Commentary

After Oprah's Defection, Syndication Needs Its Own Dual Revenue Stream

What happens to TV's syndication business and its TV station clients, now that Oprah Winfrey is leaving?

 

Perhaps the question should have been asked a few year ago, when things began to go sour, with the sharing of valuable off-network sitcoms with cable networks, and fewer new high-rated, first-run shows.

More recently, there's been a nearly deadly 30% to 40% decline in local TV advertising sales. Last week, Winfrey added to the bad wave of news, going to the enemy, (maybe frenemy), cable.

Syndication always had it over cable, because syndicated programming generally still out-draws what cable networks do locally. Even after Winfrey's defection, most of the $4 billion in advertising that TV producers/distributors get from syndication is still intact. But all this is a hint of things to come.

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For example, what happens if more hiigh-level syndication programming disappears? Perhaps "Entertainment Tonight," "Judge Judy," "Wheel of Fortune," or "Jeopardy" are next. It will get harder for TV stations to maintain their commercial unit pricing gap over local cable.

Retransmission deals? The value of some stations will see an immediate drop after September 9, 2011,  Winfrey's last show. No Winfrey means less lead-in audience for those affiliates' local TV newscasts.

Fence-mending is under way; perhaps it should go further, into full-fledged partnerships. Maybe cable operators and TV stations should do some sort of advertising revenue share. A new competitor for both could be the Internet, at least in those places (hello, Google!) where both cable and TV are feeling business pressures.

Local cable operators still have no interest in spending much on local TV news productions. Instead, they now see big-dollar advertising signs when it comes to set-top box data -- should Canoe Ventures finally get into gear.

If nothing else, Winfrey's departure sends a clear sign about license fees. Syndicators anticipating even lower cash license fees from TV stations in the future means a bigger reliance on advertising sales -- and you know how TV business executives feel about free, ad-supported media these days? It's a dying business.

Barter program/advertising syndication deals -- those where no cash is exchanged for a TV show, just a sharing of advertising avails -- has driven syndication's growth since the mid-'80s. But that can't last either.

Maybe these TV programmers will look increasingly for their own dual revenue stream in the future. If TV stations aren't going to pay, they'll find someone who will.

 

 

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