DRAPER U.S. Digital Television's plans to revolutionize delivery of low-cost, wireless, cable-like TV service may be derailed.
USDTV filed for Chapter 7 bankruptcy July 6 in Delaware.
Although Chapter 7 bankruptcy usually involves liquidation, published reports indicate that USDTV is still providing service in its four existing markets and that at least two parties are interested in securing its assets and continuing the service.
The company has been providing service to about 16,000 subscribers in Salt Lake City, Dallas, Albuquerque and Las Vegas.
USDTV, formed in June 2003, leases portions of the digital spectrum from local television stations. Customers with a set-top box and antenna receive about 30 channels of "off-the-air" wireless digital TV service for $19.95 monthly as a low-cost alternative to cable or satellite TV.
The company was founded by Steve Lindsley, who is USDTV's chief executive officer and former president of KSL Television. In November, Lindsley said he believed the Salt Lake market had 75,000 to 100,000 households that would have some interest in USDTV and that research indicated 15 million to 16 million households in the country would subscribe if it were available in their markets.
The company reportedly had about 5,000 subscribers in Utah.
The effort was backed by $25.75 million from several partners, including Fox Television Stations Inc., Hearst-Argyle Television Inc., McGraw-Hill Broadcasting, LIN TV Corp., Morgan Murphy Stations and Telcom DTV LLC.
Morning News attempts to contact Lindsley through the company for several days were unsuccessful. A telephone message to his bankruptcy law firm, Landis Rath & Cobb LLP of Wilmington, Del., was not returned Monday.
USDTV's Web site said the company is "unable to accept your phone calls or e-mail requests for service at this time." Calls to the customer service phone number prompted a recording and suggestion to call a toll-free number, but calls to that number received a busy signal.
Bankruptcy court documents indicate the company had estimated assets of between $1 million and $10 million and estimated debts of $10 million to $50 million. It lists the company's locations as 12552 S. 125 West, Draper, with a network operations center at 935 W. Bullion St., Murray. It also lists a mailing address in Riverton and offices in Los Angeles and Ft. Lauderdale, Fla.
The documents indicate U.S. Digital Television LLC is 28.28 percent owned by USDTV. Among entities each holding a 12.35 percent ownership are Hearst-Argyle (HATV Investments Inc. and Hearst Broadcasting each have 6.17 percent), LIN Television Corp., McGraw-Hill Ventures Inc., News-USDTV Holdings Inc. and Telcom DTV LC.
A federal bankruptcy court trustee, Alfred Thomas Giuliano of Marlton, N.J., has control of the company. Broadcasting & Cable quoted his attorney, John Carroll, as saying Giuliano is close to securing financing to keep the company's system going in hopes that it can be sold to an investor group. It said one investor group was already negotiating to take over the company's assets and assume some of its debts, while Giuliano later was contacted by a second group.
TVTechnology.com quoted Carroll as saying that an agreement with one of the negotiating parties could be reached before an Aug. 3 creditors meeting in Delaware.
In comments published by Broadcasting & Cable, Lindsley said USDTV was "well on our way to proving our business model" but added that broadcast stations weren't willing to make the financial commitment it would take to expand the system and market it properly.
"We had a very positive sign of consumer demand of this product in a very short period of time," Lindsley said in a TVTechnology.com story.