RadioShack Looks Forward to Digital Cable

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Las Vegas -- Tandy Corp. chairman and CEO John V. Roachsaid he's looking forward to the not-too-distant day when retail stores likeTandy's RadioShack will be selling digital cable boxes.

'The time is coming,' said Roach, speaking at theConsumer Electronics Show here two weeks ago. 'They need to be represented at retail.We're the place where people historically have gone to be connected.'

Roach said Tandy is still in the early stages of talking tocable companies about bringing the set-top boxes to retail.

'We're more interested in selling them than theyare in having us sell them,' Roach said, 'but they're coming around. Iremember when I first started talking to them about selling PrimeStar -- they didn'twant to sell something very seriously that competed with cable. Then DSS came along.'

He was referring to Digital Satellite System, thedirect-broadcast satellite technology distributed by DirecTv.

RadioShack is more likely to carry digital cable boxes orother digital television converters than it is to carry full-blown high-definitiontelevision sets, said Roach.

The early market for HDTV is not likely to be large enoughto support placing HDTV models in each of the thousands of RadioShack stores around thecountry. And unlike other consumer electronics chains that are enlarging their storesizes, RadioShack stores don't typically have the floor space to devote tolarge-screen TVs.

Some cable companies support the move to retaildistribution of expensive digital cable boxes so they don't have to keep the hardwareon their balance sheet while making the money back slowly in monthly leasing fees. Butthose cable companies should not assume that retailers will market their hardware withouta price.

When asked whether RadioShack would seek a commission oncable programming packages, Roach replied, 'We want to make the best deals we canmake. Certainly we'd like a cut of the service revenues.'

To make up for the small profits retailers often see onelectronics hardware, stores like RadioShack supplement their revenues with serviceresiduals from digital phone services, DBS programming and extended service contracts.

'We're not interested in any low-marginactivities,' said Roach.

Sharing their revenues with retailers may not come easy forthe average cable company, but it may be necessary in the years ahead.

'What worked for cable companies five years ago mightnot work for them five years from now,' said Roach.

Such retail/cable partnerships are not without risks to theretailers, as well.

'One of the problems in working with cable companiesis you've got to keep the customer happy,' said Roach. 'I don't wantcustomers to call me in the middle of the night when their cable goes out.'

And selling local cable programming packages can prove morecomplicated to the retail sales floor than selling DBS, for example.

'Even the cable companies that are large don'thave the same service offerings in all their markets,' said Roach.

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