USDTV Unveils First U.S. ''Over-the-Air'' Subscription TV Service Using New Digital T

[Gregg Lengling]

NEW YORK--(BUSINESS WIRE)--March 16, 2004--
  USDTV's Digital Terrestrial Service Offers Low-priced TV Service in Digital-Quality Plus HDTV Reception of Local and National Broadcast Channels    





U.S. Digital Television, Inc. (USDTV), today unveiled the first ever "over-the-air" digital subscription cable channel service in the United States. The service is priced under $20 per month and broadcasts local, national and popular cable channels "over-the-air" in digital and high-definition formats utilizing unused digital spectrum from broadcast partners. USDTV's proprietary technology will enable subscribers to receive "Best-of-TV" as the company's innovative service is launched in 30 major markets by the end of 2004. USDTV is currently available in Salt Lake City and will be introduced in Albuquerque, N.M., and Las Vegas in the next 30 days.

USDTV's unique television subscription service is the first of its kind in the broadcast industry. The company bundles multiple cable channels to enable broadcast partners to deliver the service to subscribers' homes through standard VHF/UHF antennas. Customers view these digital and high-definition broadcasts via USDTV's proprietary set-top box instead of a direct cable connection or a satellite dish. The USDTV service offers 12 of the most popular cable channels and also receives the digital and high definition TV channels of local and national affiliated broadcast stations.

"USDTV's service has created a new category in the pay television marketplace," said Steve Lindsley, Chairman and Chief Executive Officer of USDTV. "Our high-quality service provides consumers a compelling low-cost alternative to cable and satellite with all the benefits of the digital and high-definition viewing experience. Broadcasters will also benefit from larger digital TV viewing audiences and a share of our subscription revenues."

Broadcast Partners

The USDTV "over-the-air" subscription television service represents a new business model for television broadcasters across the country. The company partners with national and local television broadcast entities to carry its service of popular cable channels over the station's unused digital spectrum. Broadcasters share in monthly subscription fees and can also benefit from additional recurring revenue streams generated by on-demand content that will be stored on a hard drive to be incorporated into the USDTV receiver by Q4, 2004.

Content Partners

To complement its local broadcast strategy, USDTV adopted a "Best-of-TV" approach to gather a wide variety of content for its service that includes many of the nation's most popular cable channels. Most recently, the company signed the FOX News channel and added STARZ! as a premium movie service. USDTV's channel roster currently includes ESPN, ESPN 2, Disney Channel, Toon Disney, Discovery Channel, TLC, Lifetime, Lifetime Movie Network, HGTV, Food Network, FOX News and STARZ!.

Funding Partners

In addition to its service, broadcast and content strategy, USDTV announced today that it closed on $8.5 million in private equity funding from NexGen Investments and a private investor group led by Stonebridge Capital. The company also announced that investors will fund an additional $12 million based on USDTV's successful completion of strategic company milestones.

Marketing

The service's nationwide rollout will be accompanied by a market-by-market advertising campaign developed from a concept created by Grey San Francisco. The campaign centers on an open casting call where more than 100 participants try out to become the perfect USDTV spokesperson. Each participant attempts to top the others by describing what he or she loves about USDTV's low price, best channels and HDTV quality in simple, funny and zany ways. The campaign starts this week in Salt Lake City.

Strategic Partnership with Hisense

To create the set-top boxes that enable consumers to enjoy the company's unique service, USDTV has entered into a strategic manufacturing and financial partnership with China's Hisense Company, Ltd. The agreement includes $60 million in financing to produce 400,000 of the company's proprietary, ATSC compliant set-top boxes capable of tuning all digital and high-definition formats. The companies are also developing integrated USDTV Ready(TM) plasma and LCD televisions. Hisense is also a minority investor in USDTV.

Receivers

The USDTV service receiver can be purchased at all Wal-Mart stores nationwide, as well as at regional electronics chains, for $99 with a $19.95 per month subscription fee where USDTV service is available. Prior to service availability in a given area, a set-top-box, also sold in Wal-Mart stores nationwide under the USDIGITAL(TM) brand, can be used as an HD Tuner to receive high-definition television programming and is USDTV Ready(TM). In the Mountain West, the service is also sold at RC Willey furniture and electronics stores. RC Willey is a wholly owned subsidiary of Berkshire Hathaway. As USDTV service becomes available in each market, customers can activate the service with a simple phone call.

Technology

USDTV technology development and recent acquisitions have enabled the company to create a consumer product that will be continually relevant as the technology continues to evolve and be adopted, the company said.

"Our partnerships and extensive intellectual properties underscore our technology leadership and enable us to provide a completely integrated offering for both broadcasters and consumers," Lindsley said. "USDTV is involved in every aspect of the process from encryption, to decoding to reception to ensure the best experience for the customer."

USDTV has enhanced its proprietary security technology with the acquisition of select assets of Metro Link Inc., a digital and consumer electronics software company. Metro Link's proprietary MediaCenter PVR technology will enable USDTV to offer content-on-demand--storing movies, TV shows, music and local broadcast programs on a USDTV set-top box.

USDTV has also entered into a strategic partnership with Dotcast and the Winegard Company to develop and produce a next-generation antenna for enhanced digital television reception. The antenna will allow USDTV to provide subscribers in difficult reception areas with reliable, clear reception with a compact, 22-inch tube that can be mounted indoors, outdoors or on top of the TV.

Infrastructure Services

USDTV has formed a strategic partnership agreement with ServicePower Technologies plc (LSE: SVR), a global developer and supplier of workforce optimization software for the Customer Relation Management Market (CRM), and eWest Advantage, a reverse logistics programs developer, to build a nationwide network with over 5,000 dealers to sell and support USDTV products and services.

About USDTV: U.S. Digital Television, Inc. is introducing the first "over-the-air" terrestrial digital subscription TV service in the United States using the new digital broadcast channels of local television stations. USDTV provides subscribers with cable channels and local broadcast channels in digital-quality picture and theater-quality sound, including HDTV, at unmatched prices. The company is headquartered in Salt Lake City, Utah.
 
Contacts  
 
   
 Coltrin & Associates for USDTV
Troy McCombs, 212-221-1616
Troy_McCombs@coltrin.com
or
Coltrin & Associates for USDTV
David Olsen, 212-221-1616
David_Olsen@coltrin.com

[Gregg Lengling]

I'm guessing here but I imagine stations like WVTV, WVCY and WCGV are prime choices to sell their multicasting if they decide not to do high definition or reduced definition multicasting like WDJT does.

On a high note though, seeing as the receiver is an ATSC receiver that also has decode logic for this new service, it is a stand alone ATSC (digital and HiDef) receiver also.  And at a price point of under 100 dollars this will spur the market to deliver more cost effective STB's in the very near future.