A Dozen Items for Stations to Worry About

I was asked this week by a rather prominent member of the broadcasting community what I thought were some of the biggest challenges and opportunities facing TV broadcasters. Off the top of my head, I said continued national spot revenue erosion, cable's campaign against retrans and affiliates' loss of exclusivity to network programming.

Yes, they all belong on the list. But upon further reflection, I came up with nine other issues that broadcasters are grappling with -- some more important than the original three.

In assembling the list, I discovered that eight of the 12 items fall more into the challenges category, but I hate to be negative especially on this delightful summer afternoon. So, let's at least start with opportunities.

DTV. OK, you've invested millions in your new digital transmission plants. Now, it's time to cash in. But how? I know of no broadcaster who hasn't labored long and hard over this question over the past several years. So far, nobody has come up with a solid answer, although all remain hopeful it will revive the business.

From where I sit, the most promising opportunity is mobile broadcasting. I like it because it's simple and costs little to implement. By encoding and broadcasting its same schedule over a small portion of its digital channel, a TV station can begin reaching on-the-go viewers wherever they are -- in the park, in the car or in line at Starbucks. Assuming the mobile viewership can be measured, broadcasters can fold it into the viewership that comes through cable, satellite and off the air and get paid for it. No fuss.

A lot of stations are experimenting with secondary networks, things like MNT, RTN, NBC Weather Plus and LATV. That model is not so clear to me. That's a lot of new inventory with small ratings, hardly worth the effort to sell. And then you never know when some of these startups may disappear on you.

Simpler even than mobile is leasing. Stations that don't want to bother with operating a new business can simply lease their spectrum or portions of it to somebody who does. Sezmi is out there looking to lease 40 megabits from several broadcasters in each market for its planned wireless cable service. In an interview with me this week, Peter Mathes said that he has found that he can lease his digital subchannels for a monthly fee. All he has to do is keep the signals on the air and cash the checks.

The Web. Like DTV, the Web is all potential, sitting there to be realized by aggressive broadcasters. Retailers and other local businesses have already begun turning from yellow pages and newspapers to online outlets. They should be turning to sites owned and operated by TV stations. Right now, most aren't.

TV stations only have a sliver of the local online market. That's bad because it means stations have been lollygagging. But it's good because it means that there is a lot of upside for stations if they can get going.

Retransmission consent. Finally, TV stations are getting this revenue stream going by demanding cash payments from local cable operators. It's vitally important, even though it accounts for just a fraction of stations' total revenue. B&C's comprehensive piece on the subject earlier this month pegged broadcasters' total take from retrans at $1 billion in just two years, about 4-5 percent of total revenue. It's a double win for stations. The money goes straight to the bottom line and it's no longer available for operators to use to cut into stations' local ad business. A word of caution: Just as broadcasters have gotten the upper hand in negotiations, the cable operators are whining for changes in the rules (see below).

Automation, automation, automation. The best thing that station owners and managers have going for them these days is technology, particularly the kind that streamlines and automates. The latest products promise quantifiable return on investments that can help stations prop up margins when the revenue declines. Of course, automation is not good for the people who use to run the cameras and control boards. When management says "streamline," it means replacing people with machines. But that's been the history of civilization, hasn't it?

Newsrooms are benefiting by the rapid developments in production technology, acquisition and editing. The gear is cheaper, easier to master and increasingly capable. There's still a place for the $25,000 pro camcorders, but there is also a place and a growing need (given those Web sites) for the $1,000 cameras or even the $180 ones.

National spot erosion. This has been going on for so long that it is now more or less accepted by broadcasters as irreversible. Maybe. Maybe not. You never know what new category or categories may suddenly discover geotargeting as the presidential candidates did in the 1990s. Why the pharmaceuticals continue to shun national spot is a mystery, especially given that diseases and conditions are more prevalent in some areas than in others. You don't sell antihistamines in Arizona just as you don't sell snow tires in Florida.