Filling Secondary DTV Channels by Ken Freed. . The .2 Network is rolling out a 24/7 multicast service with revenue sharing for local stations.

As local broadcasters switch to digital services, among their challenges will be earning revenues from their secondary multicast digital channels.

One option is simulcasting the primary signal while spreading out revenues from new and existing advertisers on all channels. Another option is to buy syndicated programming piecemeal to fill out the schedule on the secondary channels and then to sell local ads around that content.

An Ohio company is offering another alternative &emdash; a 24/7 DTV network feed with local branding that features presold national ads, local commercial avails, local news slots, and promised revenues for local broadcasters from day one.

Guardian Enterprise Group (GEG) of Columbus, Ohio, in February 2006 will launch the .2Network, touted as "the network-in-a box," which will feature 300 Hollywood movies provided under an umbrella licensing deal with Sony Pictures Television.

Among the Sony titles acquired by .2Network are such top films as The Pink Panther, Stuart Little 3, Marie Antoinette, All The King's Men, RV, Stranger Than Fiction, Seraphim Falls, Gridiron Gang, Reign Over Me, Monster House, Surf's Up, Second Chance, and Premonition.

The overall network programming package, which includes content from sources beyond Sony, will include big event digital broadcast movie premiers, three theatrical movies daily, original network programs, several repeat television series, lifestyle shows, plus FCC-compliant educational and informational (E/I) children's programming.

GEG president Richard Schilg said the "dot two network" will be the first DTV service to provide local station affiliates with "a uniform, national network platform, affording stations a 24/7 option to simply 'plug and play' the network onto their current available and unused digital multicast channel positions and receive back immediate non-traditional revenue in the form of revenue sharing."

The .2Network affiliates can localize their digital channel by pre-empting designated portions of the feed and inserting their main channel's re-purposed local news, traffic, weather, or public interest programming. Affiliates also receive local barter spots throughout the day.

"The network's unique name and logo will enables local affiliates to extend their local brand," said Schilg. "In the digital world, each main channel has multiple sub-channels identified as .2, .3, .4, and .5. If the current main broadcast channel is 7, for example, the station can add our .2Network logo to co-brand the channel as the 7.2Network."

Schilg noted that when the FCC fixed the number of local station licenses based on local population counts, the rule effectively restricted the number of viable nationwide broadcast networks serving local stations, so today seven networks now dominate analog broadcast TV. "In the digital world and with digital multicasting, however, a limited number of new, nationwide broadcast networks can be added to the landscape."

Among those offering multicast content are Qubo for Ion affiliate stations and the new Retro Television Network (RTN), but these are only "partial solutions," Schilg said, so such services do not really solve the problem of how to monetize the conversion to digital multicasting.

"There's always been a sunshine story about all thing you could do with the expanded bandwidth capacity for digital TV," he continued, "and we feel that providing our affiliates with at a plug-and-play 24/7 network that shares revenue with them is the best way to monetize that excess capacity."

After the .2Network launching in February 2008, Schlig said the 24/7 programming service will continue only for the first three or four years of operation, then the network will revert to mostly prime-time offerings like the other national networks.

"Essentially, we're providing local stations with a 24/7 national network now to help them navigate through the next three years of choppy waters as the country converts to full digital by 2009. Once the stations get into the open seas of full digital operations, they may no longer need us to fill all the dayparts of a secondary channel. So we plan to scale back our offering, but we will never leave any local stations stranded."

He explained that the revenue-sharing model of the .2network permits a local station to start earning regular income at once just by downlinking and passing through the .2Network without doing anything else. Local stations will share 30 percent of the national ad revenues in the first year, 40 percent in the second year, and 50 percent in the third year.

If local station management wishes, however, they can sell ads for the four minutes per hour allocated for local spots during 14 to 16 hours of the daily schedule. The network will cap commercials at 10 minutes per hour

Stations also can keep all revenues from any ads sold during any local half-hour newscasts, which can preempt the national feed in specified slots four times daily. "Stations might want to offer special buys to advertisers for multicast play," Schlig suggested. "We'll have media packets ready soon."

Stations will be able to downlink the .2Network in MPEG-2 will little or no additional equipment outlay, said Rob Kasper, director of engineering at GEG. The new network is now deciding whether to transmit with DVB-S or DVB-S2. Stations that already have a compatible IRD will not need to spend anything more to downlink the signal.

Influencing the transmission decision is the existing and future infrastructure needs of GEG, Kasper said,

GEG owns and operates a full-power commercial UHF station at channel 51 in Columbus, yet the company also operates Guardian Studios in Columbus, which produces the stand-up comedy show, Bananas, distributed worldwide by Sony Pictures Television, plus the Comedy-at-Large reality series along with a children's sitcom, Taylor's Attic, both licensed to the iLife cable network. GEG also operates a small DBS network called GTN that carries Fox News, HGTV and Hallmark among other channels, GEG has uplinked all of this programming with DVB-S, but the operation is now migrating to DVB-S2.

"While the installed base of DVD-S2 is small now, it will dominate the industry within three years," Kasper said, "so the question is whether we go with DVB-S2 now or later."

Kasper said that if the .2Network does go with DVB-S2 transmissions from the Columbus NOC, local stations will be able to buy any compatible IRD for around $2,000, "which won't take them long to learn back," even with the plug-and-play revenue sharing model.

"From our experience operating a local station, operating a production studio and operating a DBS service," Schleg said, "we believe the multicast play can succeed for local stations and for us if we can keep costs down and content quality high."
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