Here in Phoenix we don't have a problem with signal coverage (or, at least we didn't before the DTV conversion) so there should be no problem with virtually every household getting their networks via antenna. I realize that isn't the case in many other cities. But here I would think people subscribe to cable/sat because they want the additional services not available OTA. One huge attraction I hear about constantly are the sports channels like NHL Center Ice and The NFL Network. /quote]
Not everyone cares about the sports channels -- remember that while there are a large number of very dedicated sports viewers who do care deeply about access to their favorites teams and events, there are also a large number of viewers who don't care and don't watch those sports channels.
If all local broadcasters disappeared from both cable and DBS, a lot of viewers would be putting up antennas. A large minority would discover that they were watching the stations received from that antenna more than they're watching the stations that they're paying for on cable or DBS. Once they had that realization, cable/satellite subscription rates would decline quite significantly.
I'm not saying that I think most viewers would go OTA-only. But I think it is entirely conceivable that in this scenario, we'd see the combined cable/satellite penetration rate drop from the current 85 to 90% down to, perhaps, 65 to 70%.
That 20% drop would represent a huge number of dollars, and would have a major impact on the profitability of the cable and satellite companies.
