Satellite Operators: Sky's the Limit
By Glen Dickson -- Broadcasting & Cable, 12/4/2006
Fixed-satellite operators were in a good mood last week in New York,
despite a rough past few years. Fiber-optic networks have stolen a large
share of satellite's television traffic, compression technology has
allowed more feeds to be squeezed into smaller chunks of spectrum, and
private-equity firms have caused major consolidation. But satellite
operators say a boom in video business is giving revenue a big boost.
Several operators were in Manhattan to pitch Wall Street at the
inaugural ISCe Satellite Investment Symposium at law firm Jones Day's
offices, while others attended the fifth annual SATCON conference at the
Jacob Javits Center.
One of the appeals of satellite operators is consistent cash flow from
long-term lease contracts with broadcast networks. And while video
represents less than half the traffic for most major operators, which
also handle voice and data traffic, those contracts remain robust.
“Video is really what drives the FSS [fixed-satellite service]
industry,” says Gerry Nagler, executive director of marketing strategy
for Loral Skynet. “It's those long-term relationships that help drive
valuations.”
While fiber has made major inroads in the television “backhaul” business
(which involves taking a feed from a live event back to the network
before it's distributed to affiliates), broadcasters say satellite's
point-to-multipoint distribution scheme is still the most efficient way
to distribute their signals to hundreds of affiliates and thousands of
cable headends. “For the distribution side, it's hard to beat
satellite,” says Michael Huitt, director of new technologies for ABC News.
ABC, for one, occupies eight C-band transponders, which are used for
program distribution, and five Ku-band transponders, used for news
operations, on Intelsat. CBS has 10 C-band transponders spread across
two Intelsat birds and Ku-band capacity with both Intelsat and SES
Americom. Neither network sees its satellite requirements shrinking in
the near term.
Huitt says the network's appetite for Ku-band capacity is growing.
Stations that relied on microwave links for remote feeds are turning to
satellite as the FCC claims more and more microwave spectrum. ABC has
begun adding satellite capability to news trucks for maximum
flexibility. WLS Chicago, for example, now has six hybrid
satellite/microwave trucks, one satellite-only truck and only four
microwave-only units.
High-definition television, with its large bandwith, has been a boon for
satellite operators because most major broadcast and cable networks
transmit separate HD and SD feeds of the same content. Some of those SD
feeds will go away when analog broadcasts cease in February 2009, and
most networks will transition to a single HD feed where possible. But
Huitt says even the biggest ABC affiliates will still likely require an
SD feed right up to the analog deadline.
Bob Ross, VP of East Coast operations for CBS, doesn't expect that the
network will be using any less capacity; he notes that King World's
distribution of HD syndicated content just began this fall. For their
part, satellite operators say the new traffic from HD programmers will
more than make up for SD feeds that get eliminated.
Satellite operators are also seeing fresh demand driven by Internet
Protocol Television and mobile video services. Eutelsat gained 400 TV
channels last year and expects to fill eight to 12 transponders with HD
programming by 2009. And both SES Americom and Intelsat have launched
program-aggregation services aimed at small telcos launching IPTV.
While MPEG-4 compression is expected to dramatically reduce the
bandwidth required for video feeds, operators believe that the volume of
new HD content and IPTV programming services will outweigh the losses.
Says Nagler, “The bandwidth requirement will go up faster than advanced
compression techniques can keep up with it.”
--
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