuWeather...................................................................................................58
ABC News Now.......................................................................................................59
Columbia Broadcasting System (CBS)...........................................................................60
Fox Broadcasting Company, The CW Television Network, and My Network TV........62
Specialty Digital Networks.....................................................................................................63
Qubo Network.................................................................................................................63
LATV Network...............................................................................................................63
Motor Trend TV..............................................................................................................63
World Championship Sports Network............................................................................64
Multicast (Standard-Definition) Business Model...................................................................64
Model of Program Choice...............................................................................................64
Dual Carriage in a Multicast Environment......................................................................65
Advantages of Multicasting.............................................................................................66
Improved affiliate/network relations: Complementarity..........................................66
Creation of new national networks: Newness..........................................................66
Ability to target advertising to particular market segments: Utility observability
and efficiency........................................................................................................67
Outlet for extended/enhanced news programming: Content distribution................68
Relatively inexpensive once infrastructure is in place: Technology cost................68
Cross-market penetration: Complementarity...........................................................69
Similar to existing business model: Compatibility..................................................69
Other Uses of Multicast Technology...............................................................................70
Digital signal used to air programming from different networks: Content
distribution............................................................................................................70
Better carriage for low-power stations: Utility observability and efficiency...........70
Revolutionary Uses of Multicast Technology.................................................................71
Broadcast of flight arrival and departure information: Newness............................71
Traffic reporting: Newness.......................................................................................71
Benefits to Advertisers Through Use of Multicast Technology......................................71
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Challenges of Multicasting..............................................................................................72
Securing the capability to digitally deliver a signal: Technology cost.....................72
Producing more with the same staff or same capital expenditure: Technology
cost........................................................................................................................73
Acquiring programming to fill secondary channels: Complementarity...................73
Adding more channels does not mean there are more advertisers: Technology
cost........................................................................................................................73
Automation in a Multichannel Operation........................................................................74
Ancillary Services...................................................................................................................75
Media Technology Characteristics..................................................................................76
The Return Path Will Have Major Impact on Television Advertising............................76
Variations of Ancillary Services.....................................................................................77
WRAL-TV 5: A Digital Pioneer.............................................................................................78
Multicasting.....................................................................................................................79
Outlet for extended/enhanced news programming: Content distribution................79
Improved affiliate/network relations: Complementarity..........................................80
Relatively inexpensive once infrastructure is in place: Technology cost................80
Datacasting: Newness/Utility Observability and Efficiency...........................................81
KUSA-TV 9: A High-Definition Newscast Pioneer..............................................................83
High Definition................................................................................................................83
Content Distribution........................................................................................................83
Technology Cost..............................................................................................................84
Cable Is Using High-Definition Advantage in Battle With Satellite......................................84
USDTV: A Low-Cost Alternative..........................................................................................86
Conclusion..............................................................................................................................87
3 METHODOLOGY.................................................................................................................89
Data Gathering Method Used.................................................................................................89
Selecting the Study Participants.............................................................................................90
Pre-Interview Procedure.........................................................................................................92
Conducting the Interviews......................................................................................................93
Research Questions and the Actual Interviews......................................................................94
Data Analysis..........................................................................................................................97
Conclusion..............................................................................................................................98
4 FINDINGS..............................................................................................................................99
Profile of Interview Participants...........................................................................................100
Status of Multicasting as of Interview..................................................................................102
Viewpoints on USDTV: The Wireless Alternative to Cable.........................................104
Reasons cited for why USDTV’s business model was not viable.........................105
Reasons cited for why USDTV’s business model could have been viable............107
Core Characteristics..............................................................................................................108
Firm Characteristics.......................................................................................................108
Station affiliation....................................................................................................108
Ownership group....................................................................................................113
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Media Technology Characteristics................................................................................119
USDTV and its media technology characteristics..................................................119
Complementarities.................................................................................................121
Technology cost.....................................................................................................124
Supporting Factors................................................................................................................126
Perceived Strategic Value..............................................................................................126
Methods of selling advertising on multicast channels: Stations currently
multicasting.........................................................................................................126
Methods of selling advertising on multicast channels: Stations not currently
multicasting.........................................................................................................128
Managerial Knowledge/Incentives and Multicasting....................................................129
