Digital TV Providers Stand to Profit from Many New Subscribers

 |  Includes: CMCSA, CVC, DISH, T
by: Investment U

Unless the Obama administration changes something between now and February 17th, all televisions that don’t receive their TV signal digitally will cease working. If you’ve got rabbit ears on your set, you probably don’t get digital TV.

The conversion was a post-911 improvement where the frequencies now used by television will be given to emergency responders and law enforcement. Unfortunately, that also means that millions of Americans that still depend upon “terrestrial” television will need to find a new way to get digital TV signals.

The government’s solution has been to issue vouchers for set-top converters. Regrettably, that program is running “a teensy bit behind.” In other words: don’t hold your breath. So following the law of unintended consequences, digital television outlets like cable and satellite television will see a huge bump in new subscribers.

It’ll be easier – but not necessarily cheaper – for many consumers to sign up for a subscription through a cable outlet like Comcast (Nasdaq: CMCSA) or Cablevision Systems (NYSE: CVC).

The other route, and a necessary one for rural homes, is to go with a satellite TV operator like The DIRECTV Group (NYSE: DTV) or Dish Network (Nasdaq: DISH).

This author’s parents (in their 70s) purchased cable for the first time ever this month, solely because of the digital conversion. How many other households will do the same? For every household that’s cutting back expenses like cable, there will be many more who see a need to subscribe. And these subscribers will spell profits for the digital television providers.