NTIA lawyers are seeing if a DTV coupon can apply to sales tax on a converter box sold for less than the coupon’s $40 value, a spokesman told us. An unidentified contractor raised the issue in the first question posted on NTIA’s vendor procurement website (http://dtvcoupon.esrl.noaa.gov). NTIA’s immediate response was a flat refusal: “The consumer pays the appropriate sales tax,” NTIA said: “The coupon does not cover payment of any taxes.” NTIA later declared the govt. doesn’t see how the issue should affect a vendor’s technical proposal or money bid. NTIA repeated the statement, “The coupon does not cover payment of any taxes.” But it said it would issue guidelines “at a later point.” NTIA’s final rule expressly bars redeeming a coupon for anything but an eligible converter box. But nothing on the books says anything about sales tax. One commenter in NTIA’s rulemaking urged the agency to make coupon-eligible converter boxes tax-exempt as a bow to disadvantaged and low-income households, a proposal not addressed in NTIA’s final rule or vendor solicitation. The questioner conceded chances are “remote” of a box retailing at less than $40, but called it anyone’s guess what might happen if retailers start cutting prices or suppliers try to unload excess inventory as at the end of the coupon program. LG’s coupon-eligible box, to ship in Jan., will retail for about $60, it said, telling the House Telecom Subcommittee the price is unlikely to fall because so little margin is built into the product (CED March 29 p1).
Paul Gluckman
Paul Gluckman, Executive Senior Editor, is a 30-year Warren Communications News veteran having joined the company in May 1989 to launch its Audio Week publication. In his long career, Paul has chronicled the rise and fall of physical entertainment media like the CD, DVD and Blu-ray and the advent of ATSC 3.0 broadcast technology from its rudimentary standardization roots to its anticipated 2020 commercial launch.
Unknown factors lent traction and speed to an FCC order, now circulating, that would make CE retailers post analog- cutoff warnings at point of sale near legacy analog TVs still being sold (CED April 12 p1). The order is expected to get a vote at the Commission’s April 25 open meeting unless members approve it earlier.
A “recommended practice” that CEA published over 2 years ago to promote widespread use of common terminology and screen icons for easing restrictions on use of transmitting portable electronic devices (T-PEDs) on commercial aircraft (CED Sept 23/04 p3) has been upgraded and published as a formal CEA standard.
XM Chmn. Gary Parsons and CEO Hugh Panero each got $50,000 pay hikes and contracts extended through March 31, 2008, under employment agreement amendments signed April 4, the company said in an SEC filing. Panero’s salary jumped immediately to $700,000 through March 31, the filing said. When Panero’s employment ends -- he will be odd man out if the Sirius-XM merger is approved -- he also will get a lump- sum severance payment of 3 times his base salary plus the target bonus he would get in his year of termination, it said. Panero agreed to stay on as a 20-hours-per-week consultant if terminated before March 31 or when the Sirius- XM deal is done, whichever comes first, it said. Parsons, in line to chair a combined Sirius-XM, got a raise to $525,000 effective Aug. 6. COO Nate Davis agreed to lump-sum severance and other benefits in an amendment he signed April 4, but his salary is unchanged, the filing said. Severance pacts are being reached with other executive officers who would lose jobs if the merger becomes final or if fired for good cause, it said. Displaced holders of agreements will get a lump sum cash payment 2 times base salary, plus their target annual bonus and a pro-rata target bonus, it said. They'll remain on XM’s insurance plan and get outplacement services for 2 years and a gross-up payment to cover excise taxes, it said.
Harris is disavowing the accuracy of its own ex parte presentation filed at the FCC April 3, in which it alleged that broadcasters’ foot-dragging and other factors had put DTV transmitter installations woefully behind schedule for the Feb. 2009 analog cutoff. The ex parte is dated Nov. 1, 2006. Originally filed at the FCC last fall, it was filed again at the Commission’s request, a Harris spokesman said. He said he didn’t know why that request was made. Many of the conclusions in the ex parte no longer are valid because DTV transmitter installations have increased significantly since, he said, but an updated tally of installations isn’t available. About 297 new digital transmitters need to be ordered, manufactured and installed for the analog cutoff, equaling 15 months capacity of the U.S. transmitter industry, Harris said in the ex parte. “To drive the required timing for installation crews, transmitter ordering would need to commence on an even order basis approximately 23 months prior to analog sunset, or end of March 2007,” Harris said. In conveying “feedback from the field,” Harris said many broadcasters don’t believe Feb. 17, 2009, “will remain as a fixed date for analog sunset,” Harris said: “Most believe that there will be a transition period after analog sunset during which they will have time to build out their RF system for the final DTV channel assignment.” Asked to respond to the Harris ex parte, NAB Exec. Vp. Dennis Wharton said his group “recognizes Congress established a Feb. 2009 date for ending analog television, and our stations are working aggressively toward meeting that deadline with minimal disruption to consumers. We also look forward to working with the FCC to accommodate the minority of stations who have extenuating circumstances that could prevent them from meeting the 2009 date.”
