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w/e October 25, 2009 SCRI International, Inc © 1984 - 2009

INDEX

TECHNOLOGY NEWS

HD IPTV coming soon

Dutch telecoms group KPN said it saw "no sign of recovery yet" in its business markets due to the recession, but third-quarter operating profit was up slightly as the company managed to squeeze out costs.

KPN said it now has 924,000 digital TV customers. Approximately 70,000 of those subscribe to the IPTV service, the terrestrial digital TV platform Digitenne has 854,000 subscribers. It expects to reach the 1 million mark in 2010.

The telco has also confirmed plans to launch HD television on its IPTV service in the second quarter of next year. The company is currently in the process of updating its copper network by upgrading to VDSL2 across the network.

FCC Considers Shifting Some TV Airwaves to Broadband

According to the WSJ, the FCC is considering taking back some airwaves from television broadcasters and auctioning them off to wireless companies to increase the availability of wireless broadband services.

"The record is very clear that we're facing a looming spectrum gap," said Blair Levin, a former telecom analyst who is in charge of crafting the FCC's national broadband plan, which is expected to lay out a variety of things the U.S. can do to increase broadband availability and usage. The plan will be released in February.

The WSJ reports that it's not clear if the proposal will actually make it into the FCC's final plan. At this stage, FCC officials are mostly trying to get input from broadcasters and others. Station owners are likely to fight the plan, although the FCC is envisioning paying broadcasters for any airwaves that are taken away.

The National Association of Broadcasters "believes it is imperative that policy makers explore spectrum efficiency choices that don't limit consumer access to the full potential of digital broadcasting," said spokesman Dennis Wharton.

Double-Digit IPTV Growth Forecast

AT&T and Verizon are expected to post double-digit IPTV subscriber growth in their respective third quarter releases, according to Strategy Analytics.

The group estimates that Verizon's FiOS TV customer base will grow 12 percent in the quarter, exceeding 2.8 million total subscribers. Meanwhile, AT&T is expected to add over 250,000 new U-verse subs, implying a 17 percent sequential growth rate. A recent report published by Strategy Analytics shows US IPTV growing to 15.5 million subscribers by 2013. This growth, however, will hinge upon the ability of Telcos to articulate the value of IPTV, according to Strategy Analytics.

"Telcos need to go beyond trying to simply replicate the cable experience," said Ben Piper, analyst and Director of the Strategy Analytics Multiplay Market Dynamics service. "Content does matter, but so do features. Operators able to optimize relevant feature sets for customers will ultimately succeed." The total US Telco TV market, estimated at 4.6 million subscribers in Q3-09, will near 5.3 million subscribers by year-end, according to Strategy Analytics.

Record-setting mobile TV quarter

TeleAnalytics Mobile TV Tracking Service (TMTS) quantitatively substantiates the position taken back in Q3-08 that the worldwide Mobile TV adoption/sales would not be much upset by the financial crisis, and rapid growth would resume by early 2010 or before. It is noted by the firm that the cumulative mid-year (H1-09) Mobile TV device sales were only 3% below the corresponding H1-08 figure.

In Q2-09, 6.97 million new Mobile TV users were added to the worldwide total, according to market research firm TeleAnalytics. In terms of mobile TV device sales, Q2-09 proved to be the best quarter ever with 11.57 million mobile TV devices being sold.

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INDUSTRY NEWS

Worldwide Box Office Continues Steady Growth

The following data is from the MPAA (Motion Pictures Association of America.

Worldwide Box Office Continues Steady Growth
Worldwide box office for increased 5.2% in 2008 to reach another historic high, at $28.1 billion, compared to $26.7 billion in 2007. International box office ($18.3 million) made up 65% of the worldwide total, while US and Canada ($9.8 billion) - classified here as “domestic” - made up 35%. International box office in US dollars has grown 17% in the past five years.

International Box Office Increases in All Regions
Of international box office ($18.3 million), the region of Europe, the Middle East and Africa (EMEA) comprised over half (54%), while Asia Pacific comprised 37% and Latin America 9%. Over the past five years, all regions have experienced double-digit box office growth in US dollars, with a short dip in 2005. International theater admissions totaled 5.7 billion in 2008, led by 4.2 billion in Asia Pacific. Admissions have stayed flat over the past five years, with the exception of fluctuation in Asia Pacific admissions, centered in the Indian market..

Domestic Box Office Reaches New High
Domestic box office reached the highest total in history at $9.8 billion in 2008, up 1.7% over 2007, and up 6.8% over five years ago. At the same time, theater admissions were 1.4 billion in 2008, down 2.6% over 2007. Admissions have stayed relatively flat in the past ten years, with the exception of 2002’s high of 1.6 billion admission.