Managerial Knowledge/Incentives and Ancillary Services..........................................131
Strategic Networks........................................................................................................133
Network-broadcaster partnerships..........................................................................133
Broadcaster-cable provider relationship.................................................................134
Environmental Factors..........................................................................................................143
Regulation of the Broadcast/Multichannel Video Programming Distribution
Industry......................................................................................................................143
Reasons cited for differing strategy.......................................................................144
Reasons cited for not differing strategy.................................................................146
Market Conditions/Size.................................................................................................147
Competition...................................................................................................................149
Station vs. station...................................................................................................149
Broadcaster vs. cable operator...............................................................................150
Cable operator vs. cable operator...........................................................................151
Conclusion............................................................................................................................153
5 DISCUSSION.......................................................................................................................157
The Multicast Business Model.............................................................................................158
Weather Is the Most Popular Multicast Format, Particularly in the Larger Markets....158
Managerial knowledge (supporting)......................................................................158
Media technology characteristics/technology cost (core)......................................159
Smaller-Market Stations Are Multicasting My Network TV and The CW Network:
Market size (environmental)......................................................................................159
Networks Have a Limited Influence on Digital Model Adoption: Managerial
knowledge (supporting).............................................................................................160
Broadcast Ownership Group Makes a Difference.........................................................161
Diverse strategic postures: Firm/entrepreneurship (core)......................................161
Broadcast ownership groups are important in providing funding and support of
HD newscasts: Firm/entrepreneurship/organizational strategic traits (core)......162
Cable Industry as a Mediator of Strategy: Managerial knowledge and broadcaster-
cable provider relationship (supporting)....................................................................162
USDTV Failed to Successfully Compete with Cable and Satellite Providers..............164
Competition (environmental).................................................................................164
Market conditions (environmental)........................................................................164
Firm/entrepreneurship (core)..................................................................................164
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Market conditions (environmental)........................................................................165
Ancillary Services/ Datacasting............................................................................................165
Current Federal Communications Commission Decision to Not Mandate Multicast
Cable Carriage...................................................................................................................166
Mandate in Favor of Multicast Cable Carriage Would Be Significant.........................168
The Cable Industry Has Become a Gatekeeper: Competition (environmental)............168
Themes of Multicast Carriage.......................................................................................169
Multicast carriage theme 1: Broadcaster-cable provider relationship impacts
multicast carriage................................................................................................169
Multicast carriage theme 2: Affiliation and access to high-definition
programming influence multicast carriage.........................................................173
Multicast carriage theme 3: Level of competition experienced by cable
operators influences multicast carriage..............................................................175
Limitations of the Study................................................................................................175
Areas for Future Research.............................................................................................176
Multicasting............................................................................................................177
Ancillary services...................................................................................................178
Multicast cable carriage.........................................................................................178
Conclusion............................................................................................................................179
6 CONCLUSION.....................................................................................................................182
APPENDIX
A LIST OF KEY DEFINITIONS.............................................................................................183
B INTRODUCTORY LETTER...............................................................................................185
C INTERVIEW QUESTIONS: RESEARCH QUESTION 1..................................................187
D INTERVIEW QUESTIONS: RESEARCH QUESTION 2..................................................189
E INTERVIEW QUESTIONS: RESEARCH QUESTION 3..................................................191
LIST OF REFERENCES.............................................................................................................193
BIOGRAPHICAL SKETCH.......................................................................................................203

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LIST OF TABLES
Table page

4-1. Stations Multicasting as of Interview Date...........................................................................102
4-2. Number and Format of Digital Streams Broadcast..............................................................103
4-3. Time Frame for Non-Multicasters to Begin Multicasting....................................................104
4-4. Reasons Why or Why Not that USDTV was a Viable Business Concept...........................105
4-5. Level of Influence of the Network over Local Multicasting................................................109
4-6. Likelihood that Having a Big 4 Affiliation Will Influence Multicast Cable Carriage
More Than Will a Smaller Network or Independent Station...........................................110
4-7. Multicasters’ Views on the Effects of Network Affiliation and Broadcast Ownership
Group on Ability to Receive Cable Carriage...................................................................113
4-9. Involvement of Ownership Group in Decision to Pursue Ancillary Services......................117
4-10. Type of In-House Programming Being Aired on Multicast Channels...............................120
4-11. Reasons Provided by Current Multicasters for Carrying This Combination of
Programming....................................................................................................................121
4-12. Reasons Provided by Future Multicasters for Carrying This Combination of
Programming....................................................................................................................123
4-13. Costs Involved in Carriage of Multicast Channels.............................................................124
4-14. Current Multicasters’ Methods of Selling Advertising......................................................127
4-15. Future Multicasters’ Methods of Selling Advertising........................................................128
4-16. Stations Planning to Offer Ancillary Services...................................................................131
4-17. Type of Network Programming Being Aired on Multicast Channels...............................133
4-18. Rationale Provided for Voluntary Carriage of Multicast Channels...................................135
4-19. Multicasters Receiving Current Cable Carriage.................................................................138
4-20. Future Multicasters’ Views on the Effects of the Broadcaster-cable relationship on the
ability of broadcasters to receive multicast Cable Carriage.............................................142
4-21. Responses of Executives When Asked if Their Strategy Would Differ.............................143
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