CBS, Other Broadcasters Had Reservations About ATSC 3.0 Push

LAS VEGAS -- ATSC 3.0 may have been the belle of the ball at the NAB Show (see 1604200051), but some large broadcasters and networks, most notably CBS, had reservations about the new standard and NAB's support of a petition for FCC authorization of ATSC 3.0's physical layer (see 1604130065), broadcasters, attorneys and other industry officials said in interviews last week. Those misgivings are believed to stem from the uncertainty of the undertaking, the expense and its possible effects on the network/affiliate dynamic, they said. They are part of the reasoning behind ATSC 3.0's voluntary transition plan, they said.

There was “overwhelming support” for the ATSC 3.0 petition on the NAB board, an NAB spokesman told us. CBS doesn't have a seat on that board's executive committee, and it wouldn't comment. CEO Les Moonves said previously that he had been skeptical of the plan for the new standard but was keeping an open mind based on the interest from affiliate groups like Sinclair.

ATSC 3.0 was everywhere at the NAB Show, a primary topic of conversation where broadcasters gathered, raised as an issue during nearly every panel we attended, and nearly every FCC commissioner mentioned visiting the show's demonstrations of the new standard in action. Perception of the standard was largely seen as positive, and FCC Chairman Tom Wheeler got loud applause when he announced that the petition for approval would go out for comment shortly. Broadcast industry officials and attorneys associated with larger broadcasters told us there are many unanswered questions connected with the new standard, making it difficult to securely invest large amounts of money in it. ATSC 3.0 is widely supported by broadcasters in part because there's no competing vision for the future of broadcasting, one broadcaster told us.

To transition to the new standard, station owners would have to buy new equipment and negotiate simulcast deals with neighboring stations, both of which could get expensive, broadcasters and broadcast attorneys told us. Since the petition is only for the physical layer, there are still many unanswered questions about what will come next and how concerns about the transition plan -- such as how it affects cable carriage of simulcast stations -- will be addressed. The need for large capital investment to make 3.0 work when there is no guarantee consumer electronics companies will build and market equipment that can receive the new standard's signal also motivated reservations among the networks and large broadcast groups, broadcast officials told us.

The cost of upgrading equipment is not likely an issue for larger entities like CBS, GatesAir Technology Adviser Jay Adrick told us. The new pieces of equipment required for a station to transmit 3.0 have a total cost of about $200,000, he told us. That's not likely to be a problem for the largest station groups and networks, he said. Smaller stations might find that cost harder to handle, but the incentive auction repacking reimbursement funds may be able to reduce that burden, BIA Kelsey analyst Mark Fratrik said.

Some broadcasters and broadcast attorneys told us CBS might have reservations about the new standard that are unique to its situation. One of the advantages of 3.0 touted by Sinclair and the Pearl TV mobile DTV consortium of broadcasters is that it will allow broadcasters to send content to mobile devices, something CBS already does through its VOD All Access OTT service. Part of the network's doubt about 3.0 could stem from concerns the service would allow its affiliates to compete with their own mobile content delivery, broadcast attorneys told us. Part of CBS's issue may be that it has already invested time and money heavily in All Access to make it a nationwide OTT service, SNL Kagan Research Analyst Peter Leitzinger said. The mobile capability of 3.0 could be seen as potentially undermining that work by allowing affiliates and other networks to also send content to phones, he said.

Numerous attorneys and broadcasters also pointed to CBS's relationship with its affiliates as a possible cause. Growing reverse compensation fees charged to affiliates were a common topic of discussion at the NAB convention, and some broadcast industry officials said 3.0 could give affiliates more leverage in such negotiations because of the mobile aspect of the technology.

Reservations aren't expected to be a barrier to the FCC approval process (see 1604140071), broadcasters and attorneys told us. Since the voluntary transition plan doesn't compel any broadcaster to move to the new standard, CBS isn't expected to file comments opposing it, a broadcaster told us. ATSC President Mark Richer said he wouldn't comment on the business plans of any network but said the voluntary transition plan is designed to allow the industry to determine the course of ATSC 3.0 on its own.