House TV Digital Bill Has $5 Billion Ad Price Tag

by Wayne Friedman, Oct 31, 2005, 9:32 PM

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Tough-minded Congress officials are making it tough on TV stations concerning the switch to digital from analog signals. The price tag now could be huge--especially for mandatory advertising messages to consumers.

According to a hard-line House Energy and Commerce Committee bill, as reported by> Television Week, in addition to forcing broadcasters to make the switch, TV stations would be required to air two 60-second spots every day for more than a year leading up to the change.

If you are in the digital television-manfacturing or production business, that's extra marketing support you can't buy anywhere. But if you are a TV station, that's not such good news. Having stations already adhering to tough bills (from the Senate as well) mandating a change from analog to digital signals by the end of 2008 (in the House bill), is already a difficult task to face. For TV stations, it now takes advertising time and money out of their pockets.

Of course, those TV stations that are more committed to digital television wouldn't have to think twice. Promoting a station's change to digital TV will be a necessity--rather than suffering the dire consequences of losing customers, who have been increasingly moving to cable.

So a little marketing support wouldn't hurt. For those 60-second spots, a TV station could just reassign that time as promotional station time.

According to Television Week, analysts are concerned that all this snubs freedom of speech. That would be true. But if you are a station abiding by the new law, that would seem part of the package. A bigger concern is how those ads are structured-- especially if they have to abide by a Federal-imposed formula in which the ads would need to adhere to specific technical language concerning the switch to digital.

Another big issue is the total price for the digital advertising. According to Television Week, the total annual advertising budget in the bill comes to $5 billion. If that number is correct, that would be a big deal - more than 26% of the entire and current $18 billion in overall local advertising revenue.

But there are more questions to ask. Do those spots run in prime time, daytime, or overnight? That could change the price drastically and make the $5 billion estimate seem a big premature, perhaps a big inflated, given the fact that two minutes of advertising a day on a station account for a fraction of a its daily advertising time.

One thing is for sure: These bills have lots of steam behind them. In three years or so, stations will need to brace for some big changes.

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