JANUARY 12, 2009 Industry Mixed on Digital Delay TV Stations, Electronics Retailers Wary of Postponing Transition
By SAM SCHECHNER and VISHESH KUMAR Wall Street Journal http://online.wsj.com/article/SB123172251912172485.html After years of preparation, a proposed delay in the transition to digital broadcasting could confuse viewers, hit local TV stations with unexpected costs and hamper electronics retailers' and cable companies' efforts to win new customers, some executives, trade groups and analysts say. Others say a postponement is in order. According to Nielsen Co., about 6.8% of TV households in December were still unprepared for Feb. 17, when television broadcasters must shut off their old analog over-the-air transmitters. A $1.5 billion coupon program to help viewers buy converter boxes for older sets is running out of money. There are now about 1.35 million people on a waiting list for coupons, leading consumer advocates to push for a delay until Congress funds more of them. President-elect Barack Obama's transition team weighed in Thursday, asking Congress to consider pushing back the deadline. Some TV-station owners are wary of any delay, even though they stand to lose viewers, at least temporarily, when the transition takes place. Along with retailers and cable operators, they have invested heavily in promoting the current date and say there will always be some viewers who are unprepared. Another factor: the cost of operating and maintaining their old analog transmitters alongside the new digital ones, even as many stations reel from a sharp downturn in advertising. TV-station companies had expected the switch to shave about 1% from station expenses, according to Marci Ryvicker, an analyst at Wachovia Capital Markets. "In this environment, every dollar you save is important," Ms. Ryvicker said. Belo Corp., owner of 20 television stations covering 14% of the U.S. market, said in a statement Friday that it supports "swift action" to issue more coupons but hopes "this can be accomplished without changing the date." Karole L. White, chief executive of the Michigan Association of Broadcasters, said her group is lobbying Michigan's congressional delegation to keep the Feb. 17 date while moving quickly to allocate more coupon money. "There's a surprising number of stations that have older analogs," Ms. White said. "If this goes on, we're going to be facing a possibility of not having reliable analog transmitters." A delay also could mean lost sales of digital TV sets and converter boxes for electronics retailers, said Stacey Widlitz, a retail research analyst at Pali Capital. RadioShack Corp. said in October that sales of the boxes had contributed significantly to its results in the second and third quarters. The Consumer Electronics Association opposes a delay, too, as does Customer Operating Groups Executive Vice President Mike Vitelli of Best Buy Co. "I think it's going to create confusion," Mr. Vitelli said. The major cable and phone companies, for their part, had hoped to pick up customers wanting to avoid the hassle of buying new over-the-air equipment by opting for a pay-TV service. Comcast Corp., the country's largest cable operator by subscribers, operates in regions with the highest number of customers who haven't registered for converter coupons, so it has a lot to gain from the transition proceeding quickly. A delay "could translate to a higher ratio of new subscribers foregone," said Thomas Eagan, an analyst at Collins Stewart. A spokeswoman for Comcast said the company continues to monitor the situation. Not all local broadcasters oppose a delay. Perry Sook, chief executive of Nexstar Broadcasting Group Inc., which owns or operates 50 medium-market TV stations covering 8.2% of the U.S. market, said he is in favor of pushing back the switch. "The last thing I want is customers of mine that are unable to receive my signal through some lack of government action," Mr. Sook said. Owners of the four biggest national broadcast networks -- Walt Disney Co., CBS Corp, General Electric Co.'s NBC Universal and News Corp. -- also have suggested openness to a delay, with NBC Universal and Disney's ABC offering explicit statements of support. (News Corp. owns The Wall Street Journal.) Any impact would depend on the delay's length, executives and analysts say. But it might not be feasible to push back beyond spring or summer, because the federal government already has auctioned off the airwaves the TV stations are giving up -- and pocketed some $20 billion from wireless companies that want to use that spectrum. "I'm interested in knowing what the practical impact of pushing back to the spring or summer would have on the companies that purchased that spectrum," said Rep. Rick Boucher (D., Va.), the new chairman of the House subcommittee that has jurisdiction over the digital-TV transition. Mr. Boucher said he thinks Congress needs to act by the end of January at the latest. Congress could pass a waiver to some accounting rules that would allow the government to send out new coupons before older coupons expire. That would put coupons into the hands of consumers more quickly and would keep the program running until new funds are added. ================================================= 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
