OCTOBER 28, 2008 Some Consumers Keep Old TVs Despite Switch to Digital Signals
By MIGUEL BUSTILLO and CHRISTOPHER LAWTON Wall Street Journal http://online.wsj.com/article/SB122514504789873637.html Sales of inexpensive converter boxes that allow older televisions to receive digital signals have been strong this year -- a bad omen for sales of new televisions heading into the holidays. An estimated 15% of American households still get their television for free with antennas that receive analog signals, according to the Government Accountability Office, an arm of Congress. But in February, all U.S. television stations will begin broadcasting solely in digital signals. Consumers with older TVs that don't subscribe to satellite or cable services will have to buy a converter box for each set or buy new digital televisions. Retailers and manufacturers were counting on stronger television sales this year, partly because of the digital changeover, and partly due to the ongoing shift to high-definition sets. But so far, surprising numbers of Americans are sticking with their old TVs and buying converters, which retail for $50 to $75, instead of paying hundreds more for a new television. RadioShack Corp. last week credited stronger-than-anticipated converter-box sales with boosting profit by 8% in its quarterly earnings report. A Best Buy Co. spokesman also says the retailer has seen stronger-than-expected sales of converters. The U.S. Commerce Department, which is managing a $1.5 billion subsidy program that offers consumers $40 coupons to buy converters, reports that 32 million coupons have been requested and nearly 13 million were already redeemed as last week. Commerce officials said demand has exceeded their expectations but added that no one seemed to have a good grasp on how many older televisions Americans owned. The GAO estimated that the number of coupon seekers was far greater than 15% of households, because roughly 35% of homes had extra TVs that weren't hooked up to cable or satellite boxes. Retailers selling converter boxes "had no idea what kind of inventory to order, and we have tried to give them as much information as possible," said Meredith A. Baker, the acting head of the Commerce Department's National Telecommunications and Information Administration. Analysts say there is growing evidence of oversupply in the U.S. television market, mainly because manufacturers produced a glut of flat-panel sets, but also because nearly every big retailer -- from Wal-Mart Stores Inc. to Sears Holdings Corp. to Circuit City Stores Inc. -- stocked up on them before the economy soured. Experts say profits per set, which had held up early in 2008, have dropped as retailers slash prices to move sets out of their stores. The average price of Sony Corp.'s 32-inch TVs fell nearly 14% to $946 in September from $1,096 in March, according to data from research firm iSuppli Corp. Sharp Corp. took a similar dive, with prices falling 15% to $994 from $1,163 between March and September. Sweta Dash, an iSuppli analyst, said TV manufacturers boosted production this year, anticipating that the digital transition would drive more sales, and to avoid problems they experienced last year with tight supplies due to production shortfalls of some components. But the economic slowdown is causing sales to slump and leading consumers to focus on smaller models, Ms. Dash said. As a result, inventories began building up in June -- especially for TVs 40 inches and larger. It is clear that consumers are shopping more cautiously. Christine Wands spent more than $500 to buy a 26-inch Sony flat-panel TV to replace the 16-year-old set in her living room. But instead of upgrading three other sets, she chose to buy just one converter box for the TV in her kitchen. "Fifty dollars gave me what a new flat-screen TV would have given me," said the 62-year-old business analyst from Cincinnati. She plans to buy one more converter -- or just trash her other sets. NPD Group analyst Stephen Baker said the impact of converter boxes on TV sales remains unclear. NPD, which obtains sales data on roughly two-thirds of U.S. electronics purchases, found that flat-panel unit sales still grew by 20% in September compared with the year before, even as electronics purchases overall dipped 2%. Television makers remain confident that TV sales will continue to hold up better than other consumer electronics through the downturn. "Retailers are still somewhat cautious, but they are not frantic," said Randy Waynick, a senior vice president of marketing at Sony. ================================================= George Antunes Voice (713) 743-3923 Associate Professor Fax (713) 743-3927 Political Science Internet: antunes at uh dot edu University of Houston Houston, TX 77204-3011 *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
