Sinclair aims to provide local TV news on the go

Hunt Valley broadcaster sees future in mobile devices

March 11, 2012|By Lorraine Mirabella, The Baltimore Sun

The head of Sinclair Broadcast Group has a definite idea about television's future: It will be a mobile medium. And he doesn't need industry research to tell him so.

David D. Smith, president and chief executive of the Hunt Valley-based broadcaster, recalls an experiment he conducted during a trade show: He set a portable TV down in a bar and then watched as people gathered around, asking where they could get one.

"People who say they won't watch are the same people who said they wouldn't use a cellphone," Smith said of mobile TV.

A lot of people, Smith and other broadcasters believe, will change their minds once they get their hands on the new technology.

"Look at people riding the subway or walking on the street," said Dennis Wharton, a spokesman for the National Association of Broadcasters. "People are looking down at a mobile device that features content. We want live, local TV to be part of that and part of the programming."

Once the technology catches on, Smith said, "it means we'll be able to talk to people all the time, everywhere and not be confined to the house."

Mobile digital television technology, which sends signals to cellphones, laptops or mobile devices, is still in the test phase and at least a year away from being available in the marketplace, industry experts say.

It is unclear how much advertising revenue Sinclair and other television station owners can expect from the emerging technology. But it's not surprising that the 25-year-old Sinclair, which reported $648 million in net revenue last year, has been an early proponent of mobile TV, analysts say.

The expanding company, which owns or programs 74 stations in 45 markets, including WBFF Fox 45 in Baltimore, has typically taken an industry lead in developing new sources of revenue, analysts say. As a result, the company has emerged from the recession in better shape than many competitors.

"They are always trying to push the envelope in terms of embracing new technology and making sure broadcasting stays relevant," Wharton said of Sinclair.

Despite economic and advertising volatility over the past year, the company has stepped up its pace of acquisitions, and its stations — affiliates of Fox, ABC, MyTV, CW, CBS, NBC, NTN and Azteca — now reach more than a quarter of the television viewers in the United States.

As one of the first broadcasters to demand "retransmission" fees from cable companies such as Comcast, Sinclair has developed a revenue source that now accounts for about one-fifth of its broadcast revenue, or nearly $120 million, estimated Edward J. Atorino, a New York-based analyst with The Benchmark Company LLC. Cable companies pay the fees to carry Sinclair channels.

Sinclair is a founding member of the Open Mobile Video Coalition, an alliance of commercial and public broadcasters with about 1,000 stations that are researching mobile TV technology and business models, Wharton said. The coalition is working with MetroPCS, a cellphone carrier that has agreed to be part of the rollout. Samsung and LG, among others, have invested in the technology.

The goal, Wharton said, is to start bringing mobile TV to the marketplace within the next year or so, offering local, live production of news, weather, sports and entertainment 24 hours a day.

"The future of broadcasting is to be on as many platforms as possible and to be where the people are, whether that's on smartphones, on laptops or in the back seats of cars, and also in the home, obviously, because there's still a tremendous amount of viewership in the home," Wharton said.

But the signal will take some tuning.

"One of the big problems is the distribution — who's going to be the middle man between the broadcaster and your phone," Atorino said. "Sinclair is ready, but unless the market really takes off, there will not be an impact for a long time."

The technology is already available to enable broadcasters to transmit signals to mobile devices, but the new devices would need receivers and chips installed to process and show the video.

Technical issues aside, it is really more the complex business arrangements that would need to be established between sometimes competing interests — the owners of the programming, the broadcasters, wireless carriers and mobile device manufacturers — before the technology can be viable in the marketplace, Atorino said.

He warned that a slower-than-expected economic recovery could lead to further cuts in advertising and marketing budgets, hindering the company's revenue growth. Meanwhile, advertisers have migrated from traditional media to the Internet.

"Advertisers may view alternative options as more cost-effective, limiting Sinclair's growth and growth potential," Atorino said in a report last month.

Sinclair's Smith says the company remains focused on increasing advertising by maintaining strong programming. With so much material vying for consumers' attention, he said, "the relevant content will win."

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