Upstart USDTV Adds Programmers, Cash

Author:
Publish date:
Updated on

U.S. Digital Television Inc., a new no-frills wireless TV service, is adding territories, going live in Albuquerque, N.M., and planning to launch in Las Vegas next month in time for the National Association of Broadcasters’ convention there.

The new service — which is leasing digital spectrum from local broadcasters as a way to offer a roster of local TV stations, their HDTV signals and a limited number of cable networks – held a press conference here last Tuesday to trumpet new programming and a $20.5 million infusion.

USDTV is adding Fox News Channel to its $19.95-per-month service, and Starz! will be its first premium channel.

Chairman and CEO Steve Lindsley’s company, based in Salt Lake City, also confirmed it will retail its digital HDTV set-top — and special new antennas — at Wal-Mart stores across the country, as well as at the R.C. Willey chain, which is owned by Warren Buffett’s Berkshire Hathaway Inc.

The set-tops will sell for $98.76 at Wal-Mart, and the antennas for $29.95.

USDTV is positioning itself as a low-cost alternative — a “Jet Blue” for TV — for consumers who want just the “best of” cable networks and HDTV. Cable-nevers are big targets.

“Consumers are increasingly frustrated with their cable service,” Lindsley said. “Consumers know that they are paying for too many channels that they never watch.”

As for getting digital spectrum in the 30 markets it plans to launch in this year, Lindsley said he has agreements with “many broadcasters, from one-off station deals in our early markets to large station groups with multiple properties.”

But he said he won’t reveal those broadcast relationships at this time, “to allow our [TV station] partners to continue to negotiate digital must-carry and other program-related issues with the big cable companies” — and apparently not jeopardize those talks if it’s revealed the stations are helping to launch a cable competitor.

“We’ve made the fundamental decision to protect their [the local broadcasters’] ability to negotiate,” Lindsley said. “Every group is different, but most of the groups are engaged with cable or satellite operators on a variety of fronts.”

USDTV has been selling its service in Salt Lake City for about three months now and has 1,000 subscribers, even though it did virtually no marketing in that DMA, Lindsley said.

USDTV’s initial program lineup on the cable side will now include Disney Channel, Toon Disney, ESPN, ESPN2, Discovery Channel, TLC, Food Network, Home & Garden Television, Lifetime Television, Lifetime Movie Network and Fox News.

USDTV will charge subscribers for Starz!, but Lindsley didn’t have a price for it yet.

MSOs are taking a wait-and-see attitude about USDTV.

Comcast Corp. is the operator in Salt Lake City and Albuquerque, and Cox Communications Inc. owns the Las Vegas system.

In Salt Lake City, Lindsley noted, Comcast has been running a three-month, $19.95 offer for cable — the same price as his service. But that offer had already been scheduled and wasn’t in response to USDTV, according to Comcast.

“We’re continuing on our regular course of business, competing for customers every day across all our product lines,” a Comcast spokesman said.

Cox doesn’t plan any special marketing when USDTV comes to Las Vegas in mid-April, according to a Cox spokesman.

“We do view them as competition and will watch carefully in Las Vegas, but their product does seem to be targeting a very narrow niche of possibly the non-cable/non-satellite subscriber universe, and it is possible there is a market for them,” the spokesman said. “Whether or not that is a viable business is another question.”

USDTV secured $8.5 million in private equity funding from NexGen Investments and a private investor group led by Stonebridge Capital, plus $12 million from private investors.

USDTV already has a deal with Chinese plasma TV maker Hisense Co., in which the manufacturer will invest $60 million to produce 400,000 set-tops for the new service.

USDTV’s target is to have 5 million subscribers in four years, Lindsley said.

USDTV CEO Steve Lindsley at a New York press conference.

Related