Broadcasters facing triple whammy in transition to digital television

January 22, 4:03 PMMedia Industry ExaminerJudah Freed

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The federal DTV convert box program ran out of
money on January 4. There's now a waiting list.

With 26 days to go before the February 17 shutoff of analog TV in the U.S., the broadcast industry is looking at a triple whammy. The impact will be most felt in terms of advertising revenues.

Here's the first whammy.

Many analog broadcast viewers are not ready for the transition to digital.

A telling survey of consumer readiness is online  at Rocky Mountain PBS. While the exact number taking the survey is not reported, the results show that 70 percent of the viewers already subscribe to a cable or satellite TV services that will automatically deliver digital TV signals after the analog shutoff.

Another 24 percent have a new HD-ready television set with a built-in digital tuner for receiving over-the-air digital broadcasts.

Among the remaining viewers, 60 percent of them say they have not yet acquired a set-top converter box to convert over-the-air digital signals for display on their analog television sets.

If the Colorado survey is emblematic of the national trend, millions of viewers across the country, who now rely on analog broadcasts, have not yet done anything to receive digital TV signals starting next month.  They may soon face screens filled with static "snow."

For broadcasters, this means they could potentially lose millions of eyeballs watching their programs, which means lower advertising rates, which means a drop in overall revenues.

Here's the second whammy.

Second, the DTV TV Converter Box Coupon Program ran out of money on January 4.

More accurately, the program has "reached its funding ceiling," according dtv2009.gov, the Federal Communications Commission website giving away $40 coupons (good for 90 days) to consumers needing to buy a set-top box to convert over-the-air digital signals for display on their analog television sets. 

In other words, the old Congress did not appropriate enough funds for the program. The only way the program can fund new retail coupons is if old coupons expire unused. Meanwhile, the new Congress might vote more funding, but its unlikely to happen soon, if at all, given the financial crisis. Meanwhile, consumer can put themselves on a waiting list that may never yield a coupon for them.

Most of the people still receiving analog broadcast are low income households that cannot afford cable or satellite pay TV services. (A few of these households can afford to subscribe but do not, perhaps because they chose not to support media monopolies or they dislike the customer service.)

Either way, without the coupons, many households may not get converter boxes, which means fewer eyeball, which means decreased ad revenues.

Here's the third whammy.

Based on my experience in December buying a converter box and then trying to buy a functional antenna to receive all the local full-power broadcast signals, the consumer electronics sales personnel at most big box retailers are inadequately trained for guiding viewers in making wise purchases.

An assistant manager at a Radio Shack, for instance, kept insisting to me that the analog signals were not really going to be shut off on February 17, so there was no urgency for me to buy a converter box and antenna. He did not understand that only the low-power TV station will continue broadcasting in analog for the time being, but all the full-power stations must go digital. He did not get the difference.

At other retailers, especially the Big Box stores like KMart and Target (as I described in a previous posting), the clerks knew very little or nothing about antenna reception characteristics. I went through a series of antennas before i found one that actually worked properly at my urban location.

Now, I'm not the typical consumer, because I understand broadcast engineering. The typical consumers, though, likely are getting scant retail help in selecting the right converter box and antenna for their homes. In frustration, many analog broadcaster viewers will become cable or satellite customers.

Other viewers, however, may simply opt out of televisions altogether or only get TV from websites like iTunes or hulu.com. Every time these viewers opt out, broadcasters lose ad revenues.

So, given this potential triple whammy, I'm going to be curious to see how thing splay out for broadcasters next month. Please subscribe to this column for the latest news and views.
 

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