Opposition has arisen to FCC giving temporary waivers of the DTV tuner mandate sought by 2 makers of bathroom mirrors with analog TVs built in (CED April 2 p1). The FCC set March 1, 2007, “as a reasonable and prudent date” to require that all TV receivers have ATSC tuners, engineer Norman Coltri of Medford, N.J., told the Commission. “The underlying purpose of the rule would be frustrated” if the mirror-makers got waivers, Coltri said. Kohler, a Wis.-based maker of bathroom and kitchen appliances, wants to have until Jan. 1, 2008, to build DTV tuners into bathroom mirrors with optional integrated TV receivers. Electric Mirror of Edmonds, Wash., makes mirrors with built-in TVs for hotels with closed- circuit video systems; it wants a 6-month waiver. Electric Mirror justifies its request on grounds that a waiver would ease its niche product’s DTV transition. Kohler says granting it a waiver wouldn’t thwart the FCC effort to ensure consumers can view over-the-air DTV after the Feb. 17, 2009, cutoff. Filing in the FCC docket for Kohler’s waiver request, Coltri the FCC to deny all such petitions. “The petitioner did not show any unique circumstances that would apply to their waiver, other than the desire to market a device prior to that device being capable of compliance with the rules that apply to all other manufacturers and importers,” he said. If the FCC gives the waiver “in total or in part,” it should impose conditions, including that the product’s display carry “secure stickers” warning that it won’t work properly after Feb. 2009, he said. If a device is sold through installers, Coltri said, only the “final consumer” should have the right to remove the notice and 30 days to “object to the condition” and receive a full refund.
Nothing in the DTV coupon program final rules or request for proposals (RFP) bars the program contractor from picking up the tab for modifying retailers’ electronic point-of-sale (POS) systems or sharing such costs with merchants, NTIA said in a Q&A posted on its new vendor procurement site. NTIA also extended to April 16 a deadline by which vendors may submit RFP questions. Contractor bids must arrive no later than 2 p.m. ET April 30.
There’s ample money in the pot -- and perhaps millions to spare -- to cover consumers who redeem DTV converter box coupons for “untethered” over-the-air analog TV sets, NTIA said in an economic analysis of its coupon program’s final rules. At our request, NTIA gave us a copy of the analysis explaining the program’s costs and benefits to the public. Such reports customarily are required under executive order for large govt. programs.
Best Buy and Circuit City Q4 results offer more proof that the chains (CED April 5 p1 & p2) are going in opposite directions, Matt Fassler, Goldman Sachs managing dir., said in a research report. His firm continues to view Best Buy shares as an “attractive” buy, “more so given their sell-off on solid numbers,” Fassler said. Best Buy accelerated its market share gains, gave “credible, in-line” forecasts for 2007 and is poised to capture more share because of CompUSA and Tweeter store closings and Circuit City’s restructuring, he said. Best Buy also “retains significant dry powder for share buybacks,” Fassler said. Circuit City, though “taking bold steps to remedy its margin decline,” suffered recent market-share losses Fassler called “disturbing.” Circuit City’s “initial steps” to reposition itself by emphasizing smaller stores are “likely to prove painful,” and its 2007 forecasts are “particularly back-end loaded,” Fassler said. The 5.3% spread between Best Buy’s 4.8% domestic same-store sales increase and Circuit City’s 0.5% decline Q4 was the biggest since Q3 2004, Fassler said. The chains’ widest gap in sales performance was in the bread & butter TV category, he said: Best Buy total TV revenue was up double digits; Circuit City’s, flat. Circuit City’s 3% overall sales decline in video, which includes TV, doesn’t square with a “vibrant product cycle” in DTV, Fassler said: “The company appears to have experienced unusual ticket compression, even in the context of sharply eroding industry trends, and challenges in building a profitable basket of goods.”
Though the law says consumers may request DTV converter box coupons from NTIA beginning Jan. 1, 2008, NTIA already has begun receiving coupon requests from consumers, retailers were told in a conference call briefing Wed. sponsored by the CE Retailers Coalition (CERC) and NARDA.