Land rush mentality grips digital TV channels

Last year, hundreds of applicants rushed to the CRTC in an attempt to nail down digital channel licenses.

Last year, hundreds of applicants rushed to the CRTC in an attempt to nail down digital channel licenses. In an unprecedented move last November, the CRTC awarded licenses to 283 of these applicants. Fortunate applicants obtained Category One status and some provision for immediate distribution. Some of the less fortunate Category Two licenses may never see the light of day.

On Friday September 7th, 47 digital channels went to air (or should I say ‘started streaming’) and another three channels are slated to launch in December. The great digital channel land rush is on.

New TV launches usually create a certain amount of disruption and confusion in our industry. The exact nature of a new channel is usually unclear. The impact on existing TV channels can only be surmised. How will buyers react? What kinds of sales offering will be made?

But there has never been a launch of this magnitude before. Never have so many industry observers been so unclear about the impact of so many new channels, albeit digital, on Canada’s TV landscape.

Top of the list of imponderables is the motivation behind a digital TV channel launch. Why would an operator want to incur these expenses? There are few digital receiving boxes out there on Canadian TV sets. TV buyers can’t even be approached by sellers at this point as there is such low likelihood of generating any kind of measurable audience. In fact, there is some question about whether today’s TV audience rating services have the technology or the sample size to ever develop a digital audience currency. Profit looks a long way down the road.

As usual, our history books contain parallel events that might help explain why hundreds of operators are prepared to incur expense with dismal revenue and profit expectations. Look up the Oklahoma land rush of April 22, 1889.

According to eyewitness accounts, which were reported in the May 1889 issue of Harper’s Weekly, thousands of hungry home and land seekers gathered along Oklahoma’s northern and southern borders. The US cavalry, responsible for overseeing the mechanics of the day’s events at the borders, blew their bugles at twelve o’clock noon and the following was reported.

The last barrier of savagery in the United States was broken down. Moved by the same impulse, each driver lashed his horses furiously; each rider dug his spurs into his willing steed and each man on foot caught his breath hard and darted forward. A cloud of dust rose where the home-seekers had stood in line and when it had drifted away before the gentle breeze, the horses and wagons and men were tearing across the open fields like fiends. Soon the riders began to spread out like a fan and by the time they had reached the horizon they were scattered about as far as the eye could see.

Like today’s digital TV operators, prospects have lined up and have leapt forward at a specific point in time.

The Oklahoma ‘boomers’, as they were referred to in the Harper’s article, were attracted to the promise of cheap, fertile meadows and rich loam but were soon facing the reality of thin dark earth hiding red, sandy soil and a lack of water. Similarly the newly arrived digitals might be examining their prospects in a grayer light as the economy continues to slow.

The eyewitness of the land rush noted, ‘men with large families settled upon land with less than a dollar in money to keep them from starvation. How they could live until they could get a crop from their lands was a mystery.’ Similar head scratching is occurring here in Canada concerning the digital land rush.

The motivation behind the digital rush could be summed up by the phrase ‘get it before someone else does’. But in this case the issue is not space, which is unlimited, but rather editorial theme. There are presently large red stakes hammered into quarter sections of geography, hockey, old movies, travel, sexual preference, music and animals.

When the next wave of digital settlers comes dashing, hell-bent for leather, across the plains of TV land, there might be some very unattractive plots left for selection.

Rob Young is a founding partner and SVP, planning and research, at Toronto-based Harrison, Young, Pesonen & Newell. He can be reached at ryoung@hypn.com.