October 1999
"Priming The Pump": The Role of Retransmission Consent in the Transition To Digital Television
By Stuart N. Brotman

VI. RETRANSMISSION CONSENT AND TELEVISION RECEIVER SALES

As indicated above, over 44 percent of the existing U.S. cable subscriber base will at some point be covered by digital retransmission consent agreement terms or templates already in place. Accordingly, cable subscribers will be in a good position to make a "buy" decision for a new digital television receiver when they perceive a "critical mass" of digital programming is available. The digital signals that the subscriber receives under retransmission consent agreements will be from the same source as the most-watched analog broadcast programming (i.e., major broadcast networks). In contrast, it seems improbable that programming offered by must-carry stations would provide any additional incentive to buy. But in any event, those digital signals will be available over-the-air. Digital television set owners may easily access those signals through the use of a simple antenna-cable switch.

Looking at the history of U.S. television itself, the data demonstrates how powerful the availability of a few network programming sources can be in stimulating the demand for television receivers. By the end of 1946 - the first year of production-line television set availability - 10,000 sets had been sold at $385 apiece. Less than four years later, over seven million sets had been sold. ²⁰

In 1950, there was a total of only 99 television stations nationwide, ²¹ with over 95 percent affiliated with the CBS, DuMont or NBC networks. ²² Thus, the dramatic upturn in television sets back then was not a function of how many signals were being received; rather, as today, it was a function of a smaller subset of "must-see" shows like The Texaco Star Theatre and networks such as NBC that created the momentum for consumers to want a TV in their living rooms.

There are many differences between those early television years and our present-day world, but no evidence suggests viewers have changed their behavior regarding buying TV sets. Then or now, the buy decision is based on what they perceive to be an attractive menu of program offerings, be they analog or digital. In other words, as television pioneers such as Milton Berle demonstrated before, the most popular programming, rather than the sheer number of signals received, is the better indicator that a sufficient incentive exists for cable subscribers to make buying decisions regarding digital television receivers, especially if set prices decline.

²¹ TELEVISION FACTBOOK, Fall-Winter Edition, at 25 (1957).

²² CHRISTOPHER H. STERLING & JOHN M. KITROSS, STAY TUNED 313 (2d ed. 1990).