LIN TV Corp., Sunbelt Communications and other station groups are taking digital matters into their own hands.
Rather than wait for cable operators to decide whether, where and how many of their digital signals to carry, some broadcasters have decided to circumvent the cable company and offer the content on their digital spectrum directly to consumers through a set-top box that can receive such signals.
The box comes from South Jordan, Utah-based WOW Digital TV, which also provides digital content that can be customized for the stations. The high-definition receiver takes in digital signals from broadcasters and displays them on a digital or analog TV. The company, which was started last fall, plans to launch the service commercially in late September with independent station KJZZ-TV in Salt Lake City following extensive tests during July and August with several other broadcasters.
The box will sell for about $200, said Steve Lindsley, chairman and CEO of WOW Digital TV. WOW works with its station partners to develop interactive digital content while the TV stations promote the service and the boxes on-air.
“The important point of this [digital] transition it to figure out how to get an enabling box into the homes. For broadcasters, the distribution to consumers has been dependent on cable retransmission, and broadcasters are just one of many channels,” he said.
Summer tests
Broadcasters are concerned that not all of their digital channels will be carried on the cable system, or that the channels will receive poor placement on the lineup since many of their digital services-interactive television, electronic program guides, trivia and games-compete with cable operators’ ITV services.
“They could put you on 382 and have their own competing service on Channel 5,” said Peter Maloney, VP of finance for LIN in Providence, R.I. “Having another means of distribution is attractive.”
WOW conducted its first trial earlier this year with KSL-TV in Salt Lake City during the Olympics with 30 prototype boxes. The service provided digital pictures, multiple video feeds and additional Olympics information such as the medal count, Olympics facts and the NBC schedule. “All of that content is retrieved on demand,” Mr. Lindsley said.
Tests will be conducted this summer with Sinclair Broadcast Group’s KOVR-TV in Sacramento, Calif., McGraw-Hill’s KGTV in San Diego, Sunbelt’s KVBC-TV in Las Vegas and other stations.
The service allows broadcasters to reap new revenue streams with premium content, Mr. Lindsley said. “We’re not going to leave on the table revenues that can be enabled as you go to digital,” he said. That’s why LIN plans to test the service this summer at one of its stations.
Mr. Maloney expects the LIN stations to increase the amount of local news and weather for their markets on the digital spectrum. Instead of turning to the Weather Channel for the local forecast, viewers could turn to a LIN station’s digital channel any time of the day, he said. WOW’s service allows a broadcaster to provide “hyper-local” information for towns and cities within a metro area, he said.
Sunbelt is also looking at what it can gain from its digital spectrum.
“With the amount of money broadcasters are spending to do the digital transition, you need to think about a way to make money,” said Ralph Toddre, president and chief operating officer of Sunbelt Communications. If consumers are willing to pay for a digital TV set, they will be willing to pay for a box and a service that will enable them to harness digital content, he added.
Mr. Lindsley said his company plans to target owners of high-definition television sets, since those viewers are interested in digital-quality pictures. To reach them, WOW’s broadcast partners offer 30-second spots promoting the converter boxes.
The key to the success of WOW will be getting the retail outlets to bundle it with digital TV, said Bruce Leichtman, with Leichtman Research Group in Winchester, Mass. Stores should not promote it as a substitute for DBS or cable but rather as a supplemental service, because consumers spending upward of $2,000 on a TV probably already have DBS or cable, he said.
The total number of digital TVs shipped from manufacturers to retail outlets from 1998 to 2001 was 2.2 million, a number that is expected to grow to 4.5 million by the end of this year, according to the Consumer Electronic Association. The majority of those sets are HDTV.