• by David Goetzl , August 7, 2007

The University of Nebraska women's volleyball team is one of the best in the country, enjoying a healthy following even in the football-mad Cornhusker state. In a bid to increase viewership and viability of a digital multicast station in the Lincoln, Neb. market, Gray Television has carried several of the team's games. It's part of a larger strategy, but so far, COO Bob Prather says the telecasts have yielded "great results."

While some station groups want to build their Internet operations and others focus on garnering retransmission consent dollars to find new revenue streams, Gray is placing an emphasis on launching digital multicast channels. It has some 39 up and running--up from six 20 months ago--and looks to launch up to four channels in each of its 30 markets.

Over the first six months this year, Gray said it invested $2 million in building the multicast business, and expects a total outlay of $9.5 million for the full year.

On a conference call Monday to announce Gray's second-quarter results, Prather reiterated his belief that the federally mandated switchover to all digital TV by February 2009, which will offer better picture and sound quality, will give the multicast channels greater viewership and wind at their backs.

Overall, second-quarter net revenue at Gray fell 2% to $79.8 million, driven by a drop in political advertising.

Gray's 36 stations have a heavy presence in communities with universities that participate in big-time collegiate athletics, from Lexington, Ky. to Lansing, Mich. to South Bend, Ind. While the basketball and football teams have huge followings in those markets, other so-called non-revenue sports--from women's hockey to men's soccer--enjoy smaller, yet similarly passionate fan bases.

On a national level, cable channels ESPNU and CSTV have sought to air more competitions in those areas. The coming Big Ten Channel will do so for the teams in that conference. But locally, the lower-tier sports also provide ample programming opportunities for multicast channels, since many of the teams are hungry for exposure.

Gray also hopes to air high school sports coverage on the alternate channels, including relying on user-generated content. And it plans to launch another local news and weather multicast channel in one market in the third quarter. (It has seven already.)

Prather touts the potential of the channels. They offer advertisers that can't afford the principal channel a chance to get on TV. Plus, he says they're attractive to other marketers looking to reach younger, more tech-savvy consumers. Vis-à-vis the traditional channels, Prather said, "we're going after a totally different advertiser."

Still, as would be expected, viewership is modest at best--perhaps save some volleyball contests in Lincoln. So are revenues. Gray did not break them out specifically Monday, though it said it generated $3.6 million in all digital revenues in the first six months of 2007.