A compatible high-definition television (HDTV) coding system is described in this paper. This scheme allows the HDTV signal to be transmitted at a channel rate of 135 Mbps while an extended-quality television (EQTV) signal is encoded into a 45 Mbps subchannel. Three major coding strategies are used to achieve this goal: first, a hierarchical one stage pyramid coding structure is adopted to separate the HDTV signal into two paths; second, a DPCM scheme with run-length coding and a novel modified quantization scheme is used to compress the first path into a 45 Mbps stream for EQTV; and third, a simple PCM scheme is used to compress the second residual path into a 90 Mbps stream. At the receiver, the first path alone is used to reconstruct the EQTV signal, or the two paths are combined to generate the HDTV signal. This scheme has the advantages of relatively low hardware complexity since the minimum number of channels are used (for a complementary approach) and, since it is implementable with concurrent processing, no scan conversion buffers are required. Also, the proposed pyramid structure incorporates a feedback loop for the coding of the complementary high-definition residual signal. The system design details are investigated and computer simulation results are presented. Both the HDTV and EQTV reconstructed picture quality were found to be very good.