Independents struggle to find a place in TV distribution market December 15, 2004 12:00am Source: Reed Business Information - US Weekly Variety: NEW YORK Jeff Smulyan tells anyone who will listen that he=20 has a plan to take the TV distribution business=20 back from cable and satellite. Smulyan, CEO of Indianapolis-based Emmis=20 Communications, decries the "middlemen" ---=20 cable, satellite, and soon the Bells --- that=20 "take our product and profit from it." Here's his plan: Broadcasters were granted reams=20 of digital spectrum back in 1996 by the U.S.=20 government to convert to digital broadcasts. It's=20 enough spectrum for a company like Emmis to=20 provide a low-cost, terrestrial pay TV service=20 that would have local channels plus about 25 of=20 the top cable channels. Best of all, the service would cost about $25 a=20 month, about half the cost of most cable bills. But after months of talks with local=20 broadcasters and the networks, the plan remains=20 in limbo, a new competitor has launched a similar=20 service, and it's starting to look like the Baby=20 Bells are going to get into the pay TV business=20 before local broadcasters get their act together. More than 80% of the American public receive=20 their local broadcasts by subscribing to cable or=20 satellite. And each year the cable guy raises=20 rates and takes a bigger bite of local=20 advertising --- the lifeblood of local=20 broadcasters. But Emmis commissioned a study that found a=20 low-cost pay TV service would have strong=20 national appeal. In a survey of 1,000 households,=20 the Monitor Group found 29% of those subscribing=20 to cable and 26% of satellite customers would=20 consider a switch. Even more encouraging, 20% of those who=20 subscribe to neither cable nor satellite said=20 they were "likely" to give such a service a try. "There's a huge hole in the market," Smulyan=20 told a recent investor conference in Gotham. "I=20 haven't had one person who has studied this and=20 not fallen in love with it." The trouble is, getting fiercely independent=20 broadcasters to work together is something akin=20 to herding cats. Broadcasters such as Citadel=20 Communications, E.W. Scripps and Media General=20 signed on to Smulyan's plan last spring, but=20 talks have stalled with the networks, which are=20 owned by conglomerates that also own cable=20 channels. The first digital TV service to test such a=20 business model has already launched on a small=20 scale. Salt Lake City-based startup U.S. Digital=20 Television has partnered with local broadcasters=20 around the country to launch it's own terrestrial=20 pay TV service and recently signed its 10,000th=20 customer. USDTV sells a digital antenna at Wal-Mart for=20 $99 and then offers a $20 subscription for local=20 channels and 12 top cable channels, including=20 Discovery, ESPN and Lifetime. USDTV, which operates in Salt Lake, Albuquerque=20 and Las Vegas, signed seven-year agreements with=20 cable channels and leases spectrum from=20 broadcasters. USDTV shares revenue with=20 broadcasters and pays retransmission fees. <<Weekly Variety -- 12/13/04, p. 33>> << Copyright =A92004 Reed Business Information - US >> ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways: - Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org - By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word unsubscribe in the subject line.