A Bold, Uncertain Vision of Creativity and Commerce

David Hill, the chairman and chief executive of Fox Broadcasting Co., says moving the television industry from the old-style world of analog into the vaunted digital age is like “adding three more lanes to the 10 Freeway.”

Robert Iger, president of ABC Inc., the broadcast and cable division of Walt Disney Co., says that “computer-enhanced television” could be the salvation of broadcasting.

TV director Pen Densham is so bullish on the creative possibilities of crystalline pictures and sounds of high-definition television that he has been producing two television series, based on “The Outer Limits” and “The Magnificent Seven,” in the wide-angle format of a movie so they can be shown on HDTV.

The television industry today, as it approaches the digital frontier, is certain of only one thing: Over the next decade, technology will reinvent the appliance that resides in 98% of American homes and the things we see on it.

Advances in digital technology are giving once-hollow TV sets the brains and the brawn of personal computers and making it possible for them to duplicate the sound and picture quality of a movie theater. Images and data can now be broken into tiny digital bits that squeeze into smaller spaces and are less prone to distortion than their analog equivalents, marking the long-anticipated marriage between Hollywood and Silicon Valley.

How this digital revolution will reshape television is an issue of profound debate. Executives at the highest levels of the business are uncertain and at odds about what will happen.

Yet interviews with engineers, consultants, equipment manufacturers, analysts, software developers and TV executives and producers suggest that consumers will be bombarded with new choices and new forms of programming, especially during the experimental period of the next several years.

Television distributors will expect to offer movies, sports and live telecasts in the highest-quality digital format, HDTV, which can pack a dazzling dramatic punch.

Despite early disasters in interactive television, networks and cable operators seem convinced that with the new capacity provided by digital and the growth of the Internet, its time is arriving soon. That means movie listings, home banking, shopping, video on demand and someday video telephony will be available via TV.

“When the artists are turned loose on what the engineers have created, you will see things you never imagined,” predicted Robert Graves, chairman of the Advanced Television Systems Committee, a standards-setting organization for digital television in Washington.

The impact will ripple through the entertainment business with particular resonance in Los Angeles, where content producers will have to adapt.

In the most obvious sense, the picture clarity of HDTV means that cheesy paneling, fake ferns and a news anchor’s blemishes will all be vividly clear, possibly giving way to expensive new sets and an even bigger premium on young faces.

The transition will not happen quickly, with technical hurdles still to be resolved and a constellation of industries with competing agendas to be served. The high stakes, shaky economics, regulatory uncertainties and vast unknowns about consumer demand make the transition to digital the most daunting, ambitious and intriguing undertaking in TV history.

“At this point, we just don’t know where this is all headed,” Hill said. “But the potential and the possibilities make this the most exciting time in my 34 years in television.”

High-Definition TV

Broadcasters have embraced HDTV reluctantly, primarily because there is no clear business plan for making money or selling more advertising from the transmission of the most expensive and highest-definition signal. But many of the 40 or so stations nationwide that began broadcasting a digital signal earlier this month as part of a government-mandated conversion are achieving a low form of HDTV.

Many experts say HDTV will survive despite widespread predictions of a quick death, due to the high cost of equipment. These television sets cost $7,000 and up. Until that cost drops substantially, the market for HDTV will be small.

Though the nation’s 1,600 television stations are spending about $16 billion to convert to digital, HDTV is a “mirage,” said Jeffrey Chester, executive director of the watchdog group Center for Media Education in Washington. He says the broadcasters committed to HDTV in order to persuade Congress to give them additional airwaves--delivered last year--at no charge.

While TV manufacturers such as Sony Corp. and Thomson relish the prospect of replacing the nation’s 250 million analog TV sets, broadcasters believe the problem with HDTV is that advertisers are unlikely to pay much more for higher-quality pictures, and ratings are unlikely to spike as they did in the 1950s when “Bonanza” and “Disney’s Wide World of Color” were the first to abandon black and white.

“If you air ‘Monday Night Football’ in HDTV, even with a lot of HDTV sets out there, ratings won’t go up because everyone who wants to is already watching,” said Steve Burke, who left as president of ABC Broadcasting in June to become president of Comcast Cable Communications, the nation’s fourth-largest cable company.

Yet broadcasters may be forced to offer HDTV because cable and satellite providers will drive demand. “HBO, cable and DirecTV can provide HDTV without much of an investment,” Burke said. “HBO will raise the bar for ABC movies, the prices of sets will eventually drop below $2,000 and HDTV will grow.”

Iger agrees to some extent. “With the biggest events--the Super Bowl, a miniseries--HDTV will be hard to avoid,” he said.

But the dazzling clarity of HDTV has a downside. Stars may not be eager to be seen in high-definition resolution that reveals every detail--although set designers, makeup and hair stylists could make a killing. “Everything is so real, you can see that it’s fake,” said Bill D’Elia, a producer of “Chicago Hope” who directed this week’s episode in HDTV.

A television executive watching one of the first HDTV broadcasts, John Glenn’s recent launch into space, said that a bird circling the base of the shuttle that would not be visible in analog prompted jokes about its imminent death among colleagues in the viewing room.

