The Channel | 2003 | September

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the channel | 31
Delivering content is one of the greatest challenges facing
international broadcasters. Today there are more platforms
than ever before and thus more ways of reaching audiences
than could be imagined even, perhaps, ten years ago.
Radio broadcasters have long relied on short wave or medium wave
to beam their programmes to audiences worldwide. Today, the
problems that plagued many broadcasters – jamming of frequencies
by governments – have largely disappeared (with one or two notable
exceptions). But radio audiences have deserted scratchy, noisy,
interference-prone medium and short wave bands and tuned their
radio sets to FM, with better sound quality and, as deregulation of
the airwaves has occurred around the world, to more stations offering
more choice of content that’s predominantly locally produced.
Engineers have struck back, though, developing new technological
solutions that could be the salvation of the AM bands. Digital Radio
Mondiale, or DRM, is the prime candidate to breath life back to
broadcasting below 30MHz (that means the long, medium and short
wave bands). In this section of The Channel, AIB member VT Merlin
Communications explores what DRM means and what it offers both
broadcasters and listeners. DRM provides the opportunity to broadcast
“FM-like” sound to listeners and the system is now a real, functioning
platform, albeit that currently no consumer radio receivers exist. Given
the uphill struggle that DAB Digital Radio – the other terrestrial radio
system that’s been on the air officially for more than eight years – has
endured, will DRM be able to accelerate the acceptance of the technology
by consumers and indeed the companies that manufacture radio sets?
Excluding the issue of receivers for the time being, the DRM business
case looks attractive. Broadcasters on the long, medium and short
wave bands have invested hundreds of millions of pounds in the
transmitters and antennas and a majority of these still have many
years’ life in them. DRM enables existing transmission infrastructure
to be used in the digital environment, without the need to invest in
new transmission plant. While there is a cost for modification, this is
modest in comparison with starting afresh with new equipment. There
is a further upside, as Peter Jackson of VT Merlin Communications
explains in his article. Broadcasters retain ownership of the
transmission infrastructure. There are no “gatekeepers” who can hold
a broadcaster to ransom – and that’s an important consideration for
international radio stations which broadcast to areas of the world
where their programming is not necessarily welcome.
Despite the attractiveness of DRM, broadcasters cannot afford to
rely on a single means of getting their output to audiences – and
major organisations like the BBC’s World Service (part of BBC Global
News, another AIB member) now need to look at more than 20
distinct platforms for their content distribution. Without embracing
each of these, a broadcaster’s audience could dwindle rapidly.
Consider the position the World Service, along with other major
international radio broadcasters, is in. The list of platforms is long.
Medium wave for Europe, the Middle East, the Indian subcontinent.
Short wave for Europe, Africa, Asia, Latin America. DAB in the UK.
FM in North America, and around 130 cities worldwide. Audio on
demand on the Internet. Satellite – digital and analogue – over
Europe, Africa, the Middle East, Asia, the Americas. Cable in cities
worldwide. SMS news services. DTT in the UK. The list goes on and
as it grows, so do the bills. Every additional platform has a cost
attached, and yet few broadcasters can afford not to develop new
outlets to reach additional audiences.
In television, the message is much the same. Audiences crave more
choice and they seem to be getting it. More than 1,000 TV channels
are on the air over Europe, beaming every conceivable genre of
programming in a multiplicity of languages. From channels serving
expatriates from Japan, Sri Lanka, India or China to entertainment
from household names like Discovery and MTV – it’s all there, but not
necessarily easily accessible to every audience. And how many viewers
actually go through the hundreds of channels on an EPG? Anecdotal
evidence suggests few do, with a majority of viewers sticking with the
well known broadcasting brands near the top of the list. Naturally,
audiences now expect to be able to access additional channel-related
content on the web, with some of the content that they’ve seen available
for download, too.
The rights issues here are significant and it’s not surprising that
some companies have taken to developing their own channels that
they control entirely. Disney and Hallmark are examples of this
approach and it seems that there are benefits in owning the content
and the distribution mechanism. But what it all boils down to is
getting the viewer to tune to your channel, and for that a considerable
marketing effort is needed. Walk around any major city in Europe
and you see billboards advertising television broadcasters –
conventional terrestrial channels as well as satellite-based channels.
In the mega-channel world, building the brand is a vital component
of any strategy to ensure viewers tune to your output rather than
that of your competitors.
There is no doubt that each component of the broadcasting industry
– from content producer to delivery platform owner – is inextricably
linked. Satellite operators and transmission companies would be
nothing without the broadcasters. There has been aggressive selling
of capacity in the satellite arena and the move to digital transmission
has meant that supply has in some areas exceeded demand. This has
resulted in consolidation in the sector – SES-Global, owner of AIB
member SES-Astra, has become the current industry leader through
the acquisition 18 months ago of Americom. Americom was the
satellite division of General Electric and as a result of the deal, that
company has a 20.1 per cent voting interest in SES-Global. SES-
Global also has a stake in AsiaSat, providing services to the Asia-
Pacific region.
Elsewhere in the industry, PanAmSat could be a take-over target.
Speaking to the London Financial Times recently Romain Bausch,
CEO of SES-Global, suggested that “PanAmSat will be acquired by
Intelsat or by financial investors.” For the financial community,
the thought of free-flowing revenues generated by the broadcast
and telecommunications business that are core to the satellite
industry looks attractive. Bausch, in the same Financial Times article,
said “It takes three years to build and launch [a satellite] but then
you have an average 15 years in space to earn money. The investment
is repaid after four or five years.”
The successful satellite operators achieve enormous free flow of cash
– in the case of SES-Global, the net operating cash flow is around €1
billion, although the net profit last year – as a result of the Americom
deal – was only €205 million. That is still a healthy position to be
in, and profits are likely to increase rather than decline over the
coming years. That’s good for all broadcasters and the rest of the
industry and probably not a bad thing for consumers. All they need
to do is remember which position between 1 and 1000 on the EPG
their favourite channels are.
Transmission, Platforms and Delivery
Choosing which platform to use is fundamental to every broadcaster and each year the choice gets
bigger. In this special feature, The Channel examines the issues and highlights the choices to be made.
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