Digital TV: News Is King?

What does Rupert Murdoch's buyout of DirecTV have to do with the computer industry? Storage Supersite Editor David Morgenstern says the move could fast-forward the advance of digital TV-and a commensurate speedup for storage sales.

A media company looks to have launched a new consumer computing platform last week, yet did anyone notice? The companys CEO has gravitas equal to that of the current reigning captains of industry—and maybe more important, real vision.

The boss in question is Rupert Murdoch, chairman and CEO of News Corp. In a deal last week worth $6.6 billion, the media company purchased the DirecTV satellite television service. For years Murdoch has worked to create a global network of satellite services as well as a conglomerate of newspapers, magazines, film production and broadcast media companies. The deal will face regulatory approval and is expected to close toward the end of the year.

Media reports focused on the changes Murdochs move may bring to the satellite market; the increased leverage that News Corp. and its FOX Broadcasting Co. subsidiary will have with U.S. cable network operators; as well as the increased clout his distribution holdings may gain for when bargaining other content producers.

So what does this have to do with the computer industry? After all, broadcast television is ancient history.

While Murdoch has struggled toward satellite content distribution, his vision now is focused on the medias digital future. According to David Kirkpatrick in the New York Times, in last weeks conference call Murdoch spoke enthusiastically of new satellite set-top boxes that will reschedule programs and skip commercials, "threatening havoc on networks advertising and schedules."

Here, Murdoch refers to next-generation set-top boxes that combine the features of a digital television receiver and a personal video recorder. As Ive mentioned before in,3973,801818,00.asp previous columns, hard drive manufacturers have been waiting a long while for the PVR market to take off; they see this consumer market as the primary source for future growth. Murdoch knows that the combination of digital television services and recording will sweeten the pitch for customers.

On the other hand, as one of the worlds largest publishers and media providers, it would be logical to think that Murdoch would stand on the other side of the digital-rights issue, joining Ben Affleck to decry content piracy. But no, hes looking forward to grinding up the advertising model with DirecTV and personal video recorders. Whats up with that?

I can suggest a couple of reasons for Murdochs attitude: First is his experience in bringing real-time interactive computing to the broadcast space, and second, his newfound command of a complete content platform.

In the U.S. market, interactive television services have had lackluster results; still, Murdoch has had positive experience abroad. He championed interactive television in England with the B Sky B provider. While focused first on sports, the services reportedly have gained popularity with non-sports fans.

Several shows on Foxs current lineup could use interactivity: viewers phone in votes or responses. For example, American Idol pulled in more than 21 million votes the other week (my wife said its a tossup between Clay Aiken and Ruben Suddard), and Americas Most Wanted collects weekly tips and leads to criminal investigations. Of course, there are many ways to add-value with interactivity: games; pop-up information for broadcasted shows; and perhaps in some areas, gambling.

More importantly for News Corp., the company will be able to sell advertising thats immune from fast-forwarding with a PVR. To access the new interactive features, customers will view screens with a variety of ads, some static and others more like current television spots. This is all on top of the service fees that customers will pay for the opportunity to interact with content.

Finally, with DirecTV, Murdoch now controls a complete digital content platform, spanning hardware, operating system, delivery and software. Some of his hot content properties may only be available from this platform, coming over his service and viewable on his hardware. Other titles may feature an added value through interactivity.

All of this potential must provoked cheers in the halls of storage and other component manufacturers. Hard disks will be needed on both ends of this content-distribution scheme: in the set-top box and on the video servers. Maybe they will count that as two new markets instead of one?

David Morgenstern is a longtime reporter of the storage industry as well as a veteran of the dotcom boom in the storage-rich fields of professional content creation and digital video.