By Sam Adams
LOS ANGELES (Hollywood Reporter) -
A year from Sunday,
television for many Americans will cut to black. Analog signals
will stop transmitting, older sets will become useless and
millions of TV-watching households will simply disappear.
At least that's the doomsday scenario confronting the TV
industry as a government mandate forces all U.S. stations to
convert to digital from the analog signals that have been
broadcast on the same frequencies since the 1930s.
An estimated 21 million households have TV sets that
receive only over-the-air signals, and about 14 million of
those homes rely solely on analog TVs, according to Nielsen
Media Research. For viewers who don't upgrade to digital-ready
TVs or set-top converters, February 18, 2009, will begin with a
blank screen instead of a smiling Meredith Vieira. For TV
executives, that day could be catastrophic.
"You could see a 5%-7% drop in the ratings in a heartbeat,"
says Shelly Palmer, president of the New York branch of the
National Academy of Television Arts & Sciences. Palmer
estimates such a drop could translate to as much as $3 billion
in lost revenue for networks, studios and stations.
Congress is preparing for the switch, allocating money for
33.5 million $40 coupons to defray the cost of set-top
converters, which retail for about $50-$70. Each U.S. household
is entitled to request up to two coupons, redeemable at a
certified retailer within 90 days.
In addition, the National Association of Broadcasters is
spending $700 million on digital TV education, which includes
localized speaking engagements, informational ads set to
premiere next week and a cross-country tour by two "DTV
trekkers," customized vans made up to resemble analog TV sets.
But networks are confronting the possibility that the
education efforts won't work and their already-eroding audience
numbers will take another hit in the middle of next February's
sweep. NBC already has asked Nielsen to move up that sweep
period so it ends before the transition, and other executives
are keeping a close eye on what's being done.
"A year out, is it daunting? Yes. Are people fully engaged?
Yes. No matter what we do, it's not going to be perfect," says
Martin Franks, executive vp at CBS Television. "It's just how
much we can minimize any consumer disruption."
With a year to go, those numbers will almost certainly
change. NAB already points to its own study showing that 83% of
over-the-air households have "seen, read or heard something
about" the transition, up from 38% a year ago.
But Congress is not requiring retailers to participate in
the coupon program, and only about 100 of them are certified to
do so. Further, no one knows whether the increased awareness
will translate into consumers taking action before their TVs go
dark.
"I think the American public has close to zero awareness of
what's coming," Bob Pittman, a co-founder of MTV and member of
private investment firm Pilot Group, told an audience at the
television industry's recent NATPE convention in Las Vegas. "I
think they're going to be hopping mad at the government when
(it) turns off the TV."
According to spokesman John Taylor, LG Electronics has two
entry-level converter boxes already in stores. Taylor, a member
of the board of the DTV Transition Coalition, says LG expects
to sell millions of the boxes during the next year and that its
research indicates consumer response will not heat up until the
deadline grows closer.
"The real action for coupon ordering and sales takes off in
the second half of 2008," he says.
Federal Communications Commission (FCC) chairman Kevin
Martin echoed this sentiment at the Consumer Electronics Show
in January, defending the strategy of waiting to ramp up
education initiatives. "I think in general we don't want to put
too much emphasis on that too early," Martin says.
But Best Buy spokesman Brian Lucas says that promoting
steady sales from now through early 2009 is key to the chain's
strategy. "It's the big ebbs and flows that are going to cause
problems," he says. "We don't want to get to this point next
year and have everybody decide all of a sudden that they need
to get a converter box or a new television. That's what would
make us nervous."
The relatively low-key approach to the transition caused
the Government Accountability Office to find in November that
the FCC and the National Telecommunications and Information
Administration (NTIA), the agency in charge of the U.S. coupon
program, had "no comprehensive plan or study to measure
progress and results" of their education efforts. The FCC
responded that it has been planning for the DTV transition for
more than 20 years.
FCC commissioner Michael Copps worries that too much faith
has been placed in the free market to minimize consumer
disruption.
"This is a national problem," he says. "A lot of people are
going to be affected. That's not business as usual. That's not
something where we can rely on the wonderful workings of the
invisible hand."
"We're relying on industry to do the rest," he says. "And
industry will do a lot. But this has to be coordinated."
President Bush's proposed budget includes an additional $20
million for DTV education, a figure that House Commerce
Committee chairman John Dingell, D-Mich., has called "far too
little."
A major complicating factor in spreading the word about the
transition is that the over-the-air viewers who will be most
affected also are the hardest to reach. In particular, LG's
Taylor says, the industry is concerned about five "underserved
communities": the elderly, the underprivileged, minorities,
rural Americans and people with disabilities. According to NAB,
31% of Latino households get their television over the air,
compared with 15% of the general public. The number jumps to
41% for households speaking primarily Spanish.
While advertisers might fret less about the loss of
lower-income TV viewers, Amina Fazlullah, a Public Interest
Research Group staff attorney, worries that consumers forced
into stores by the transition might be easy prey for
unscrupulous or misinformed salesmen.
"They're going to depend on retailers, and when they go in,
they're going to look for whatever fix the retailers hand
them," she says.
The NTIA is requiring that retailers retrain their sales
staff to prepare for a wave of new customers seeking converter
boxes. But there is no clear means to enforce that provision,
nor to sanction retailers who violate it.
"The approach by the government so far is that they're
relatively hands-off," Fazlullah says. "The hope is that the
industry will self-regulate."
CBS' Frank and NBCUniversal research chief Alan Wurtzel
both say doomsday scenarios are overstated. They believe the
transition could shake out in a similar manner as the Y2K
changeover, where a lot of hard work and awareness efforts
turned what could have been a disaster into a mostly smooth
process.
In particular, Wurtzel finds it hard to believe that
millions of people will simply stop watching TV.
"I'm not really worried in the long term that a lot of
people will be disenfranchised without television," he says.
"My big worry is that there will be measurement issues."
Those issues include an equipment upgrade required by
Nielsen to move analog measurement homes to digital in time for
the change.
"We have an entire team that is looking end-to-end at every
aspect of the digital transition," a Nielsen spokeswoman says.
"We've had a series of meetings with clients to discuss with
them the challenges they know and the challenges they haven't
thought about."
Further complicating matters, Nielsen can't simply inform
affected viewers that they need to convert because clients and
the Media Rating Council might consider that an improper
influence over how sample households watch television. So crews
are bringing carefully written scripts and other messages into
homes.
"We're not taking this lightly," the Nielsen rep says.
"TV is very habitual. The biggest danger is when you break
a habit," Palmer says. "I think a substantial number of these
antenna-only households are going to disappear."
Reuters/Hollywood Reporter
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