Commentary

The End Game For TV Stations: More Extreme Than We Realize?

by Wayne Friedman , Staff Writer, February 18, 2009

TV stations have been through rough patches before. But now the ground is rumbling with some strange noises about consolidation.

First, small TV markets are considering what to do with their costly news operations. They are loath to give them up, since local news programming is a true point of distinction in a rapidly hard-changing media landscape.

So stations are talking about sharing news operations. Not only that, but they want more duopolies -- especially in the mid-sized and smaller markets. Maybe that is not enough. What about one company owning not one or two stations, but maybe three or more in the market?

All this will have concerned public interest groups sending out the warnings about the lack of diversity. Public airwaves? Oh yeah, the public conceivably owns them. But who is making the profits?

Now more than ever, business and journalism are at a crossroad. Don't think there is plenty of real news reporting on the Internet. Real journalism costs money, no matter if it's on a screen or through paper and ink.

The Obama Administration almost assuredly will support choice, diversity, and the little guy. But stuff always falls through the cracks, even with the best of intentions.

What does that mean if you are a TV station owner? You may get some outside help, but odds are you are mostly on your own. Some have already crashed; it's called bankruptcy. Virtually all of these are chapter 11 filings, which allow companies to still operate.

What happens if -- or when -- things get to a point that they can't? Scores of TV stations will just stop operating. Viewers will have to adjust; maybe they'll even notice

7 comments about "The End Game For TV Stations: More Extreme Than We Realize?".

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Douglas Ferguson from College of Charleston, February 18, 2009 at 11:29 a.m.
One owner for one market medium? No, that would be too much like the local newspaper in most cities serving under a million people.
No matter who owns the airwaves, the spectrum has no intrinsic value until somebody risks capital to hire people.
Reply

Arthur Greenwald from Greenwald Media, February 18, 2009 at 11:53 a.m.

There are plenty of tough challenges facing local television these days -- but also growing opportunities to extend and monetize their contact online and very soon to a wide range of affordable mobile devices. This is already happening in even the smallest markets. I know because I frequently speak with the station managers. Will there be further cost cutting and re-organizing during this bad economy? Probably. But that's very different than closing down stations. I always find your comments thought-provoking but you're writing a premature obituary.

Jim Courtright from Big Thinking By The Hour, February 18, 2009 at 11:56 a.m.

Our crystal ball says that local TV broadcasters will fail because the Internet can easily replace them as the distribution system for syndicated and national broadcast content for a lot less money. The only real value that a local TV station has is their news. However, newspapers can deliver news far better and with more depth than the local broadcasters can with their half hour format. We think the only way for newspapers and local broadcasters to survive is to merge their operations and deliver local news over the Internet in both video and text formats. Stringer reporters from all across an ADI can upload their content, video and otherwise from laptop computers and broadband connections. Someone should let Sam Zell know that his salvation is merging WGN and the Tribune.

Jay Oconner from World Colours Network Inc., February 18, 2009 at 1:50 p.m.

The 30 Second Commercial is Dead, The relationship with networks and station owners must find new ways to balance the monetization of content, while keeping production costs in line. Take a look at the Hyundai 80 Million dollar 25 episode commitment to Fox's "24" and the product placement that will take place as Jack Bower saves the world. They are broadcasting via traditional TV as well as NBC's and Fox's Hulu.com and thereby mobile device access. What if you could click on any product in said video and have it delivered locally making sure that the local station owner, the local car dealership also benefits in the case of a car manufacturer. But why stop there. In the future, not to distance we will be able to watch a 30 minute program with three commercial breaks, one at the start, one in the middle and one at the end. Yet during the program you can click your remote or your mouse or roller ball and click on that Hyundai. Get a test drive and enter a contest all at the same time.

How can we save local television stations we have to change the paradigm of how merchandise is moved across the medium itself. Oh and by the way, we may just have a solution for the entire television industry.

Erwin Krasnow from Garvey Schubert Barer, February 18, 2009 at 5:10 p.m.

I am pleased that you used the word "conceivably" in saying that the public owns the airwaves. Public ownership of the airwaves is a concept that does not make sense. The frequency spectrum cannot be seen, touched, or heard. Like sunlight and the wind, it has existed since the beginning of time --- long before any person was around to claim it as their own. The spectrum --- actually pulses of energy at different frequencies --- cannot be contained, or divided, or held in any way. So how can anyone own or control it.

Not only does the concept make no sense, it does not have any legal basis. Congress never intended the public to control the airwaves. Senator Clarence Dill, one of the coauthors of the Radio Act of 1927, made that point clear: "The government does not own the frequencies, as we call them or the use of the frequencies. It only possesses the right to regulate the apparatus. We might declare that we own all the channels, but we do not."

