WOW TV TO UNVEIL DTV-BASED SERVICE IN SALT LAKE CITY THIS YEAR

To date, WOW has announced carriage deals with about 40 stations, though Lindsley indicated deals could be announced soon with another 60 or more. Broadcast TV service will be introduced in Salt Lake City late in 3rd quarter or early in 4th quarter, WOW Chmn. Steven Lindsley said. Lindsley, who was in D.C. Wed. to make presentation to ATSC, told us WOW service would debut in Las Vegas in first quarter 2003, with others to follow quickly. Recently announced station group deals include Sinclair Bcst., McGraw-Hill, LIN TV, Sunbelt Communications, Larry Miller Communications. Salt Lake City rollout will be on KSL-TV (NBC), Las Vegas on KVBC (NBC). Sinclair deal is for KOVR-TV (CBS) Stockton. OpenTV provided most of early financing for WOW, and other strategic partners include ST Microelectronics, Advanced Digital Bcst., Intellocity.

WOW’s key business assumption is that cable won’t provide significant carriage of DTV signals, at least for immediate future, Lindsley said, creating opportunity for over-air DTV reception via butterfly antenna. If cable reception of DTV became widely available, he admitted most consumers would prefer that to having antenna: “It will be helpful if cable remains recalcitrant.” Even if cable carriage of DTV became widespread, he said, 81 million U.S. TVs remained reliant on over-air TV, still creating market.

WOW service is “not just for sight and sound” quality of DTV, Lindsley said, although that will be initial attraction for consumers: “The sizzle is the sight and sound. The glue is the enhanced content and data.” Much of enhanced content would be same material that many stations put on Web sites, such as sports league standings, cast lists, program guides. Service also could include subscription-based premium programming, subscription-based interactive videogames (simple games downloaded and stored in box’s flash memory) and t-commerce using telephone return link, he said. Later versions of box probably will add hard drive, he said.

WOW would sell national ads, with local ad availabilities for stations. It also would provide data center, call center, master control and back-office operations for stations. “We provide the tools to the broadcasters and share in the revenue,” Lindsley said. For stations, total cost would be less than $50,000 to add server, plus some promotion, he said.

Advanced Digital Bcst. of Taipei will begin delivering first DTV set-top boxes for WOW Digital TV service within 4 weeks. Consumer price covers “price of materials” for box, Lindsley said, although it doesn’t cover R&D, distribution, marketing, other costs. Although he’s reluctant to call it subsidy, Lindsley said rest of cost was to be covered by WOW’s new revenue streams from advertising, subscription services and providing back-office services to broadcasters. He said he could anticipate models in which set-top price could drop to or near zero if consumer were “willing to participate in marketing.”

WOW already has ordered 10,000 of boxes, Lindsley said, and manufacturing deals are expected with other OEM makers. Prototype was demonstrated during Olympics coverage. He wouldn’t provide details of chipsets, but said chips, including those from ST Microelectronics, one of strategic partners, provided best available DTV reception performance. Marketing plan targets households that can receive DTV with indoor antenna.