[opendtv] News: Independents struggle to find a place in TV distribution market

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Wed, 15 Dec 2004 10:08:51 -0500

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

  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

  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

  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 >>
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