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The broadcast flag is a digital signal signaling that redistribution (via internet, for example) is prohibited. It does not appear in the NTSC analog output of a DTV converter box. A DTV converter box NTSC output will be recordable on a DVD recorder.
The "analog hole" that the studios are concerned about is the high definition analog output of a blu-ray player. There, the plan is to gradually deny the use of analog high definition outputs.
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