Number of Films Released Increased Slightly While Production Dipped
After staying relatively flat between 2006 and 2007, the number of films released domestically in 2008 increased 1.8% to 610 films. Films produced in the U.S. dropped 20.7% in large part due to economic and labor issues.

The Number of Large Multi-Screen Theaters is Increasing
While the total number of theaters remained flat at 6,269 in 2008, the market continues to shift toward theaters with more screens. Over the past three years, the number of theaters classified as miniplexes (2-7 screens) has declined 6.2%, while the number of megaplex theaters (16 or more screens) has increased by virtually the same percentage. As a result, the number of screens around the country increased to 40,194 in 2008. Multiplex and megaplex theater screens now represent 74% of all domestic screens.

Digital Cinema Screens Expanding
Worldwide digital screens increased 33% to 8,614 in 2008, more than 25 times the amount of screens five years ago. 64% of all digital screens are located in the U.S. With the addition of 842 screens in 2008, U.S. digital screens reached over 5,400.

Michigan Public Stations Net $750,000 in Federal Funds

Public TV stations in Michigan are the latest recipients of federal DTV transition grant money. Central Michigan University’s public TV stations received $750,000 from the U.S. Department of Agriculture’s Rural Development fund, according to The Michigan News. The money was secured by Michigan Democratic Sens. Debbie Stabenow and Carl Levin.

The grant money will go toward digital production equipment including cameras, editing, mixing and storage equipment. The coverage area of this grant includes the digital stations serving central and northern Michigan. CMU’s PBS member stations include WCMU-TV, WCML-TV, WCMV-TV and WCMW-TV.

Grant money continues to flow to PBS member broadcast TV stations through a couple of federal agencies even as a third is considering reassigning broadcast spectrum for wireless broadband applications. WVUT-TV in Southwest Indiana received $596,000 for DTV gear from the Ag department earlier this month. WOUB-TV in Athens, Ohio, received a $255,000 matching grant from the Commerce Department, and Iowa Public Broadcasting netted $47,000 in September.

McGraw-Hill TV Revenue Down 24 Percent

Third-quarter revenues for McGraw-Hill’s four TV stations fell by 24 percent to $19.1 million compared to the same period last year, the multimedia company said today. Local and national time sales declined during the quarter, but absence of political advertising in the non-election year was the biggest factor in the year-over-year decrease, McGraw-Hill (NYSE: MHP) said.

The company owns KMGH-TV in Denver, KGTV-TV in San Diego, Calif.; KERO-TV in Bakersfield, Calif.; and WRTV-TV in Indianapolis. It also owns several print franchises, including AviationWeek, BusinessWeek, McGraw-Hill Construction, Platts, and research firm J.D. Power and Associates. All are rolled into the Information & Media division, which generated $239 million for McGraw-Hill in the third quarter, down 10 percent from a year ago. Operating profit increased 29 percent to $29.5 million.

Consolidated results from McGraw-Hill’s media, education and financial services divisions yielded $1.9 billion, down 8 percent; and net income of $336 million, down 14 percent from a year ago. Diluted earnings per share were $1.07 compared to $1.23 last year.

Harold McGraw III, chairman, president and CEO of the company said the outlook for full 2009 results would be worse than previously anticipated.

“With market conditions continuing to weaken in school education and advertising, we now expect revenue for 2009 to decline by approximately 7 percent. We had previously forecasted a decrease of 5.5 to 6.5 percent,” he said. “But with stringent cost controls, we now expect to achieve the top end of our $2.20 to $2.25 earnings per share guidance for 2009. At the end of the second quarter, we had anticipated coming in at the low end of that range.”

MPAA Statement Supports FCC

The following statement is from Motion Picture Association of America, Inc. (MPAA) Chairman and CEO Dan Glickman:

“The American motion picture and television production industry applauds the decision of the FCC to recognize the critical role of legitimate content in the continuing development of the Internet. Today’s notice of proposed rulemaking (NPRM) makes clear that reasonable network management includes the ability to stop unlawful distribution of content online. Although we are not proponents of government regulation of the Internet, by highlighting the importance of intellectual property in this way, the Commission signaled that American creativity and ingenuity, and millions of related jobs will be preserved. We look forward to reviewing the NPRM in its entirety and working with the Chairman and the Commission to craft policies that will lead to widespread broadband adoption, greater consumer choice, and preservation of American intellectual property online.”

