Qualcomm’s MediaFLO Says Digital TV Delay Would Cost It ‘Tens Of Millions Of Dollars’

imageIt’s unclear whether the switch to digital TV will be pushed back with the Senate and House disagreeing about whether the delay is necessary, but one thing for certain is which company will be most affected by a delay: Qualcomm’s MediaFlo. If the transition is pushed out to June 12 from Feb. 17, Qualcomm (NSDQ: QCOM) estimates that it will cost the company “tens of millions of dollars in extra expense and lost revenue,” the WSJ reports. The day after the switch, the company planned to launch its proprietary TV broadcast service in four new markets, signaling just how eager it is to reach nationwide scale. Right now, MediaFlo is in a difficult position. Because its service is scattered across the U.S., it is difficult to advertise and garner consumer awareness. As soon as it launches more broadly, Qualcomm, and its carrier partners, Verizon Wireless (NYSE: VZ) and AT&T (NYSE: T), can roll-out national campaigns, which they hope will create momentum for the service. Qualcomm’s COO Len Lauer: “We are very much opposed to the delay of the DTV transition. The delay will cost us tens of millions of dollars in extra expense and lost revenue.”

Here’s how to calculate the millions of dollars in losses: Qualcomm has built out the markets under the assumption that it can go live next month; it paid $550 million on the spectrum that’s being vacated by the broadcasters; and most astonishingly, Qualcomm is paying broadcasters to vacate the analog signals early, so it can launch in those markets. But if the date is pushed back to June, the fees will continue. Lauer: “It’s the biggest expense,” which he said would be “tens of millions of dollars” in and of itself. Qualcomm will also miss out on new revenue coming in from new markets, such as Boston, Houston, Miami and San Francisco. Qualcomm is also likely feeling pressure from broadcasters, which are committing to launch their own mobile TV services, using their existing digital airwaves and infrastructure. That’s got to be rough since mobile TV is clearly a money-losing proposition for Qualcomm at this point. It reported today that the division, which mostly consists of MediaFlo, cost the company five cents a share and $102 million in operating expenses during the first fiscal quarter.