Future of TV programming unclear in world of streaming video

As the audience for free television fades, federal regulators are wrestling over the future of the government-mandated broadcasts, which were originally intended to knit the nation's disparate communities together.

Today only 10 percent of the nation relies on free, over-the-air TV, which was created by the Telecom Act in the 1930s. To get a license, broadcasters had to offer local, educational and political programming, and make it widely available to rich and poor alike.

Now that viewing audience is becoming fragmented once again, social scientists say. On the Web, where users pick and choose what they want to watch, it's harder to ensure public broadcasting, local news and political debates will reach the bulk of American households. With options such as iTunes, Hulu, YouTube and Netflix, communities are no longer bonded by watching the same evening news and prime-time shows.

And as fewer people rely only on broadcast television, stations around the nation are struggling to survive even as some rural residents, elderly and the poor continue to rely on free TV.

"Broadcast has an incredibly important function for community and political reasons, and that programming will need to be delivered to 100 percent of the people," said Reed Hundt, former chairman of the Federal Communications Commission.

Americans watch about 147 hours of cable, satellite and broadcast television a month, a pretty consistent figure in recent years, according to Nielsen, a media metrics firm. Now they are supplementing that viewing with tablets and laptops, watching an average of 4 1/2 hours of online video each month, double the amount three years ago. Younger viewers are watching even more hours online.

Those who only watch broadcast television, however, comprise a niche audience. In the third quarter of 2011, they totalled 5.8 million homes, down from 6.25 million homes in the third quarter of 2010. In the past four weeks, all four major networks said prime-time viewing declined.

That's made it harder for broadcasters to court advertisers as viewers shift to the Internet, analysts say. Viewership for local television news has steadily declined since 2007, Nielsen said. Six in 10 consumers, meanwhile, now get their news online.

Networks NBC Universal, News Corp. and Disney are responding by trying to steal away advertising dollars from its television stations to its online site, Hulu, whose viewers watched about 1.7 billion ads last month.

And local broadcasters are faced with new rivals such as Aereo, an online startup that the networks are suing for alleged copyright infringement. The firm, funded by IAC/Interactive chief executive Barry Diller, offers $12 monthly subscription to get shows from New York city broadcast stations streamed on the Internet. Diller will testify in a Senate Commerce Committee hearing on Tuesday on the future of television and online video.

The business battles being fought for video dominance in the digital age have created an abundance of new options. But not always for the better, some consumers say.

Linda Taylor, 70, feels like cable and the Internet have led to a decline in the quality of local television shows she watches from the kitchen television of her Herndon, Va., home. She's disappointed by what she says is too much repetition and not enough original reporting. She can't rely on her Washington area stations for national and international news, Taylor said.

For that information, she turns to the television her living room, where Direct TV gives her dozens of channels. But she often wonders if the average $85 monthly bill is worth the three to four channels she likes most. She has a broadband connection but hasn't leaped to Internet video, which she fears would add more costs as she and her husband prepare for retirement.

"There seem to be so many options but at the same time no options," she said. "I am paying so much for what doesn't seem like a lot. Nothing gives me everything I want."

Video's migration to the Internet creates new challenges for lawmakers and regulators who have strict rules for broadcasters and cable providers but none for the Web.

"We need an intelligent discussion about how to reflect public interest on the Internet when TV and radio broadcast is moving there and the Internet has become the venue for civic dialogue," said Michael Copps, former commissioner of the FCC and board member of interest group Public Knowledge.

Senator John "Jay" Rockefeller will focus a hearing this week on how rural and disadvantaged communities are affected by the shift in technologies.

"I want to focus this hearing on what these changes mean for consumers, especially in rural areas, and if this evolution of video can bring them higher quality content at lower rates," Rockefeller said.

Broadcasters say the decline of their business is exaggerated. Political ad money is still being funneled to their stations, and the networks are charging retransmission fees to cable and satellite providers to run the hottest network shows.

"As policymakers review online video's potential, make no mistake that there is no substitute for the role of the free and local broadcaster in delivering compelling content, niche programming, and lifesaving information in times of emergency," said Dennis Wharton of the trade group National Association of Broadcasters.

The FCC said it remains committed to broadcast television even as it tries to get stations to give up airwaves to resell to wireless providers. Set on solving the capacity crunch on wireless networks, the agency is considering ways to protect broadcast television. But there are no guarantees a town won't lose stations that choose to sell airwaves.

"The FCC is committed to making sure that consumers can get the information that they need, and expects to see a healthy broadcast industry after incentive auctions," spokesman Neil Grace said. "At the same time, many broadcasters recognize the changing landscape and are working to seize the opportunities of a multi-platform broadband world by experimenting with new technologies, platforms, and business models."

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