Over-the Air-Broadcasting Is Alive and Well

by: J.P. Hannan

The Association of Public Television Stations released a new survey last week that finds “more than half of over-the-air consumers prefer free broadcast television after the DTV transition.” The survey also declares the transition from analog broadcasts to digital is getting much more attention and consumer awareness of the impending switch has now increased to 76.4%.

There had been a fear that the estimated 20+ million Americans who still receive their television programming via a free over-the-air broadcast, as opposed to through a cable or satellite television subscription, would suddenly be left without service on February 17, 2009 when the hard date for the digital television transition comes, and a broad awareness program was launched by the U.S. government and broadcasters to inform the public.

According to the survey:

Roughly 62 percent of the approximately 14.5 million over-the-air consuming households who are aware of the cutoff to analog television indicated that they would buy a converter box or digital TV set between now and when the transition takes effect February 17, 2009, compared to 10 percent who would opt for cable, satellite or telecommunications service to receive digital television.

Consumer awareness of the transition has also increased to 76.4 percent in February 2008, compared to 51 percent in November 2007. Moreover, 55 percent, or 23 million of these households, correctly identified the year when the DTV transition will occur.

Part of that increase is due to the converter box coupon program that launched in January and is administered by the National Telecommunications and Information Administration [NTIA]. As of March 19, NTIA reported it has received requests for 8,067,272 coupons from 4,267,828 households.

This is interesting movement in what had been somewhat of a wildcard in the media landscape. Some have speculated early in the transition phase that this switchover would push that final sliver of the television watching households into a subscription based service, benefiting large cable operators such as Comcast (NASDAQ:CMCSA), Charter (NASDAQ:CHTR), Time Warner Cable (NYSE:TWX) and Cox, or either of the satellite services provided by DirecTV (NYSE:DTV) and Dish Networks (NASDAQ:DISH).

With this survey, it is looking less likely that the cable operators will largely benefit, and more likely that big box retailers like Best Buy (NYSE:BBY) and Circuit City (NYSE:CC) will see the most sales gains out of the government mandated conversion. Barron's recently cited this factor in its overall recommendation of Best Buy, indicating it should see a number of consumers finally scrap their old analog television sets, opting to upgrade to a high definition model rather than simply purchasing the available digital to analog converter.

The other big beneficiaries are the broadcasters themselves, particularly those that cater to smaller, more rural television markets, and any upstart networks that cater to this niche of the business. Retro Television Network, a division of Equity Media Holdings (EMDA), is one in particular which I have previously mentioned in Seeking Alpha commentary, and there are several others in formation.

This survey reinforces that free, over-the-air television will always have a place in the media landscape. It will be an exciting area to keep an eye on as the February 2009 date approaches.

Disclosure: None