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So far, low return on sports in HDTV

WashPost: Despite -definition hasn't lured in more viewers.
/ Source: a href="http://www.washingtonpost.com/wp-srv/front.htm" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

When the horses bolt from the starting gate at the Kentucky Derby today, viewers watching on high-definition television sets will feel like they are trackside at Churchill Downs. Dirt will splash into the air from the horses' hooves. Sweat will shimmer on the animals' skin. All of it, bridles, whips and saddles, will be richly detailed in digital clarity for the first time.

The marriage of a major sporting event such as the Derby and the wizardry of HDTV would, on the face of it, be just the jolt sports and television network executives have been searching for over the past decade as ratings for most major athletic events tracked steadily downward.

With prices declining and more and more Americans entering the digital television age, the broadcasters and professional sports leagues have been banking that HDTV, with its rectangular, movie-screen format and images that are much more lifelike than those on the square-sized conventional television sets, would bring fans back. Get viewers back, the theory goes, and advertisers will pay more for commercials, broadcasters will pay more for television rights and the leagues, and everyone associated with them, will get richer.

"That's the theory," said Anthony Ponturo, vice president of global media and sports marketing for Anheuser-Busch, one of the biggest advertisers in sports. "It's not the reality at the moment."

Despite the creeping spread of high-definition television into homes across the United States, sports and television executives say it is increasingly apparent that HDTV is unlikely to be the ratings and revenue windfall they had thought a few years ago, when the first HDTV sets hit the stores. The Federal Communications Commission last year ordered the broadcast giants to completely switch from the old analog signal to digital by 2006.

"I don't think high-definition is a panacea," said Kenneth Schanzer, president of NBC Sports, which also plans to broadcast the first all-high definition Summer Olympics from Athens in August. "It will certainly enhance the viewing experience for the fan. But I don't think it generates any new viewers or any new revenues anywhere. In my heart of hearts, I don't think it will increase ratings."

The reason, many television and sports executives have concluded, is that all the new technology in the world won't make a sport more compelling if the product on the field, track, court or ice isn't already compelling.

"It doesn't wave a magic wand and make a sport any better," said David Hill, chairman and chief executive officer of Fox Sports Television Group.

"It's the quality of the game that matters. You have to have the goods," said Steve Bornstein, executive vice president of media for the NFL.

Most sports teams need the money. Three of the four major sports leagues — the National Basketball Association, National Hockey League and Major League Baseball — lose millions annually despite substantial TV deals. The National Football League is still very profitable and its television ratings have stabilized, but broadcasting partners CBS, ABC and Fox are believed to be losing money on their deals.

High-definition broadcasts are expensive, requiring networks to spend hundreds of millions of dollars on new cameras, studios and transmission gear at a time when some are already losing tons on sports. HDTV is also pricey for consumers. High-definition television sets cost about $1,500, down from $3,000 when they hit the market in 1998, according to the Consumer Electronics Association. The average conventional television costs about $400.

While there are an estimated 10 million high-definition television sets in use in the United States, only about 2 percent of the nation's 108 million households have both a high-definition television and a signal from the local broadcaster that allows them to watch the game in high-definition, according to network officials and television association representatives.

HDTV still has considerable support, and its backers say it's far too early to declare that it won't eventually make money for networks and sports leagues. The vast majority of American homes will probably have high-definition TV by the end of the decade, both because of the 2006 FCC deadline and natural evolution of a new technology under which prices should continue to decline. The price of HDTV sets is currently dropping by about 2 percent a year.

To cover their bets, the leagues and networks are plunging ahead, with more and more content, including marquee sports events, running in high-definition: the Masters, Super Bowl, NCAA men's Final Four, Daytona 500, horse racing's Triple Crown, the World Series, the NFL, NBA and NHL playoffs, and the Olympics are just a few.

"I don't think any programmer can afford the luxury of not paying attention to new technology that enhances viewing," said Chris Tully, senior vice president for broadcasting at Major League Baseball.

Dallas Mavericks owner and technology entrepreneur Mark Cuban is betting big on HDTV, having invested $100 million in HDNet, which offers high-definition sports and entertainment to many cable and satellite television subscribers. Cuban is one executive who claims that high-definition is going to lift ratings, especially for hockey and soccer.

"You can follow the puck and see the people in the front rows going crazy, see the blood coming out of the cuts and the sweat on the players' faces," Cuban said. "It's going to be the best thing ever to happen to professional sports television."

With its meager television audience, and its difficult translation onto the television screen, the NHL may have the most to gain. Nearly a quarter of the league's games this season were produced in high-definition, and it has been promoting the technology as something that can make fast-moving hockey more television friendly.

"We are very bullish about it," said Jon Litner, the NHL executive vice president.

The four major sports leagues are creating their own television channels, all with high-definition capability. The NFL Network, NBA TV and NHL Hockey Channel all are either broadcasting in high-definition or moving in that direction. Major League Baseball is planning its own network launch as early as 2005.

ESPN will broadcast 185 events in high definition this year, up from 145 in 2003. The sports network is building a new digital television center in Connecticut that will open this spring. ESPN will televise nearly 60 percent of its entire schedule in high definition by 2005.

"Television is going to go this way, and we had to choose to be in front of the train or in back of the train," said Bryan Burns, vice president of strategic business planning and development at ESPN.

Cable giant Comcast is spending millions on its regional sports networks to provide high-definition content. It has purchased a high-definition production truck and outfitted its Philadelphia game production studios for HDTV. The company has 7.5 million subscribers in its Philadelphia and Washington area regions. The result: All Wizards, Capitals and D.C. United home games, as well as some Orioles and University of Maryland basketball and football games, will be broadcast in high-definition next season.

Sports leagues and networks are holding out hope that once viewers experience HDTV, they will be able to compete for consumers' attention against traditional rivals such as movies and outdoor sports and upstarts like video games. Just as the newspaper industry went to color pictures over the past decade in order to stay current, so television is moving to high-definition. Some say the business opportunities are there, but yet to be discovered.

"A lot of it is on faith," said Neal Pilson, a former president of CBS Sports and now a sports television consultant.