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OTA broadcasters benefiting from rising cable TV cost

To the FCC, broadcast television is ancient technology. In a speech last year, FCC Chairman Julius Genachowski said the percentage of viewers watching broadcast over the air—as opposed to over cable or satellite—had fallen to less than 10 percent.

Genachowski mounted a campaign to move broadcasters off their spectrum and to auction it for use for wireless Internet over portable devices, where future economic growth is predicted. Congress last week passed legislation allowing such auctions.

Even the U.S. Supreme Court, which in January agreed to hear a case involving broadcast indecency, had a justice ask why. Justice Samuel A. Alito Jr. suggested that the court should not rush to resolve a question concerning a technology on its last legs.

“Broadcast TV is living on borrowed time,” he said. “It is not going to be long before it goes the way of vinyl records and eight-track tapes.”

However, the “Wall Street Journal” reports that broadcast television is enjoying an unexpected revival due to the soaring cost of cable. Some companies are pitching consumers to view web-based television coupled with broadcast signals—as a way to lower overall costs. “The Journal,” of course, is owned by News Corp., which also owns the Fox Television network and many of its affiliated stations.

The newspaper cited several previously reported events as evidence of this resurgence. Antennas Direct, a TV-antenna seller based in St. Louis, said it sold 70,000 antennas in January, and expects to double last year’s sales of about 600,000. That was up from 400,000 antennas in 2010. The newspaper reported that Wal-Mart recently agreed to sell Antennas Direct’s antennas, joining Best Buy and Costco. The antennas cost from $50 to $150.

Industry research firm SNL Kagan claims that the average monthly bills for basic cable service and broadband service cost roughly $91.44, before add-ons like high definition and premium channels. By sacrificing basic-cable channels, and signing up for Netflix Inc., a household could pay less than $48 per month.

Boxee, a company that sells a set-top box that lets people stream online video, offers a $49 add-on antenna that pulls in broadcast-TV signals. “Many consumers don’t realize they can get these channels over the air in HD for free,” Avner Ronen, chief executive of Boxee, told “the Journal.”

Last week, a new service called Aereo, backed by IAC/ InterActiveCorp chairman and television veteran Barry Diller, announced it will stream online local-broadcast signals for residents in New York City—where over-the-air reception is difficult—for a monthly fee of $12. It is aimed as a complement to online video services.

What the article did not say is that some broadcasters are expected to sue Aereo in an attempt to block its service from coming to market.

“It’s not a stretch to think that the broadcast business model will outlive that of cable,” Dennis Wharton, the NAB spokesman, told the “Journal.” “The naysayers can talk all they want about broadcasting being a dinosaur.”