Tuesday, August 10, 2010

Spotlight Feature: Where Does Local Television Go From Here?

By Frank Macek

We all hope the economy has turned the proverbial corner and local advertising dollars will continue to flow through the doors into the 2nd half of 2010 and into next year.

Watching mobile television on your portable device
Recent 2nd quarter results have been very encouraging for many of the major broadcast groups including Gannett, Disney and Fisher who have recently reported significant gains over 2009. The trend will continue upward as we head into midterm elections with plenty of political advertising flowing to local media sources including WKYC which finds itself in the heart of battleground states during any election.

But the concern for local stations is always: "What happens after November 3rd?" Local television has become too reliant on these cycles of big events to ride the highs and lows of advertising income. For NBC stations, like WKYC, the worries are especially deep when there are no Olympics, no elections or no major events scheduled on the network that allow us to charge premium dollars for advertising time. With so many television and cable networks populating the spectrum, even these big events are becoming more and more spread out and difficult for stations to depend on them for guaranteed sources of revenue.

Thanks to the recession, or depression of 2009, local television stations got a jarring wakeup call that forced us to change our thinking and strategy. We need something else. What is that "thing?" - digital platforms. In 2010, the move toward new platforms has only accelerated and television stations are no longer just television stations. They are content providers who just happen to broadcast on the tv or the internet.

The question becomes how to make money on these new opportunities. We all know the internet has been a priority for stations to develop websites or acquire more profitable on-line businesses that can supplement their mainstream media business which can not survive like it has in the past.

Gannett - parent company of WKYC - has spent the last several years effectively developing new subsidiaries including Careerbuilder.com, Shoplocal.com, Point Roll, Inc., Planet Discover and the Captivate Network and partnerships with giants like Yahoo that will use the content provided among the 23 local television stations and 81 daily newspapers in the chain. This in turn will drive additional revenue streams.

Howver, the next big business will clearly be mobile television. Consumers - our customers - are demanding we provide television to them wherever they go and in the form they want...their mobile devices. No longer are just stand alone mobile websites acceptable. They are telling us and telling us loudly that in order to survive, we must begin providing them local television content 24/7 and on-demand.

You can already see local stations in the Cleveland market ramping up efforts to be competitive in the news category. News used to be more expensive to produce than syndicated programming. Those costs have done a complete turn around with the advance of technology and reduction of staffing that makes news a better option today. Why else would a station like WJW offer 9 1/2 of local programming per day?

Other stations are likely to follow soon especially in the early morning hours where a 4:30 a.m. newscast is being added in many major markets to attract more people earlier in their day. Other stations are adding more automation to reduce costs in staffing after they waited too long to do so to reign in costs earlier in the recession.

But the foundation for this new world was laid recently when several large television groups formed a mobile television coalition that is working on a business model for this new technology that already exists and is ready to be implemented.

In my opinion, mobile TV will be the saving grace for local broadcasters in the next five years. Stations will finally have another stream of revenue that isn't as dependent on the political or sports cycles every year. Much like retransmission fees paid by cable operatores, local broadcast  are banking on the willingless of the customer to pay for the convenience of getting their tv wherever they are. The only outstanding question is how much are they willing to pay. We see mobile TV starting out much like cable or satellite did...a modest cost that will increase based on the amount of programming desired and consumed.

But that content must be fresh, relevant and available on demand. Too much news that's rehashed will simply fail and that will the balancing act local stations will have to make in order to survive the new world order. More won't necessary be better. Content will be king.

We are proud of the strategic moves made by WKYC and Gannett  that puts us well positioned for the future as a massive upgrade to the station and company infrastructure will be done in the coming months and will allow us to share content across all platforms now in use and those coming in the future. No other station in the market will have such flexibility.

Those who thought HDTV was the climax of local television's long running success were clearly short sighted as only imagination and creativity awaits us. See you on your mobile device soon.


Chris McNamara said...

This is great insight into seeing how vital advertising is to local stations. Graduating with a journalism degree a few months ago, advertising dollars were rarely mentioned. It would have been great to learn about the advertising/sales side of the industry.

At my internship I dabbled in the sales department for a bit, but I never got a good grasp as to how vital sales is.

Frank Macek said...

Hi Chris,

I'm actually going to dive into that part of things soon.

The quickest thing broadcasters learned is how dependent we are on the auto industry!