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Q&A: Bob Kelly, PRECO

Equipment distributor and systems integrator PRECO remains active on a number of projects with broadcasters, studios, networks and post production facilities. But business development manager Bob Kelly notes that broadcasters are being hit “square between the eyes” by the economic downturn and growing competition from the Internet and other alternative distribution systems for news and programming. Kelly, who draws on nearly 30 years of experience in television, talked with HD Update about the impact of those issues on the transition to high-def production and broadcasting. An edited transcript follows:

Q: How do you see the market for helping broadcasters and others upgrading to high-definition?

A: Almost everyone realizes that to be competitive, they will have to get on that train somewhere along the line.

In California, there are obviously two factors impinging on these broadcasters trying to go HD — the digital transition and the economy.

In the smaller markets, some stations are having a hard time getting ready for the Feb. 19 digital transition but in the big markets, people are there. Everyone is standing back and waiting and hoping that it will work smoothly.

But in terms of the equipment purchases and things like that, that is basically behind us. If someone hasn’t gotten their act together, they are going to have a very difficult time doing it.

In terms of high-definition, most of the broadcasters have been upconverting from standard-def to HD for a number of years. I’ve sold a lot of equipment to enable them to do that.

In the big markets in California, the news is mainly in HD today. Over the last four or five years, it has evolved to the point where the network affiliates in Los Angeles, San Francisco, and Sacramento are pretty much HD.

In the smaller markets, they are still doing a lot of upconverting to HD. If you own an HD capable TV, their news is not going to look as good as the news from a station that has the money to spend on true HD transmission.

And, they know that. But if they decide to go to HD, there are a lot of things that need to be purchased.

The second thing is this economy. And the broadcasters are not only suffering because of the recession. They are also suffering because of the new competition they face from the Internet and all the alternative means of accessing news and programming.

Q: Is the economy causing them to slow down their upgrade to HD or change how they are approaching it?

A: They are certainly concerned about the economy. I work with a couple of stations that are having a heck of a time because of the economy. For a lot of people, print and electronic media — television and radio — are becoming also-ran’s rather than being a prime source of news. So, it is kind of a perfect storm right now.

Q: Will these financial problems be particularly hard on stations in the smaller markets, which have already been slow to move to HD?

A: Their intentions are good. However the CFOs and the owners of these groups are really watching the bottom line. They’re asking, ‘Do we absolutely have to do this? Is our competition doing it? And if they aren’t doing it, can we ride this thing out for a while without having to make commitments to upgrade.’

I’ve seen projects deferred and that is happening more frequently than it was more 6 months ago.

I would say the smaller markets are probably being impacted the worse. If they are funded locally, they usually don’t have as deep pockets.

I don’t think there was a lot of prescience in what the owners were looking at for this year and this coming year in 2009. I don’t think anyone saw that this would hit us as badly as it has hit us.

In the back of their minds they’ve got to be thinking how they are going to get a return on their investment the way they used to be able to do.

I think we are in a bad time right now.

Q: What about the transition to HD from the field? Is that going slower than the other parts of the upgrade to HD?

A: I could characterize it the same way. But with the prices for cameras coming down, I’ve seen a surprising amount of HD cameras in the field. It is likely that you are going to buy an HD camera even if you are not doing HD because the price is so good. Today you can buy an HD camera that is probably better than what you were shooting with for the same price.

Q: What sets PRECO apart in terms of what you can do for stations in this kind of uncertain economic and technological climate?

A: I have a long history in this market and have been working only in the California market, so I’m well known. The guys I deal with trust me. We have good products and we’re very service oriented. We take very good care of our customer. That’s why as a company we are doing well in this market. The broadcasters know we will take care of them and their business.