Over-the-Air TV Catches Second Wind, Aided by Web By CHRISTOPHER S. STEWART It's cool to have rabbit ears again.Largely relegated to obscurity decades ago, old-fashioned television broadcasts-over the airwaves and not via cable or satellite-are enjoying an unexpected revival in the digital era. With an increased array of online-video programming now drawing viewers' attention, companies are starting to pitch consumers on complementing online video streamed from the Web with broadcast-TV signals as a way to save money on cable subscriptions.
If it gains traction, this trend could undercut part of the rationale for selling off TV spectrum in voluntary auctions, approved by Congress on Friday, aimed at freeing up spectrum for wireless broadband.
There are signs that consumers are responding. TV-antenna seller Richard Schneider of St. Louis says sales at his company are soaring. Mr. Schneider's Antennas Direct sold 70,000 antennas in January, and he expects to double last year's sales of about 600,000. That was up from 400,000 antennas in 2010.
Wal-Mart Stores Inc. recently agreed to sell Mr. Schneider's antennas, the retailer confirmed Friday, joining Best Buy Co., Costco Wholesale Corp. and others.
Mr. Schneider's antennas cost from $50 to $150, and he says the typical customer saves $96 a month by "cutting the cord" on cable or satellite TV, according a survey his company conducted. The average monthly bills for basic cable service and broadband service add up $91.44, before add-ons like high definition and premium channels, according to SNL Kagan. By sacrificing basic-cable channels, and signing up for Netflix Inc., a household could pay less than $48 per month.
"Every time that Hulu and Netflix enhance their services, our phones light up," said Mr., Schneider, referring to two online-video services. (Hulu is an online-video service owned by Walt Disney Co., Providence Equity Partners, Hulu employees, Comcast Corp.'s NBCUniversal and News Corp. News Corp. also owns The Wall Street Journal.)
Others have jumped on the bandwagon. Boxee Inc., which sells a set-top box that lets people stream online video, offers a $49 add-on antenna that pulls in broadcast-TV signals.
"Many consumers don't realize they can get these channels over the air in HD for free, or for a small fee from your cable provider," said Avner Ronen, chief executive of Boxee.
A variation of this idea came last week from a new service called Aereo, backed by IAC/ InterActiveCorp chairman and television veteran Barry Diller. Aereo will start next month a service to stream online local-broadcast signals for residents in New York City-where over-the-air reception is difficult-for a monthly fee of $12.
It is aimed as a complement to online video services. But Mr. Diller said, "I think this will mean increased usage for broadcast."
The value of spectrum used by broadcast TV has been hotly debated in the past couple of years, as the FCC has looked for ways to add spectrum for wireless broadband. Last year FCC Chairman Julius Genachowski said the percentage of viewers watching broadcast over the air, rather than through cable or satellite, has fallen to less than 10%, in contrast to the precable-TV days when it was 100%.
While most people get their broadcast channels as part of a pay-TV package that usually includes cable channels, consumers with newer TVs, or an inexpensive converter for old TVs, can receive over-the-air signals from broadcast stations free in areas with good reception. Mr Schneider says the number of channels varies based on the area, from about 90 stations in Los Angeles to about 25 in St. Louis. He says on average that viewers get 30 to 45 channels, as long as they don't live in a canyon or deep valley and are within 65 miles of a transmitting tower.
Cable channels have become the most lucrative part of the entertainment business, mainly because of huge fees paid by cable and satellite subscribers, a cut of which is passed on to the channels. Broadcast stations found it difficult to extract cash payments from distributors until relatively recently. And even now these fees are a relatively small, albeit growing, part of broadcast stations' revenue. SNL Kagan estimates stations will pull in nearly $1.5 billion in such fees in 2011, compared with $38 billion in fees for cable channels.
TV executives lately have warned that cable's rising subscription costs may prompt people to cut back. Indeed, in the past 18 months, the number of overall pay-TV subscribers has largely stagnated, after years of steady growth. At the same time, the number of American households wired with only broadband and broadcast TV jumped 23% to 5.1 million in the third quarter of 2011 compared with the year-earlier period, according to a recent Nielsen study.
"It's not a stretch to think that the broadcast business model will outlive that of cable," said National Association of Broadcasters spokesman Dennis Wharton. "The naysayers can talk all they want about broadcasting being a dinosaur."
The big media companies that own the major broadcast networks are generally eager to preserve the current cable-centric model. Not only do they mostly own big portfolios of cable channels; media outlets also haven't figured out how to generate advertising revenues from online outlets in the same proportion as off-line. So the shift of viewers from traditional TV to the Web could hurt ad revenues.
"There are a lot of moving parts," said Perry Sook, CEO and president of Nexstar Broadcasting Group Inc., which owns a few dozen local-TV stations. In a cord-cutting world, Mr. Sook sees the advantage to broadcasters of fewer channels-even against greater online competition-but worries that the potential ad revenue wouldn't make up for lost subscription fees.
Mr. Schneider, the antenna seller, meanwhile, has been lately partnering with TV stations to give away antennas and spread the gospel of cord-cutting. He says that for some stations the giveaways are about increasing viewership while for others it's "out a sense of duty to their community."
-Sam Schechner contributed to this article. Write to Christopher S. Stewart at christopher.stewart@xxxxxxx ---------------------------------------------------------------------- You can UNSUBSCRIBE from the OpenDTV list in two ways:- Using the UNSUBSCRIBE command in your user configuration settings at FreeLists.org
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