As NFL Season Begins, Startup Vows No More Local TV Blackouts

(Bloomberg) -- Satellite and cable providers are increasingly feuding with TV networks, leading to blackouts of popular channels and a surge in cord cutting.

Until just a few days ago, millions of DirecTV customers didn’t know if they’d be able to watch the NFL on CBS, Fox and NBC because of a standoff between the pay-TV provider and station owner Nexstar Media Group Inc. The two sides managed to settle the dispute before Thursday’s kickoff.

Now a company called Orby TV is looking to capitalize on that frustration. At a time when many consumers are dropping pay TV, the Los Angeles-based startup is marketing a $40-a-month, 44-channel satellite service that doesn’t require a monthly contract. And it sidesteps the threat of a blackout by making it easier for customers to watch local broadcast channels over the air, for free.

The company provides an attached antenna as part of the deal when customers order its dish, set-top box and installation for $250. Signals from local stations, including affiliates of ABC, CBS, Fox and NBC, are integrated into the onscreen guide that viewers use to surf channels.

Orby TV is a long-shot bid to get consumers excited about satellite service again. The industry, led by DirecTV and Dish Network Corp., has been hemorrhaging customers, and the company will have a tough time reversing that trend. It also can’t guarantee that cable networks -- the ones you can’t get with an over-the-air antenna -- won’t get blacked out from time to time.

What’s more, it’s launching at a precarious time: New streaming platforms, such as Disney+, will prompt customers to wonder if they need a live TV service at all.

But Chief Executive Officer Michael Thornton thinks there are plenty of consumers who still want a traditional TV package, as long as it’s cheap and headache-free.

Underserved Group

“We looked at it and saw a big group that was underserved,” said Thornton, who previously worked for the premium cable network Starz.

Orby TV’s pay-as-you-go approach lets people with poor credit sign up for the service. Still, it’s not the only low-cost option. Dish, for example, offers a prepaid package with 50 channels for $37.99 a month, though there are charges for set-top boxes, an optional antenna for local stations and installation. Like Orby TV, Dish can integrate channels from the antenna with its interface. Comcast has a package, too, for people who lack credit.

But since Orby TV doesn’t have deals with broadcast networks, such as CBS, it doesn’t have to pass those costs onto consumers. Customers can sign up via the web, an Orby TV app or at a Best Buy store.

Thornton founded Orby TV with two other media executives: Chief Operating Officer Tres Izzard, and Carl Crabill, chief revenue officer. They bring a mix of backgrounds, including stints at Disney and DirecTV. The venture is backed by a pension fund they won’t identify.

No Fox News

“These are people with experience in the industry that saw something in the market,” said Dan Rayburn, a Frost & Sullivan analyst who writes for Streaming Media Blog. “They are offering people a solution with a good price and good package of channels. They aren’t trying to be everything to everyone.”

For example, Orby TV leaves out some expensive or popular channels, like ESPN and Fox News. And by providing an antenna as part of the service, the company doesn’t pay a cent for local broadcasts -- everything from Fox to Univision to PBS. Customers can also add HBO for $18 a month. The company rents space on satellites to beam its signals to U.S. homes.

Orby TV executives won’t disclose the company’s subscriber count, but Thornton said he expects to gain enough customers to break even sometime next year.

“Once we prove the model, we’ll have options to expand into other areas,” he said.

To contact the reporter on this story: Scott Moritz in New York at smoritz6@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Rob Golum

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