News

Wireless-TV Outfit USDTV Pulls Plug

3/09/2007 7:00 PM Eastern

After a series of setbacks USDTV, which offered a low-cost wireless television alternative to cable, threw in the towel for good, shutting down its operation last week.

The closure of four-year-old USDTV will affect about 7,200 subscribers in Salt Lake City, Utah, Dallas/Fort Worth, Albuquerque, N.M., and Las Vegas.

Salt Lake City-based USDTV blamed its demise on the withdrawal of financing from its major investor, NexGen Telecom, which experienced a setback in another business.

In November, NexGen Telecom paid a reported $1 million to buy the assets of USDTV, which had filed for Chapter 7 bankruptcy protection in July and had remained operating. NexGen financially backed the company that purchased USDTV, USDigital.

“We owe a great debt of gratitude to NexGen for their efforts,” said USDigital CEO Steve Lindsley, who described NexGen Telecom’s core business as energy-related.

“[But] they suffered a significant setback in one of their non-USDTV-related businesses, to the point where they had to notify us and our management team that they could no longer fund the company or the operation,” he said.

Then Lindsley failed to find bridge financing to tide the company over until he could secure a larger cash infusion from investors.

USDTV’s strategy was to offer consumers a no-frills, low-cost alternative to cable, for $19.95 per month, using the digital spectrum of local TV-station partners and its own HDTV digital set-tops.

Averaging 30 channels per market, the USDTV service included all the local and Big Four national broadcast channels, along with about a dozen popular cable networks such as ESPN, Disney Channel, Discovery Channel and Fox News Channel.

USDTV tried to rally broadcasters around its service, and in 2005 it got a $26 million investment from Fox Television Group, Hearst-Argyle Television, McGraw-Hill Broadcasting and Morgan Murphy Stations. But the full industry didn’t hop on board.

“I’m very saddened by the fact that at the end of the day the broadcast industry didn’t really grab hold of this opportunity and take it to its full promise, because this was an idea whose time really had come,” Lindsley said.

The company has made arrangements with a third-party installation company to convert the USDTV cable set-top box so as to continue receiving free over-the-air local digital and HDTV channels without the USDTV cable service.

March