Ryvicker, Amy, Sook All Gung Ho For 3.0

Wells Fargo securities analyst Marci Ryvicker, who closely tracks the financial fortunes of the publicly traded station groups, says they have no choice but to implement the new ATSC 3.0 broadcast standard

“To stay at 1.0 is not good,” she said at the S&P Global TV & Radio Finance Summit in New York. “That puts you at a complete disadvantage.”

Once the 3.0 transmitter is up and running, she said, “you have to put your faith in the management teams to figure out what the best business proposition is.

“For me, I only see it as a good thing. I can’t figure out what the absolute opportunity is. I can’t put a cash flow on it. I can’t put a multiple on it. I just know it’s better than staying at 1.0.”

ATSC 1.0 is the current broadcast standard.

Ryvicker’s remarks came at the end of an hour-long session she moderated featuring three top broadcast executives — David Amy, EVP-COO of Sinclair Broadcast Group; Perry Sook, CEO of Nexstar Broadcasting Group; and Kevin Latek, EVP, business affairs of Gray Television.

While her 3.0 advocacy was forceful, it was hardly needed. Sinclair has been the leader in advancing 3.0 and Nexstar has also been a strong proponent.

The opportunities are “fantastic,” Amy said. It “will forever change the way viewers consume our product.”

It enables 4K picture resolution, targeted advertising, pay TV, interactive TV and data distribution, he said.

“Then, we will have the benefit by being able to provide a robust and reliable mobile service to every mobile device out there — something we simply cannot do today.”

Targeted advertising will allow broadcasters to drive CPM pricing, he said. “It will be a significant increase, not just a few percentages. It will be three or four times, potentially.”

During the transition, broadcasters plan to simulcast a 1.0 signal along with the 3.0 signal. “That’s very important to us because of the retrans revenue we receive from it. We are not going to shoot ourselves in the foot and destroy that income.”

Amy said he expected the FCC to approve use of 3.0 on a voluntary basis late this year or early next. “So you will start to see us putting our business plans together and how we are going to take advantage of the spectrum sometime beginning next year.”

Sook said that he wasn’t enthusiastic about 4K until he saw a demo at the Masters in April. It’s obviously a better picture, he said. “Our job is to always make the experience better for the viewer.”

And he said he was especially interested in datacasting. Several broadcast groups could get together, create a national footprint and offer a national data delivery service. “That’s a revenue stream that doesn’t exist today that could dwarf some of our other revenue streams.”

Sook said broadcasters are just beginning to focus on 3.0 and that momentum should build after the incentive auction. Many broadcasters will enjoy a windfall from selling spectrum, and with that money, “we can talk about how to fund the transition [to 3.0] and move forward.”

The session touched on broadband distribution of broadcast signals, but neither Sook nor Amy were particularly enthusiastic about it.

Sook said he has a year’s experience with CBS All Access, a pay service comprising the local CBS station and on-demand CBS programming, past and present. CBS affiliates get a small share of the $5.99 a month CBS charges for the service.

True, Sook said, subscribership and revenue have grown, but not to a level where it is making a material difference to Nexstar.  “We believe it is additive and incremental. We also believe that the quarterly check [from CBS] might buy everybody in the room lunch as long as we didn’t order a good bottle of wine.”

Amy seconded Sook’s comments. The service generates a little revenue and it does no harm, he said. “We think they are capturing, generally, viewers who are not cable or satellite subs so we would not be getting paid retrans anyway from those folks. They are new customers in that regard.”

In an earlier appearance at the conference, NAB President Gordon Smith said that 3.0 enjoys the support of a powerful coalition — the NAB, public TV, the public safety community and the consumer electronics industry.

He said that the FCC should approve 3.0 because it fits with its policy goals. For FCC Chairman Tom Wheeler, it’s all about “competition, competition, competition,” he said. “One of the ways to foster competition is to keep broadcasting strong.”

What’s more, broadcasting benefits all by handling the delivery of television and freeing up wireless spectrum for other uses, he said. “If more and more television is done through streaming, there will be a traffic jam out there that is unsolvable under the laws of physics.”