The Change Mariner

DVRs threat to TV station owners?

AlwaysOn:
TiVo and other digital video recorders have rapidly caught on with consumers, so much so that they pose a significant threat to television station groups not owned by one of the major broadcast networks.

That assessment by James Marsh, an analyst at SG Cowen, newly stoked concerns among investors, as shares of several independently owned TV firms slid in Tuesday trading.

In his report on the boom in DVRs, Marsh slashed his ratings on shares of Hearst-Argyle Television ( HTV: news, chart, profile ) and Univision Communications ( UVN: news, chart, profile ), the Los Angeles-based operator of Spanish-language TV and radio stations.

DVRs are popular with consumers because they allows them to record massive amounts of TV time on multiple channels, and easily skip viewing commercials or other parts of a broadcast. For that very reason, the devices are seen steadily eroding their ability to command hefty advertising revenue.

According to Marsh, DVRs are poised to reach a critical mass of 11 percent of television-watching households by 2005, and 15 percent by 2006. When that happens, he said, "high rates of ad skipping" will seriously affect revenue and cash flow growth for TV broadcasters -- particularly independent firms that don't own most of their own programming.