Public TelevisionStrategic Investment Scenarios

Digital Distribution Implementation Initiative

NETA 2003 ConferenceSan Antonio, January 9, 2003

Participants

Work scope involved both radio and television scenarios. The latter covered in this report.

Core Working Group & CPB

Ed Caleca, PBSJeff Clarke, KQEDDennis Haarsager, KWSU, NW Public Radio (DDII consultant)Byron Knight, WisconsinDavid Liroff, WGBHPete Loewenstein, NPRAndré Mendes, PBSJim Paluzzi, Boise State Radio

Ted Coltman, CPBAndy Russell, CPBDoug Weiss, CPBAlison White, CPB

R/TV Radio

Television“Civilian”

Multidiscipline Experts Group

Jon Abbott, WGBHBrenda Barnes, KUSCRod Bates, NebraskaJoe Campbell, KAETScott Chaffin, KUEDBeth Courtney, LouisianaVinnie Curren, WXPNTom DuVal, WMRATim Emmons, Northern Public Radio

Fred Esplin, U. of UtahGlenn Fisher, KTCAJack Galmiche, OregonJohn King, VermontTed Krichels, WPSXJon McTaggart, Minnesota Public RadioPaige Meriwether, KUEDSteve Meuche, WKARPeter Morrill, IdahoMeg O’Hara, WNET

Multidiscipline Experts Group

Maynard Orme, OregonAllan Pizzato, AlabamaLou Pugliese, onCourseDon Rinker, AlaskaMeg Sakellarides, ConnecticutBert Schmidt, WVPTJonathan Taplin, IntertainerKate Tempelmeyer, Nebraska

Tom Thomas, SRGMike Tondreau, OregonDavid Wolff, FathomArt Zygielbaum, Nebraska

Current Environmental Scan

Public Broadcasting Today

“Everyone is baking their own cookies”“Hail Mary” method of funding depreciationUsage strong compared to other public service providers, not so (TV) compared to other broadcastersPolicy support of pub’casting less assuredOur esteem is an asset that can be leveraged or squanderedOther public service entrants entering electronic media

The Electronic Media Today

Conglomerates dominate ownership and control diverse distribution outlets, with both “horizontal” and “vertical” operations and pricing advantagesUsers are beginning to take control of when they access programmingSubscriber-based economic models (e.g., HBO) are competing with ad-supported ones

Television Today

Cable/DBS are gatekeepers for the main receiver in 85% of homesCable/DBS increasingly deliver original progr.Cable/DBS focus is on quantity vs. qualityNon-broadcast channels are on threshold of overtaking broadcast channels in viewingTelevision advertising may erode as cable & DBS develop greater advertising options No federal support for multicast; no active support for non-HD models

Diverging Fortunes of Public R/TV

Terrestrial digital transition is mandatory for TV, voluntary for radioContent production entities are generally licensee based (with major exception of NPR)Public TV viewing and number of members is steadily declining, while public radio listening and memberships have increasedPublic radio players have explored alternative distribution platforms to a greater degree than have PTV’s

Five-Year Horizon

Most Probable Outcomes

Television In Five Years

Terrestrial will be of minor consequence as last-mile distribution to mass audiencesViewers will choose from incr. customized, personalized programming optionsRevenues from other than spot advertising will become significant and competitive“Must convince” replaces “must carry;” some stations will be shut out of cable/DBS

Television In Five Years

Erosion of audience and revenue threaten existence of many licensees; may be fewer licenseesA variety of technologies, wired and wireless, to compete for delivery of servicesAudiences will still value storytelling, but truly compelling content will continue to be scarceFirst stations in the new mobile video/multimedia service will begin operation

Five-Year Horizon

Plausible But Less Probable Outcomes – Wins and Losses

Unexpected Wins

DTV killer application – content or service – that accelerates adoptionDTV universal set-top box works with a wide variety of digital services, including DTTNew broadcast models (rich media, mobile) prove economically viable

Closet of Our Anxieties

DTV DOA with stranded $1B+ investment; diminished credibility with fundersNo federal funding for public TV NGIS – capabilities drastically reducedEarly surrender of analog spectrumContinued reduction of funding for public broadcasting

