Broadcast Nets Eye HDTV for Ad Revenues

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New York -- Broadcast stations and networks are looking to
high-definition television as a way to differentiate themselves from their cable and
direct-broadcast satellite competition in the eyes of potential advertisers.

That's what panelists said at a Kagan Seminars Inc.
conference here last week.

Faced with eroding ratings, broadcasters hope that the move
to digital will be enough to draw audiences large enough to allow them to maintain their
market dominance.

Speaking at the Digital Household Summit, John Greene, vice
president of Raleigh, N.C.-based Capitol Broadcasting Co. Inc., said the company's
business model for its move to digital is simple: "To stay in business."

Greene said Capitol would support HDTV, rather than
multicasting, because "our goal is to offer the best possible product. We think
that's where advertisers and consumers are going to flock."

Greene added that multicasting -- fragmenting the HDTV
spectrum to provide more channels -- could fragment audiences and advertisers even more
dramatically than what the broadcast industry has already seen.

Greene believes that Capitol can charge a premium for HDTV
commercial time. "There's a 'wow' factor," he said.

Ave Butensky, president of the Television Bureau of
Advertising (TVB), said pretty pictures won't be enough to sell advertisers on HDTV.
Rather, it will be the number of consumers that adopt HDTV that will drive the value to
the advertiser, he added.

Butensky said digital television adds some value to
advertisers in that an ad can be targeted to upscale consumers -- the early adopters of
HDTV products. Digital ads can also mix the high-gloss branding campaigns of television
with the more practical promotions typically associated with newspaper ads. Coupons, for
example, can be printed from data signals sent with digital ads.

And for the first time, advertisers can play around with
sound in commercials, thanks to the home-theater-quality sound available on HDTV, Butensky
said.

While many advertisers are likely to take a wait-and-see
approach to advertising in HDTV, Butensky said, some will "lead the charge, because
they know that it's right."

Saul Shapiro, vice president of broadcast technology for
ABC-TV, said that while advertising revenues for the networks have continued to be strong,
"they've been strong on declining margins."

He plans to use digital television as a way to help shift
some of the advertising revenues back to the networks.

Tom Rogers, president of NBC Cable & Business
Development, said NBC is looking for ways to derive transactional revenues from
digital-television receivers.

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