NAB Raps CEA-funded Spectrum Study

The National Association of Broadcasters today dismissed a recent study funded by the Consumer Electronics Association estimating the market-value of broadcast television spectrum. The study was filed with the Federal Communications Commission late Friday, and while CEA commissioned the study, the group also told the federal agency that it “does not necessarily endorse” the results.

NAB Executive Vice President Dennis Wharton issued the following statement regarding the study:

“CEA’s study ignores the immeasurable public benefit of a vibrant free and local broadcasting system that is ubiquitous, reliable as a lifeline service in times of emergency, and flexible enough to include HDTV, diverse multicast programming and mobile DTV. That CEA itself does not endorse its own commissioned study reinforces its isolation as primarily an academic exercise. Meanwhile, broadcasters and forward-thinking CEA member companies have embraced mobile DTV to enable delivery of live and local TV to cellphones, laptops and the back seats of cars.

“Notably, television broadcasters just returned a third of our spectrum to government as part of our historic DTV transition. As the FCC’s process to recommend a National Broadband Plan moves forward, NAB believes it is imperative that policymakers explore spectrum efficiency choices that don’t limit consumer access to the full potential of digital broadcasting.”

NAB reiterated the comments it filed on the FCC’s request for information on the national broadband plan.

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COMPANY NEWS

Harris Q1 Revenue & Profits Down

Harris Corporation revenue for the first quarter of fiscal 2010 ended October 2, 2009, was $1.20 billion, compared with $1.17 billion for the first quarter of fiscal 2009. Net income in the first quarter was $105 million, or $.79 per diluted share, compared with $119 million, or $.89 per diluted share, in the prior-year quarter.

"New orders, revenue and earnings exceeded our expectations in the first quarter as a result of strong performance in both the RF Communications and Government Communications Systems segments," said Howard L. Lance, chairman, president and chief executive officer. "

First quarter orders in the Broadcast Communications segment were $124 million and were greater than revenue and about even with orders in the fourth quarter of the prior year. First quarter revenue in the segment was $119 million, compared with $130 million in the prior-year fourth quarter and $158 million in the prior-year first quarter. Continued weakness in the first quarter was expected and reflects the global economy and delayed capital spending by broadcast and media customers, as well as seasonally slow spending, primarily in Europe and the Middle East.

Operating income in the first quarter of fiscal 2010 was $.3 million and was achieved on substantially lower revenue as a result of significant cost-reduction actions implemented during fiscal 2009.

Tektronix Acquires T&M Business From Sypris Solutions

Tektronix completed the acquisition of the Test & Measurement business from Sypris Solutions, Inc. for $39.0 million.

Sypris Test & Measurement, Inc. is a provider of calibration services, testing and component sourcing services, and specialty products. The company serves customers in a variety of markets, including military, aerospace, avionics, telecommunications, automotive, semiconductor, medical and more.

Concurrent Q1 Revenue Down, Losses up

Reports Fiscal 2010 First Quarter Results Concurrent , a supplier of video and media data and advertising solutions, announced results for its fiscal year 2010 first quarter ended September 30, 2009.

Company-wide revenue for the first quarter of fiscal year 2010 was approximately $12.8 million, compared to $18.3 million in the first quarter of fiscal 2009. Gross margins for the first quarter of fiscal year 2010 were 60.7%, compared to 56.1% in the prior year's first quarter. Operating expenses for first quarter of fiscal year 2010 were $8.8 million, compared to $9.7 million in the prior year's first quarter. The Company incurred a net loss of $1.0 million, or $0.12 per diluted share, in the first quarter of fiscal year 2010 compared to net income of $93,000, or $0.01 per diluted share, in the same quarter of the previous fiscal year.

"Our video-on-demand business continued to be impacted by reduced spending by our top two North American MSO customers which led to lower revenues in the first quarter. The impact on revenue was due to delays in implementing new projects in combination with utilization of existing VOD capacity, not cancellation of orders or loss of market share. In fact the video-on-demand market is experiencing double digit growth in consumer viewing," commented Dan Mondor, Concurrent President and Chief Executive Officer. "We believe our first half of fiscal 2010 will be the bottom of this spending slow-down. The video market continues to migrate to an on-demand viewing experience across all three screens and we are committed to provide new video and media data and advertising solutions to our current and prospective customers."