On another HDTV telecast, the underarm razor marks on a female newscaster wearing a sleeveless garment were clearly visible.

Multicasting

Broadcasters are friendlier to “multicasting,” the division of their new airwaves into more than one channel. Engineers note that even after the new spectrum is split into six channels, the pictures would be equivalent to master-quality analog signals that most television sets receive today.

The question for broadcasters is how to fill these channels. The networks are struggling with a lack of hits in their current outlet, and the average American is unlikely to extend viewing time beyond the daily average of eight hours.

Some broadcasters worry that adding new channels will only cannibalize their audiences. “We have lots of choices already,” said Graves, who calls HDTV digital’s killer application. “If a broadcaster offers 40 hours more a day of programming, they aren’t going to increase viewing by that amount, and they aren’t going to quintuple their production expenses for 10% more advertising dollars.”

Yet David Hill reports that some camps within Fox are pushing to create regionalized channels that would focus on local lifestyles, keeping costs down by using the same crews that produce its 22 stations’ news segments.

Some experts say that it may be most practical for small stations to lease out the airwave space left after sending out a digital equivalent of their analog signal. Several companies are peddling simple services offering weather reports, Little League scores, school lunch menus, stock quotes and the 100 most popular Web sites.

Some large station groups say such “datacasting” is a nickel-and-dime proposition and that striking the jackpot requires pooling the excess airwaves of local stations to create an alternative to cable. Though the cooperation required may make it implausible, the 13 broadcast stations in Los Angeles, for example, could compress 50 channels into their left-over spectrum, enabling them to offer the most popular networks from ESPN, MTV, Nickelodeon, USA and the Family Channel.

The concept may develop as broadcasters jockey for position between the cable and satellite TV industries.

“You just need a box,” said one executive of a large station group, referring to the need for a means to build customers. “We could offer DirecTV the local channels they lack and that have prevented them from growing. We’ll tell cable that to keep us from allying with DirecTV, we’ll do a joint venture and provide the basic cable service with your infrastructure.”

Some television executives are skeptical. “The smart thing for KABC to do is to keep its big 10 rating, not multicast,” Burke said.

Interactivity

The numerous failures of interactive television have demonstrated that TV is primarily a laid-back experience for couch potatoes.

Some experts say that for interactive television to work, no keyboard can be required. Reading and writing are not TV-friendly activities, but several lucrative applications could be initiated with a simple click.

Like that workbench Tim Allen is building on “Home Improvement”? Click to print out the blueprint and the address of the nearest Home Depot. Click to order a Chicago Cubs cap. Click if you missed the start of your favorite sitcom and want a summary of the first 10 minutes.

One station manager sees the potential to get additional movie advertising by letting viewers click on an advertisement to see the trailer, the listings and print out a coupon for popcorn.

Indeed, in the digital dream world, televisions will collect information about their owners’ favorite shows, teams, advertisements and services and be able to sort through layers of choices to hand-pick recommendations based on those preferences. Cable and satellite providers could retrieve the information to finely target advertising.

ABC is keen on the idea of computer-enhanced television--adding graphics and statistics to sports programming and embellishments to prime-time programs.

The first step in this direction are digital set-top boxes that are expected to be the Holy Grail of digital television.

At first, boxes will be sold by satellite and cable providers as part of a product line of television, high-speed Internet services and eventually telephony. Bank of America will offer home-banking services on the advanced boxes that cable giant Tele-Communications Inc. plans to roll out late next year, and TCI is signing up other vendors to offer games and home shopping.

“We can layer in a whole new product line and stream of income and make money on day one,” said Comcast’s Burke. “We call it the stairway to heaven,” leading eventually to video on demand.

Software developers such as Microsoft and Sun Microsystems have waged a pitched battle to supply technology for these boxes, which one day may be in virtually every home in America. PCs are currently in less than half.

“This is like TV 1947, when you pointed a camera at a radio show and called it television,” said Larry Namer, president of Comspan Communications Inc., a Santa Monica-based consulting firm developing computer-enhanced programming. “Digital television is crude right now and advertisers usually aren’t interested unless they can reach 40 million homes. But this is the first time in history when there will be millions of interactive TV devices in people’s homes.”

Said Iger: “Whether digital results in increased revenue is unclear. But what we do know is digital is here to stay. It’s just a question of how much, how fast--and I think it’s going to develop faster than people think.”

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Picture This

High definition TV relies on digital signals for its crystal-clear pictures and CD-quality sound. These signals are shot through the air as ones and zeros, rather than electromagnetic waves, whose varying intensity can cause interference in today’s analog pictures. A comparison of a digital and analog TV picture:

Analog TV

* Analog TV sets have about 525 horizontal lines, of which about 480 are visible.

* Today’s analog TVs produce pictures with about 200,000 pixels, or about 5,000 an inch for a 40-inch analog TV.

High definition TV

* Most of today’s HDTV sets display pictures with 1,080 horizontal lines.

* These sets produce an image with about two million pixels. So, a 40-inch HDTV would have about 50,000 pixels per inch.

Sources: Cahners In-Stat Group; Times research