Obama greenlights analog TV for another season

January 9, 2009

After all the excitement, endless public service announcement ads and electronics retailers salivating over anticipated high-definition TV sales, it turns out that the United States might not be switching to digital television just yet.

President-elect Barack Obama is backing a move to delay a mandatory switch to digital TV signals on Feb. 17 because viewers might not be prepared. Also, the government has run out of $40 coupons to help pay for converter boxes.

The idea that as many as 8 million homes (according to Nielsen data) might lose TV reception in a few weeks is not the kind of headache a new White House administration wants to deal with so it’s perhaps not surprising talk of a delay, possibly up to four months, is gathering support.

Traditional over-the-air broadcasters, who already have a shrinking viewer base, will probably appreciate the breathing room, says  Wall Street analyst Thomas Eagan of Collins Stewart. But Eagan thinks that cable TV companies will be less pleased if the digital transition is delayed.

A delay of this length would be a slight negative for the cable operators as they stand to benefit from over-the-air viewers becoming cable subscribers with the transition. [This is because the digital transition would not affect cable subscribers, who would still be able to watch TV on their old sets. — ed.]

Since we expect Comcast to be the biggest beneficiary of the transition (due to the high percentage of over-the-air viewers not having registered for a coupon in Comcast’s franchise areas), a delay could translate to a higher ratio of new subscribers foregone for Comcast.

It’s not all bad news for Comcast, Time Warner Cable and friends, watch out for more ads for cheaper entry level cable packages says Eagan:

That said, the cable operators could use any delay to more aggressively market their economy priced 2-play package (entry-level cable and telephone) to over-the air viewers.

Keep an eye on

  • Microsoft chief Steve Ballmer has increased pressure on Yahoo to hand over control of its search business (Financial Times)
  • Yahoo is in the final stretch of its search for a CEO to replace founder Jerry Yang and former Autodesk chief Carol Bartz is on the list of candidates. (WSJ)
  • Watch out iPhone; here comes Palm’s Pre and it has multi-touch screen as well (New York Times)

(Photo: Reuters)

One comment

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[…] asks for a hold on the big DIGITAL SWITCH for at least one more season. The mandatory switch is supposed to happen February 17, which means […]

Posted by Tell Grandma to wait on DirectTV | | Report as abusive

Perhaps the whole country shouldn’t do it all at once. I can understand people not wanting to have to get on their rooftops in the middle of winter in New Enland to install a better antenna, but 4 months from February is June. Here in Texas it’s rather hot in June. Why not phase in digital TV by region?

There does not seem to be any shortage of the converters in stores. There are shelves of them at my local Best Buy and Circuit City. The main problem seems to be getting the $40 coupons. Congress should just authorize some more funding. Considering the $20 billion the federal treasury is getting from auctioning off the spectrum currently used by VHF TV stations, another several hundred million dollars for more coupons doesn’t seem unreasonable.

Posted by Bryan | Report as abusive