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PRODUCT NEWS

Canon Announces EOS-1D Mark IV Digital SLR Camera

Canon U.S.A. introduced the next evolution in the EOS 1D series of cameras: the Canon EOS-1D Mark IV Digital SLR camera. The EOS-1D Mark IV is a high-speed multimedia performance monster with a 16-megapixel Canon CMOS sensor, Dual DIGIC 4 Imaging Processors, and 14-bit A/D data conversion, all at 10 frames-per-second (fps), with the widest ISO range Canon has produced to date. This new camera also features 1080p Full High-Definition video capture at selectable frame rates packaged in Canon’s most rugged and durable professional camera body.

The Canon EOS-1D Mark IV Digital SLR camera is scheduled to be delivered to U.S. dealers in late December, and will be sold in a body-only configuration at an estimated retail price of $4,999. Final pricing and availability for the Canon WFT-E2 II A wireless file transmitter will be available later this year.

Matrox MXO2 LE Now Shipping

Matrox Video Products Group announced that Matrox MXO2 LE, an HDMI, SDI, and analog I/O device for the Mac, is now available from authorized dealers worldwide. Matrox MXO2 LE streamlines editing with Apple Final Cut Studio on Mac Pros and MacBook Pros. It provides all the features of an I/O card in a sturdy, portable breakout box with professional audio and video connectivity. Matrox MXO2 LE is also available with Matrox MAX technology for faster than realtime H.264 file creation using professional application such as Apple Compressor and Telestream Episode.

“Matrox MXO2 LE is more than just an I/O device,” said Alberto Cieri, Matrox senior sales and marketing director. “Not only does it meet content creators needs for input, output, and monitoring, it also speeds up delivery to today’s digital formats. Creating Blu-ray discs and video for the web and mobile devices is much faster than ever before with Matrox MAX H.264 encoding technology.”

“Matrox MXO2 LE is ideal for mobile journalists and freelance editors who need to take their toolboxes with them wherever they go,” said Wayne Andrews, Matrox product manager. “It’s easy to connect to towers and laptops and supports efficient workflows in any format required – in the studio, on set, and on the road.”

Matrox MXO2 LE is priced at $995 US (£749, €799) and Matrox MXO2 LE with the MAX option is priced at $1,395 US (£999, €1,099) not including shipping and local taxes. Each unit comes with the customer’s choice of either an ExpressCard /34 laptop adapter or a PCIe desktop adapter. Additional adapters may be purchased separately at $99 US (£69, €83) each. Matrox MXO2 LE is available now through a worldwide network of authorized dealers.

Miranda and Mixed Signals Video Monitoring Partnership

At Cable-Tec Expo 2009, Mixed Signals and Miranda Technologies announced a joint solution that enables video service providers to ensure an exceptional quality of experience (QoE) for viewers. The solution is a pairing of Mixed Signals' award-winning Sentry® digital content monitor with Miranda's proven iControl Quality of Experience monitoring system, to create a complete and cost-effective monitoring solution.

"Partnering with Miranda expands the reach of Sentry into other vertical markets, including broadcasters and content providers, where Miranda has established a well-deserved reputation for excellence," said Eric Conley, CEO of Mixed Signals. "With Miranda, we can offer an enhanced QoE monitoring solution to the industry and expand our customer base, which already includes nine of the top 10 major U.S. MSOs." With the Mixed Signals and Miranda integrated solution, video service providers can cost-effectively and visually track service quality, from end to end in real time across hundreds of programs, and perform the following: Monitor video service quality and manage operations based on viewers' actual video and audio QoE Set different priority alerts based on how much and how long customers are impacted by video and audio errors Track subscribers' QoE by service (or program) from acquisition to the network edge Make timely decisions on fail over to minimize customer impact and increase service up time Simplify operations by pinpointing the source of the problem and reducing the amount of alerts generated "By partnering with Mixed Signals, we've strengthened our Quality of Experience monitoring by offering a broader and more comprehensive array of electronic monitoring capabilities," says Marco Lopez, Senior Vice-President, Interfacing, Monitoring and Control at Miranda. "The Miranda iControl monitoring and Network Management System will combine the rich monitoring solution of Mixed Signals, along with Miranda's deep visual probing technology, reducing the MTTR to resolve subscriber impacting problems." The joint solution will be available through Miranda, and will be on demonstration in booth #1060 at this year's SCTE Cable-Tec Expo in Denver, Colorado, October 28-30.

RESEARCH NEWS

SCRI RESEARCH NEWS

2009-2010 Broadcast Pro Video Marketplace Reports

2009-2010 Broadcast Pro Video Marketplace Reports Series is now available. A total of 25 individual product reports as well as a macro industry overview and micro quantitative data analysis reports are available. Contact des_chas@scri.com for more information.

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