Two-thirds of OTA viewers projected to switch to pay TV

October 20, 2008

Last week, at the ISCe Satellite Investment Symposium in New York, MSTV confronted Centris over antennas, while financial analysts tried to estimate how many new subscribers will switch to pay television.

Centris, a marketing firm, has predicted that a significant number of analog over-the-air homes won’t be able to receive DTV signals — mainly due to having poor antennas in areas of with multipath obstacles. MSTV argued that DTV signals are more robust than the analog it replaces.

Barry Goodstadt, a senior vice president at Centris, noted that “digital signals don’t travel precisely the same way analog signals do.” Because of this, viewers will find it more difficult to receive stations in areas with hilly or mountainous terrain. Centris research indicates that 72 percent of OTA households have indoor antennas, and only 13 percent have the type of directional, rooftop-mounted antennas the FCC used in its reception tests.

David Donovan, MSTV president, criticized the data used by Centris, arguing it was the result of processing numbers through a computer — not actual field measurements. He said that digital signals go just as far as analog signals. “It’s a better picture further out,” he noted.

Goodstadt predicted the transition will result in as many as 9 million people signing up for pay-TV services, with one-third going to satellite and two-thirds to cable. Over-the-air viewers who shift to satellite service will pay an average of $59 a month, adding $2 billion in revenues to the satellite industry. Those who side with cable will pay about $71 a month, adding $4 billion to cable coffers.

James Ratcliffe, a Barclays Capital analyst, predicted that 2.5 million households will switch to pay-TV service because of reception problems. Like Goodstadt, he projected that two-thirds will go to cable, with the rest going to satellite.

The Dish Network, he predicted, will get a larger share of the satellite converts than DIRECTV. Dish has “been historically a better marketer to over-the-air customers,” he said, and Dish offers a large amount of Spanish language programming — something that will give it appeal to Spanish-speaking viewers.

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