Following an invitation from Ofcom both Channel 4 and ITV this week sent in their applications for running HD services on Freeview.
The highlights were thus:
ITV
ITV sent in a 41-page application.
It proposes to bid for one stream to offer an HD simulcast of the ITV1 peak time schedule operating initially from 18.00 to 23.00 each evening.
It expects to deliver around 40 to 50% (by hours) of originally produced content on ITV1 each evening in native HD by 2010. This will go up to 60 to 65% in 2012 and to over 70% by 2014
Sport and (non-soap) drama are key to ITV's HD proposal
Outside of peak there are three options: premium HD free to air (mainly sport) content; sub-letting capacity to third parties; and download of VOD content to hard drives.
Channel 4
C4 managed 37 pages.
Along with its partners S4C and Teletext, C4 plans to offer the existing 24 hour 4HD service and a combination of C4 and S4C simulcasts plus a Teletext digital text service.
By the end of 2008, 16.4% of C4's first run commissions and acquisitions will have been transmitted in HD
C4 plans to take delivery of all commissioned and acquired content in HD by the end of 2012.
C4 also wants HD boxes to include ethernet ports and PVR hard drives to allow for the early introduction of a push video on demand service.
Those are just the headlines. If you explore the applications further, there are signs that a financial issue may be on the horizon. In simple terms, can ITV, and to an extent C4, justify the cost of providing these services?
Although no one is bidding money for these slots - this is a beauty contest after all - there are costs to consider. Beyond the expense of marketing these new services and increased production costs there are also fees to be paid to the owner of the multiplex that will be used to carry HD services, Multiplex B.
Ofcom, when it asked for applications, stated:
Successful applicants will need to negotiate carriage terms with the Multiplex B licence holder (BBC Free to View Ltd) on a fair, reasonable and non-discriminatory (FRND) basis and at rates which reflect market terms.
ITV is not having a great time financially. And this is indicated in its application. It says:
It is important to highlight that the economics of offering HD on DTT in the early years are extremely challenging. Against this backdrop, ITV's tender is conditional on the ITV plc board having the opportunity to approve any final terms or contractual arrangements with the BBC or others before being committed to any binding obligations in relation to the provision of a service.
In short, it wants the BBC to reduce or get rid of some of the current cost components. Especially if comes to light that the quoted charges for providing an HD service - which are currently a secret - are deemed to be not necessary.
I wouldn't be surprised if we stumble upon a cash row in the not too distant future. Just consider these three simple factors.
Adding another HD service is not going to come cheap. Michael Grade admitted - albeit last year - that “the costs of simply transmitting an HD channel which are likely to be in the tens of millions.” As an example, BBC HD is forecast to cost£21.4 million per annum.
There may not be any extra direct revenues available from a free-to-air HD DTT service. Advertisers have not, it would seem, shown any willingness to pay more for an ad in High Def.
On Freesat ITV HD is only available as a red button service- allowing users to access HD pictures only when they are simulcast alongside programmes. ITV confirmed: "To provide an entire channel of HD programming was simply not economically viable."
If you add these to the comments on the Ofcom application you do wonder why ITV would even bother. Where will the money come from?
Unfortunately, with demand for HD increasing all the time it's probably not a case of can they afford to provide HD services. More of a case of can they afford not to.
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