Wikipedia: Letterbox

Copying widescreen film images to video in a widescreen ratio--specifically, 16:9. Often--perhaps most of the time--the letterbox video does not reproduce the compositions of the original film, but the technique offers an alternative to the older pan and scan method of copying that cropped the image to suit the 4:3 ratio of the television screen.

Pan-and-scan results in the loss of about 25% of the image; but in letterboxing, the original aspect ratio is approximated, and black bars are put at the bottom and top of the image.

Some filmmakers state a preference for letterboxed videos of their work. Woody Allen's insistence on a letterboxed release of Manhattan probably inspired this treatment of other films. One exception to the preference is [Milos Forman]?, who finds the bands distracting. However, most video releases are made without consultation with either the director or director of cinematography of the film. The letterboxing is often careless, and the common 16:9 ratio does not exactly correspond to aspect ratios of the commonest widescreen systems.

HDTV, a newer digital video system with its TVs in widescreen format, is becoming the broadcast standard in the US. The wider screen will make it easier to make an accurate letterbox transfer.