Analog Turnoff Could Affect 34% of U.S. Households

Leichtman Research Group Survey Highlights Income Gap Between Over-the-Air and Cable/DBS Viewers

A new research survey from Leichtman Research Group found improved awareness of the digital-TV transition but also forecast a bigger consumer impact from the Feb. 17, 2009, analog switch-off than a study released by Nielsen Media Research late last month.

According to the study from media and communications analyst Bruce Leichtman, “Cable, DBS & Telcos: Competing for Customers 2008,” 84% of adults have now heard of the DTV transition, nearly double the rate from an LRG study six months earlier.

But the same study -- based on a telephone survey of 1,601 adults conducted in March and April -- indicated that 14% of U.S. TV households, or some 15.8 million of the 112.8 million Nielsen households, do not subscribe to cable, satellite TV, or any other type of multichannel video service and thus need to buy digital-to-analog converter boxes or new DTV sets to maintain TV service past Feb. 17, 2009.

That percentage of over-the-air households is higher than the 9.4 % of U.S. TV households, or 10.6 million, that Nielsen found to be “completely unready” for the DTV transition -- having no cable or satellite service and no TVs with DTV tuners in them or connected to DTV converter boxes.

Leichtman’s number of over-the-air households is also more in line with estimates from the National Association of Broadcasters, which said there are nearly 20 million households that rely exclusively on over-the-air TV signals.

While it is certainly possible that some of those over-the-air-only homes already have digital converter boxes or DTV-capable sets, Leichtman doubted that it is a meaningful number.

He said the overwhelming majority of consumers who have purchased DTV sets also subscribe to multichannel-service providers and pointed to income data from his study that found that the annual household income of over-the-air only homes was $44,400, or some 32% below the sample mean. By comparison, the household mean income for cable homes was $69,000. Telco homes were at $104,000, which Leichtman said was a reflection of the high-income neighborhoods that telcos have initially targeted with their video services.

“The defining characteristic of nonsubscribers is income level,” he said. “The disparity in income is greater than it’s ever been -- as the nonsubscriber base shrinks, it also has a comparatively lower and lower income.”

Leichtman’s study also found that 24% of the roughly 97 million cable, direct-broadcast satellite or telco homes, or some 23.3 million, have at least one TV set that only receives over-the-air signals. Combined with the previous over-the-air figure, this suggested that 34% of all US households, or around 39 million, are at risk of losing reception to at least one TV set come Feb. 17, 2009, if no action is taken.

Leichtman’s number of total impacted homes was also higher than Nielsen’s research on the DTV transition. Nielsen indicated that only 12.6% of households, or 14.2 million, were "partially unready," which translates to having at least one set that is "ready" and at least one that is not. That equated to a total of 22% of households, or some 24.8 million, with at least one set that was “unready” for the analog turnoff.

By comparison, the NAB said there were about 14.9 million cable, DBS or telco homes with secondary over-the-air TV sets in a spare bedroom or kitchen. Altogether, the NAB estimated that more than 34 million households will be affected by the transition, which is higher than Nielsen’s estimate and slightly lower than Leichtman’s study.

Leichtman also provided some granularity on the 84% of consumers who had heard of the DTV transition. Out of that group, 30% of nonsubscribers to multichannel-video services believe it will have no impact on their TVs; 41% of cable or DBS subscribers with broadcast-only TV sets think it will have no impact on their TVs; and 45% with annual household incomes under $30,000 feel that they need to know more about the DTV transition, compared with 28% with incomes of $30,000-$75,000 and 19% with household incomes over $75,000.

That last metric suggested that broadcasters are doing a good job of creating awareness among those viewers most affected by the analog turnoff -- low-income households that rely solely on over-the-air TV service. But Leichtman said his study also indicated that they need to do a better job educating the larger number of cable, DBS and telco households who could be partially impacted by the DTV transition because of their unconnected second and third sets. That is an important policy point that has largely been overlooked to date by both government officials and broadcasters, he noted.

“More subscribers will be affected than nonsubscribers,” he said.