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The digital TV transition in the U.S. could provide a once-in-a-lifetime increase for cable operators. Industry observers say that cable companies are well positioned to sign up a portion of the estimated 14 million homes that still get their TV signals over-the-air (OTA).
Collins Stewart analyst Thomas Eagan estimates that cable companies could get about 1 to 2 million of these homes, or 7% to 14%, starting in the fall, followed by a crunch closer to the February switchover date. Craig Moffett, analyst for Sanford Bernstein, says that these new subscribers would be worth $1,000 each over their lifetime to cable companies, which means that they could generate up to $2 billion in added value for the industry.
Moffett and other experts argue that rabbit ears in any one position likely won't get users all of ABC, NBC, CBS and Fox. In addition, the urban part of the OTA population tends to live in multi-dwelling units where rooftop antennas are not an option or get too much interference to work properly. As a result, subscribing to cable might be the best route to take for many.
Cable also has a strong value proposition for the OTA population since over 90% of them have phone service, which cable could provide more inexpensively. Comcast's basic cable package costs $14 on average. If you add in phone service, it's cheaper than that of telecommunications companies, and an OTA user could end up spending the same or even less for Comcast services than they do for their communications needs. Derek Harrar, senior VP and GM for Comcast's video services, says " 'it's a really simple and affordable solution.' "
Mike Lovett, Charter Communications executive VP and COO, says that " 'we do see an opportunity' " to win and upgrade new customers.
Source: Hollywood Reporter, 07/08/2008
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