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Chase Carey Cautiously Optimistic About Broadcast Business

The Hollywood Radio and Television Society launched its 2010-2011 Newsmaker Luncheon Season Tuesday afternoon with "A Conversation With...Chase Carey." The News Corp. COO and Deputy Chairman took the stage with panel moderator and B&C Editor-in-Chief Ben Grossman at the Beverly Hilton Hotel in Beverly Hills, Calif. to discuss the state of the network business and its emerging business models.

When it comes to broadcast television's business model, Carey remains cautiously optimistic.

"I don't think, [thanks to] retransmission, we're screwed. It has to be a dual revenue model or it's not realistic to expect broadcast to compete with cable," he said.

He believes the broadcast nets have "for too long accepted second-class citizenship," driving home the point that broadcasters must up the pressure on distributors to pay for broadcast signals.

"I think about the network like a cable channel. In many ways, it competes with cable channels for audiences and has a distinct kind of programming, particularly news. But to a consumer, it's another channel," he explained, adding that ad revenue alone won't suffice to compete with groups who, he believes, are paid for programming that's lower in quality.

"[News Corp.'s Fox] needs to fight to get a value for it that reflects its importance and the quality of its programming. And that means a dual revenue stream."

Though Carey admits the retrans income won't replace what broadcast has lost in ad revenue, the model simply won't survive without it. He says broadcast also underestimates the power of its audience pull--which dwarfs that of cable--as well as viewers' demand for quality programming.

"The foundation of the network has to be to create programming. That's what's going to drive business, not cutting costs," he said. "We need to continue to invest to create the best, most interesting and exciting content out there. If you deliver customers good content, they'll pay for it."

Carey does admit, however, that's it's content creation in the digital age that keeps him up at night.

"Can we navigate digital technologies in such a way that you can come out of the other side and not look like the music business? I think there's ways you can," he said. "But I think it's the thousand-dollar question as we go through the next five-plus years--[trying] to deliver what customer wants in those experiences in ways that work for us."

But when it comes to new technologies, Carey isn't concerned about navigating the emerging 3D television landscape, saying it's "not the second coming of HD."

"People will value the 3D experience for the right events, but it limits you to select [programming] you're willing to put on the glasses for. You're not going to watch eight o'clock TV every night with glasses on," he said. "It's somewhat different from HD [because] if two networks had HD, you didn't want to look crappy next to them. I think it will grow, it is real, but it's different."