Strategic Investment Scenarios

Investments may be individual or collective

Collective Investment Modalities

Toolkits – activities or tools licensees can use to achieve best practices without need for collaborationService Clouds – stations outsource significant activities created for specialized purposesColonizers – efforts to operate public broadcasting mission elements independently with or without station involvement

Scenario 1 – Sustaining

Make strategic investments in initiatives that sustain the legacy (broadcasting) businessTends to maintain operational independencePreserves as much “gross tonnage” of public service as possible, at least in near term; lengthening the “glide path”High investments in “toolkits,” somewhat lower investments in “service clouds,” little in “colonizers”

Scenario 2 – Repositioning

Make strategic investments in initiatives that reposition public television in new directions consistent with historic missionCapacity and scale created at collective levelEmphasis on editorial (programming) rather than operational independenceAccepts the current “glide path” but creates new “climb paths”Increased investments in “service clouds” and “colonizers”

Innovation Modality1 Tool Kits

Innovation Modality 2Service Clouds

Innovation Modality3 Colonizers

Public Television Investment ScenariosDiverging Investment Possibilities

DLH, 1/7/03, p. 1

Strategic Investment Scenario 1 — Sustaining

Strategic Investment Scenario 2 — Repositioning

Diminishing ability to make parallel strategic investments within both scenarios

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Innovation Modality 1Tool Kits

Innovation Modality 2Service Clouds

Innovation Modality 3Colonizers

Public Radio Investment Scenarios:Parallel Tracks Possible

DLH, 1/7/03, p. 2

Ability to make separate strategic investments within both scenarios

Strategic Investment Scenario 1 — Sustaining

Strategic Investment Scenario 2 — Repositioning

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SustainingScenario

RepositioningScenario

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Toolkits

New ShelfSpace

Colonizers

Colonizers

ServiceClouds

ServiceClouds

Generally lowerper-licenseeinvestments

Generally higherper-licenseeinvestments

Public BroadcastingInvestment Modalities

Provocations

From the consultant…Scenarios Provocations

Television Provocations

Form “virtual broadcast groups,” digital distribution companies that operate key functions of current stations across marketsProvide elective, centralized station operations services through PBSCreate public service “digital condominium association” with other state, national and international advanced networksTask system economics panel with devising strategies to redeploy [insert ambitious amount here] to priorities

Virtual Broadcast Groups

Repositioning service cloudsProvides competitive (to commercial group stations) scale and cost savingsCreate common technical standards and best practicesLicensees freed to concentrate on things not transparent to viewers, on building new constituency relationships, and fundraisingGroups could aggregate for multiple reasons

PBS Station Operations Services

Repositioning Service CloudProvides similar functions to VBGs, though perhaps more oriented toward technical opsNatural extension of NGIS role and missionServices could also be provided with VBG affiliates

Digital Condominium Association

Builds on blossoming relationships with Internet2 and affiliated state networks (e.g., IA, MI, TX, WA)Scale saves substantial dollars on capacityEnables public television to serve emerging communications needs of education, libraries, museums, et al.Multiplies political capital for interconnectionPeering provides collaborative environment for all “condo” residents – “the pool”

Redeploy $ To Key Priorities

Wide agreement on unnecessary expenditures at your station (not mine)Unnecessary = expenditures transparent to our viewersPerhaps we really can afford our service prioritiesSet an ambitious goal and task a panel with the task of identifying where and how – with proceeds redeployed to programming, capital needs and repositioning colonizer investments

DDII Scenarios Documents

www.technology360.comScroll to “Documents”

Contact Information

Dennis L. Haarsager, DDII Consultant1019 Border Ln., Moscow, ID 83843-8737208.892.9445 | e-fax 206.770.6100haarsager@moscow.com

Associate Vice President, Educational Telecommunications & Technology, Washington State University

Box 642530, Pullman WA, 99164-2530509.335.6530 | e-fax 888.455.1070 | haarsager@wsu.edu