A bunch of companies are getting out of the local TV business.
The New York Times recently sold its stations to a private equity firm. Clear Channel and LIN are selling their stations across the country. Nexstar is considering the sale of some or all of its stations in small markets. Stockholders are pressuring Gannett to sell its stations as well.
All of this activity makes it a bad time to sell TV stations. Supply goes up, prices go down.
Note to someone with money: this is a great time to buy TV stations. They’re still not cheap, but this may be the best time in years to get into this industry.
But before you buy, you need to look at why so many companies are selling.
The conventional wisdom is there’s one tried-and-true way to run a TV station.
(1) Affiliate with one of the big three major networks. The network will fill up most of your broadcast day. You get to sell a minute (give or take) of commercials every half hour.
(2) Program local news during a few traditional time periods, hiring as few people as possible and fill most of that newscast with stories from your network feed, consultant driven stories and whatever your small staff can cover from the police scanner and the newspaper.
(3) Program the remaining time slots with programs you buy from syndicators. You pay the syndicators for their programs and they also take some of the commercial time during those shows.
There’s a slight adjustment to this formula for affiliates of Fox and other “second-tier” networks. Your network will only fill 2-4 hours of your broadcast day. You may have a very small news department, and you’ll need many more syndicated programs to fill up the day.
Stations began operating this way because it allowed them to spend the least money up front and have the smallest payrolls. This formula has worked fairly well for more than 30 years.
It won’t work much longer.
If you’ve read my other blog entries, or watched television, you already know why. Most of the “second tier” stations already look a lot like cable channels. From a viewer’s standpoint, what’s the difference between watching Seinfeld on your local station and Seinfeld on TBS? As much as local stations don’t want to admit it, there is no difference.
Network affiliates look a lot like cable channels for much of their broadcast day as well, but they face another challenge: networks no longer need local affiliates. They send programs directly to viewers online and through video on demand and on cable channels.
All of this happens as technology allows stations to offer multiple streams of programming on one digital signal.
The situation creates a big black hole in the schedules for local TV stations. It also presents a big opportunity.
Local TV stations need to take charge of their own programming. There will be a new “conventional wisdom” for local broadcasters:
(1) Strengthen your news department. It’s time for TV stations to add employees to news. Think in terms of newspaper staffing rather than traditional TV station staffing. These people can generate hours of LOCAL programming that’s unlike anything on the dial now: traditional newscasts, specialty newscasts, an all-local news channel, an all-local weather channel.
(2) Create news/information programs: A court show. Current events phone-in shows. Sports talk. Ask the doctor. Ask the gardener. Ask the veterinarian. Ask the computer geek.
(3) Get back in the production business. There are sporting events and entertainment venues near you that would make great television.
(4) Beef up and retrain your sales staff. Encourage them to be creative. Your local programs will be unique in your market and advertising time will be in demand. Charge a premium for ads that run in an less-cluttered environment. Sell sponsorships for shows with limited (or no) commercial interruption. Sell ads on your digital subchannels to local businesses who’ve never been able to afford television. Let viewers upload their photos and type in their copy for video classifieds.
Within a few years, many local TV stations will operate like this. The ones who start now will be the leaders. The rest will play catchup. Which will you be?