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HD sponsor talks heat up

If negotiations continue on their current course, it may be three and out for Panasonic's high-definition television deal with ABC's Monday Night Football. As it is, the negotiations provide a vivid example of the iffy status of HDTV today.

"We're having ongoing discussions with ABC, but, to be honest, I don't think it's going to happen,''says Warren Algyer, president of Panasonic Broadcast. "There were benefits from the broadcasts that we expected that didn't accrue to us."

An ABC representative says, because negotiations are ongoing, it would be inappropriate to speculate on how things will eventuate. The network insists it's is still firmly committed to HDTV but also says it's too early to say whether it would turn to another HDTV vendor for MNF if the Panasonic deal were to fall through.

Meanwhile, CBS is also negotiating sponsorship deals for HD programming with a number of consumer electronics manufacturers, including its current partner, Mitsubishi. The deal inked nearly one year ago by Mitsubishi and CBS to bring HDTV to CBS' prime time schedule still has a few months of life left, but Mitsubishi already deems it a positive experience.

"We view the program as successful, and we're discussing future sponsorship opportunities with CBS,''says Bob Perry, Mitsubishi director of marketing.

Panasonic Broadcast subsidized last season's MNF telecasts with both technology (in the form of Panasonic's 720p production vehicle) and finances. Algyer says one of the major hurdles is he isn't sure he can build the level of support needed within Panasonic to undertake another season of MNF. Translation: The HDTV truck and the personnel Panasonic provided added up to big bucks the manufacturer may not be so willing to fork over for another year.

"It won't do the move to HDTV any good [if MNF football isn't done in HDTV], that's for sure," says Algyer. "I think broadcasters are in real danger of missing out on the future of television.''

But that obscures a bigger point: Maybe viewers don't care.

The current negotiations at ABC and CBS point to the tricky spot in which the industry finds itself with HDTV. HDTV offers no incremental revenue stream to those broadcasting it, only increased production costs. Year one in the official on-air life of HDTV saw only CBS (with Mitsubishi's big help) tackle HD in a serious way for prime time while ABC offered MNF, Wonderful World of Disney, and special events. NBC's contribution has been The Tonight Show With Jay Leno. FOX, generally, has been an HD no-show.

The result? The Consumer Electronics Association (CEA) estimates that only 17% of roughly 200,000 DTV products are capable of receiving terrestrial DTV signals. That makes for an estimated 35,000 viewers-or fewer than 300 viewers per digital broadcaster. Nobody's making a living on that.

Entering year two, it appears that the frustration among manufacturers could become more public if the networks don't step up with more complete HDTV programming lineups.

"Broadcasters have an obligation under the law to send out digital programming, and I think the intent from Washington has always been that HDTV programming will be part of the mix," says Gary Shapiro, president and CEO of the CEA. But broadcasters quickly counter that the obligation is only to offer a digital signal equal to the current analog signal.

However, potential for political noise in Washington, and in turn the potential loss of free digital spectrum, could make for some sleepless nights for broadcasters.

And there's another part of the puzzle: Retailers are discovering customers don't care too much about HD broadcasts; they're apparently buying the sets to watch DVDs.

"Consumers are spending the big money on the display, and they're choosing not to spend a few hundred dollars more on a tuner,'' Shapiro notes. "We used to think that we wouldn't be able to sell DTV sets without broadcasters' providing programming. But what we're finding is a lot of DTV sets are selling even though there's a lack of programming. And that isn't a good sign for broadcasters.''

Does the dearth of tuner sales as a percentage of DTV products sold point to the need for more HDTV programming? Many say yes. One of Mitsubishi's goals in its deal with CBS was to raise consumer awareness that HDTV broadcasts are available.

Perry says the deal accomplished that goal, but how it affected sales is unclear. "You know the old saying: 50% of advertising is effective,'' he says. "We only wish we knew which 50%.''

Mitsubishi and the other consumer electronics manufacturers are in the best position to benefit from the HDTV over-the-air product. Perry is emphatic about Mitsubishi's commitment to HDTV. "I hope that the broadcasters would get on the stick,'' he says, but he absolves CBS. "I'd hate to see the FCC have to become more punitive and aggressive in getting them to do the right thing."

At Panasonic, meanwhile, Algyer says the negotiations with ABC should be completed by the end of May, giving it time to find a new customer for the truck. They're negotiating with several potential partners now.