How To Improve Local TV’s Fiscal Future

By Arthur Greenwald

For their annual “Supersession” on the fiscal fortunes of local broadcasters, the NAB and the TVB recruited an all-star panel of station and program executives. Their surprising consensus: despite current challenges, plenty of profits lie ahead for local broadcasters — but to reap those rewards, they’re going to have to work a lot harder and smarter.

Moderated by Inside Edition anchor Deborah Norville, the panel included Bruce Baker, EVP of Cox Television; Randy Bongarten, chairman/CEO of Bonten Media Group and a member of the NAB Board; James Goodmon, CEO of Capitol Broadcasting (whose WRAL Raleigh, NC, is known for its technical innovations); Mort Marcus, co-president of Debmar-Mercury; and John Tupper, president of Prime Cities Broadcasting and chairman of the Fox affiliates board.

Norville got right to the point in her first question. Alluding to “long-gone” days of 90% audience shares and 50% profit margins, Norville asked the panel: “What concerns you most about the TV landscape?”

Cox’s Baker cited “the investment community,” which he described as hungry for short-term media-stock profits “but wasn’t prepared to finance our industry long-term — and investment in programming is what it’s all about.”

For Bongarten, it’s broadcasters’ own attitude. “For a long time it was an easy business. Now it’s not. TV is still the most powerful medium today, but more competitors and technologies are challenging our business than ever before.”

Similarly, Goodman said he is “tired of media reports that say television doesn’t work as a business” and misrepresent broadcast TV’s value proposition, and Debmar-Mercury’s Marcus accused even rival syndicators of spreading similarly gloomy forecasts. “Our competitors’ negativity concerns us. As a content player, we’re very bullish on the local-TV business. Local stations are the best place for us to make money on programming.”

According to Prime Cities’ Tupper, the foremost worry is the “imbalance in the regulatory structure that gives advantages to the cable industry. We need regulators to level the playing field,” which Tupper believes will lead to a “more mutually beneficial relationship with cable and satellite companies. We can be natural allies.”

The panel was equally outspoken when challenged to identify the greatest opportunities available to local broadcasters.

Bongarten said stations need to make a fresh effort “to sell their most loyal customers. They’re getting seduced” by rival media. Urging the audience to remind clients of the value of TV, he alluded to a new Yankelovich study for TVB that reveals that TV advertising drives half of all marketing impact — from initial consumer awareness through the final purchase decision.

Baker agreed that television advertising is too effective for clients to ignore, but stressed that changes in the agency business require broadcasters “to re-evaluate the agency relationships and sales strategies. We can’t sell TV and Internet and everything else with just six sales people.” He said that, when asked if he trains sales people to sell both TV and Web ads or if he hires Web specialists, his answer is “yes.” Cox does both as does Goodman’s Capitol Broadcasting.

Marcus said he feels strongly that stations can demonstrate superior coverage and efficiency when compared with cable — a view echoed by Bongarten, who pointed to the higher ratings that stations produce for sitcoms that also run on TBS, for example. “TV does much better. People choose to watch the local stations.”

Several of the panelists said they look forward to the programming and sales opportunities expected to be generated by mobile video — and by related interactive technologies. This prompted Norville to ask whether it’s time for stations to rebrand themselves in the marketplace as more than just “TV.”

Most panelists agreed this was desirable, “even though stations are cutting their marketing budgets,” said Baker. “Frankly we’ve got to spend money to bring attention back to our industry.”

Baker pointed to the Open Mobile Video Coalition’s successful promotion of industry awareness about mobile DTV, conceding that the economy makes a similar promotion financially challenging. On the other hand, Bongarten said, “broadcasters created enormous awareness of the digital transition without spending a lot of cash.”

The panel also highlighted a few specific obstacles for broadcasters to overcome in order to restore and enhance revenue levels. Baker said broadcasters must unite to combat and compete with Project Canoe, a cable-industry coalition designed to court advertisers with highly detailed metrics and consumer data. Bongarten advocated a renewed effort to strengthen ties between networks and affiliates, a sentiment quickly seconded by the rest of the panel.

“It’s amazing,” Bongarten said, “how little networks and affiliates appreciate each other. Networks underestimate the value of how stations deliver local viewers, and affiliates under-appreciate the difficulty of developing successful shows stations could never replicate.”

But the Fox stations are already set to address this problem at this week’s affiliates meeting, according to Fox Affiliate Board Chair John Tupper, who noted a growing willingness among affiliates to share retransmission revenues if those funds were invested in creating the best primetime programs.

After all, Tupper said, “Fox and its affiliates jointly secured the launch of the FX cable network by making carriage of the network part of each affiliate’s retrans negotiation.”