USDTV Files for Bankruptcy7/11/2006 11:34 AM Eastern
Fledgling wireless-cable-television-service provider U.S. Digital Television, which offered 30 channels of basic-cable TV for just $19.95 per month, threw in the towel last week, filing for Chapter 7 liquidation bankruptcy.
USDTV, based in Draper, Utah, used digital-broadcast spectrum to beam its signals to homes in Dallas; Salt Lake City; Albuquerque, N.M..; and Las Vegas. The company has said that it has about 16,000 subscribers.
USDTV targeted “cable-never” homes -- consumers who had never had cable or satellite television -- and cable or direct-broadcast satellite subscribers upset over paying for channels they never watched.
The company leased digital spectrum from television stations in the markets it targeted and sold the service through Wal-Mart Stores locations, select dealers and via the Internet and telephone orders.
According to its Chapter 7 bankruptcy petition, filed July 6 in U.S. Bankruptcy Court in Delaware, USDTV listed estimated assets of $1 million-$10 million and estimated debts of $10 million-$50 million.
A Chapter 7 bankruptcy is essentially a liquidation. Unlike a Chapter 11 bankruptcy -- which keeps creditors off the bankrupt company’s back as it assembles a reorganization plan -- a Chapter 7 liquidation is usually an orderly sale of all of a company’s assets.
According to TVNewsday.com (www.tvnewsday.com), USDTV CEO Steve Lindsley said the company is in discussions to possibly sell the assets to a third-party investment group. Although he would not name that group, he said USDTV is still providing service and is in discussions with the U.S. Bankruptcy Court Trustee to continue to provide service in order to help facilitate a sale.
USDTV has struggled since its inception in 2003, but in 2005, it got a much-needed capital infusion when a handful of TV-station groups -- Fox Television Group, Hearst-Argyle Television, LIN TV, McGraw-Hill Broadcasting, Morgan Murphy Stations and Telecom DTV -- agreed to invest a combined $26 million in the company.