SelecTV of California, a struggling Los Angeles subscription-television service that earlier this month lost a crucial contract with Channel 22, has filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
Under Chapter 11, a company can continue to operate, but creditors cannot demand payment. SelecTV said in a brief statement Friday that the Chapter 11 proceeding was filed “as the company finalizes its plans for future operations.”
The service was thrown into peril early in March, when KWHY-TV said it would substitute, as of April 1, Spanish-language programming for the movies and sports offered by SelecTV. Since then, SelecTV has been making daily payments to Channel 22, which broadcasts the service to 20,000 homes, to keep its programming on the air.
KWHY President Burt I. (Buzz) Harris Jr. said Sunday that SelecTV was paid up through the weekend. “We’ll see what happens on Monday,” he said. “If they continue to pay us, we will keep them on until the end of March.”
Offers No Details
In its statement, the 11-year-old pay-TV service said it intends to proceed with plans to convert its 12-hour, single-channel service to multichannel, 24-hour-a-day programming transmitted by microwave.
SelecTV, a unit of Select Entertainment Corp. that is the nation’s only remaining subscription-TV service, said it expects to begin such service by satellite within a month. But it did not offer details of how it would continue to fund the conversion or its current operations. Company officials could not be reached for comment.
Observers say SelecTV has been slow to convert from UHF broadcasting, a costly proposition in big advertising markets such as Los Angeles, to satellite transmission, a less expensive method. In addition, the company has been embroiled since last year in court battles with program suppliers who contend that SelecTV has not paid its bills promptly.
As a result, the quality of SelecTV programming has decayed, and many subscribers have abandoned the service, noted Tom Adams, an analyst with the Carmel media research firm of Paul Kagan Associates. In recent years, the number of SelecTV subscribers, who pay $20 to $25 each month for the service, has plummeted to 20,000 from 300,000 viewers in 1984.
The pay-TV business in general has suffered because of the growth of cable television, which offers dozens of channels for a similar fee.
Adams added that “they have a shot if they can go multichannel” and sign up subscribers in “the large stretches of Los Angeles that are not wired for cable.”
A change to microwave transmission--what is known in the industry as a multichannel, multipoint distribution service, or MMDS--requires the installation of new equipment in subscriber homes. SelecTV President Thomas C. Hunt has said that full conversion to a new service, dubbed SuperselecTV, would take several months.
Hunt also said the company expected to have 2,000 subscribers converted to the new service by the time the KWHY-TV contract ends.
Harris of Channel 22 said SelecTV’s survival depends on whether it can get investors to provide the millions of dollars needed to keep operating. Analyst Adams speculated that the conversion would cost $20 million to $50 million.
Harris said Hunt recently indicated that an investor had shown interest in buying SelecTV. Harris speculated that the Chapter 11 filing might have been designed to make the company more attractive to a buyer by reducing its debts.