The Congressional Research Service, which conducted a study of the problems raised by proposals to assess fees from broadcasters for use of the spectrum, concluded that "the notion that the public or the government owns the airwaves is without precedent. We find no case that so holds. Furthermore, when enacting the Radio Act of 1927, the Congress specifically deleted a House-passed declaration of ownership."

The time has come to bury a concept that is on its face preposterous. The public does not own the airwaves. The spectrum is there, whether it is used or not. Only when it is enhanced by broadcasters, who fill the airwaves with information and entertainment, does it have any value to the public. With their talent, technical knowledge and financial resources, broadcasters have increased the value of the spectrum for everyone. And without a signal, supplied by your local broadcast station, the airwaves would be so much empty space.

E. Krasnow

Jacob Barker from Barker Capital, February 18, 2009 at 5:34 p.m.

There are two public policy here:
1) The least obvious is that for the last two administrations, antitrust regulators at the DOJ have defined a combination cap at 40% of market revenue. The market is defined as television (not all competiting media). This makes combinations in the smaller markets - where the profitability situation has been dire well before the current recession - nearly impossible (even if it is permitted under FCC regs).
2) The Telecom Act and attempts to revise television combinations have focused on the largest markets where the economic necessity for duopoly let alone the briefly flirted with triopoly are least pronounced. The smallest markets have had the most difficulty under the current voice tests and the combinations allowed have generally been the marriage of the two of the least viable stations.

Dean Procter from Transinteract, February 20, 2009 at 4:17 a.m.

I always figured the broadcast stations, TV and radio, would re-invent themselves. All it takes is a little imagination and TV can be more participatory, and I don't mean by premium SMS. That donkey has only so many miles left in it.
Advertisers would surely desire a more interactive experience where viewers could buy instantly, or perhaps get more information automatically via email or the web, or perhaps by phone.
Anything is possible and it doesn't need to be with a google or a set-top box.
The right approach might see TV transform itself into something much more compelling than the web, although utilising both mobiles and the internet.

From the depths of despair comes some great ideas, or at least the desperation to try something truly new.
TV doesn't need to roll over and play dead.

I see a way to do it without actually changing anything the stations do, installing new equipment or foisting gadgets upon consumers. I also see a way to do it with privacy and security and still enable marketers to get all the demographic data they might desire.
Ratings to me are meaningless, ROI is a guess and what really counts is if the ad sells the product or service, or gets a reaction - an interaction.

Give the consumer an easy and free way to connect to you, without having to give them a thing and without it costing them a dime or their personal privacy. Advertisers could arrange test-drives and sell cars from an ad, arrange the loan, and have the customer settle with a few key-presses.
It could be so easy. It wouldn't even require the agreement of the stations, just the advertisers.

One of the keys is how you manage the privacy and security, because they are what will make or break it.
I think that eventually advertisers will almost ignore current ratings systems and measure reactions and interactions(and direct sales).
Do you really care who was watching if they didn't react, except to tailor your strategies better if they don't grab your demographic target. The key is knowing who it did work on.
The interaction part gives you a more personally tailored follow-up sales opportunity and the consumer an easy path to buy, if that is your call to action, and it could be via the mobile and or the internet/email and more.

The process just has to be easy for the consumer.
I suppose that none of you have thought of it, in this age of sell another gadget. People have enough gadgets already and only need one to participate in TV (or radio).
I wouldn't be giving up just yet, although I think there needs to be some quick action. Its easy if you know how, and I would imagine potentially quite profitable given the current depressed values.

It needn't require the actual participation of the broadcast networks, although that doesn't preclude their involvement. The networks would just have to not be too greedy, as they aren't really in any position to negotiate and it doesn't appear that position will get any stronger too soon.

Imagine all the click-through if it was made easy enough for consumers, with every ad (and show) on every station click-able, whether they liked it or not. Advertisers would buy those clicks, or maybe their competitors would.
TV has the potential to do what the web does, the important part anyway, and make it a better experience for consumers and more measurable for advertisers.
No clicks = dud ad. Next.

Any young Ted Turners out there? Perhaps the leading global brands could 'just do it' to TV? From TV to shopping trolley.
It is a whole new opportunity for education publishers like Pearson too.

And yes it could work for you and the stations you tune too, no matter where you are, or what type of phone or carrier or TV you have or language you speak.

I see TV having a bright future either way and the more channels the better - certainly more channels and more interactivity, but don't forget the trust or privacy. People still have some trust in the TV.
It could be much bigger than the internet and make a web-bound google look like a minnow. Radio could easily sell more music than the internet, they just make it too hard.

Give those viewers and listeners what they want, even if it is only a reminder that they liked the look of your product in your ad and to check it out when they are near a store.
The possibilities for TV and radio are endless.