Stations Take Idiosyncratic Paths to Over-the-Air Gear Investment

With retransmission consent established for many network-affiliated TV stations, some industry officials agree fee-collecting stations arguably have a financial disincentive to invest in their terrestrial signal because they would want as many viewers as possible on pay-TV platforms that pay them monthly fees. Over-the-air viewers generate no similar fees and an unreliable over-the-air signal could drive them to pay-TV. But stations have political and other financial incentives to provide high-quality DTV signals to homes in their markets, executives said. “They are definitely getting a significant fee from their retrans agreements, but it’s not the majority of their income,” said President Richard Schneider of Antennas Direct. “They still very much want to service their over-the-air viewers as well and they're not at all interested in sabotaging it."

Stations probably can’t push viewers to pay-TV by putting off investments in their signal, said Jeffrey Eisenach of the Empiris, a consulting economist who has done work for broadcasters and pay-TV distributors. FCC rules and provisions in affiliation agreements require stations to maintain a certain level of service, he said. “Given broadcasters’ obligations to continue broadcasting, I don’t think they have an ability to significantly influence the mix of audience between over-the-air and pay-TV,” he said.

Broadcasters’ approaches to their over-the-air service vary widely, said Dave Benco, national key account manager for Rohde & Schwarz, which makes test and measurement equipment. Some are eager to deploy mobile DTV service and put money into transmission equipment, he said. “We also see others that view themselves not necessarily as an over-the-air broadcaster, but as a content provider,” he said. “If they can get their content onto the cable system and turn their transmitter off, they'd be willing go do that.”

"I think everyone starts from the fact that they want to have a thriving business with great margins, but there’s just different means to the same end some times,” said Kerry Oslund, vice president of digital media for station owner Schurz Communications. “Just like with any business there are those that are going to take a quality path and those that are going to take a price path. I think broadcast operators are the same way. I'm really happy that I've worked with those taking the quality path."

Pay-TV carriage is a factors into how stations make equipment decisions, vendors and consultants said. Some DTV work is done so stations can reach cable headends so they can get carriage rights on them. Other work is done to reach large populations of viewers who might have trouble getting a signal over the air. “Within the context of my own clients, there are a number who are working to improve their signals, for instance, by installing improved antennas for their single-transmitter operations,” said Merrill Weiss, an engineering consultant. “In some cases, it’s trying to reach headends that they currently don’t reach or populations that they currently can’t serve,” he said. “In other cases, there are facilities with significant terrain challenges where, if new antennas don’t solve the entire problem, they are planning to put in additional transmitters to improve their service areas."

Most of the investment in DTV gear already has been made, said President David Neff of equipment vendor Axcera. “The stations have put their DTV transmitters on the air and there’s not a huge interest in back up transmitters,” he said. “A year or two ago it was big rush to buy a lot of digital transmitters.” Now most of Axcera’s work is around mobile DTV equipment, reworking transmitters for use on different channels or converting low-power analog transmitters to digital, he said.

It makes sense that broadcasters would take different approaches to investing in DTV because they're such new entrants in digital communications, Eisenach said. “They've just only now been given the tools to be as creative as the rest of the digital communications sector and they are in the very early stages of using that freedom to create new products.”