by Mark Shepherd
Having a license for a television station was once considered a “license to print money.” Competition for viewers was extremely limited and advertisers would essentially outbid each other for limited local commercial time. With few exceptions, the most successful TV stations were those with a combination of a strong network and a strong local identity.
Through the 1980s, 1990s and even into the 21st century, that network-station relationship seemed to grow stronger. Many stations gave up much of their own identity and tied their branding to their network. Yet now that relationship is threatened, and it’s the stations, not the networks, that stand to lose everything.
The threat comes as networks find other ways to distribute their programming: online, video on demand (VOD) and their own cable channels. Local stations, which profit by selling advertising during popular network programming, don’t see a cent if a viewer watches the same shows via any other source.
For the networks, it makes sense. They make money from their programming, no matter how viewers access it. They don’t have to worry about how each station in 210 television markets performs. Plus, as a cable channel, the network can collect monthly subscriber fees that range from a few cents to a few dollars per month, per cable/satellite subscriber. That means they get a lot of money whether anyone’s watching or not.
Local TV stations may collect fees (called retransmission fees) from cable and satellite companies, but they’re not usually as high as what a cable channel collects. Only a portion of that money, if any, is passed on to the network.
Those subscriber fees are at the heart of the latest threat to local television. At least one company, Aereo, is using an alternative delivery system to bypass the subscriber fees. The whole matter is in court, and networks have threatened to pull their programming from OTA broadcasts if Aereo is allowed to continue. 
Whether Aereo succeeds or networks follow through with the threat, the network-station relationship is strained. With the networks offering their programming in so many other places, OTA is left without the unique programming that made them so popular for the first 60 years of the medium. While ratings for network programming continue to drop, local stations continue to tie their own destiny to the fate of their networks–networks that don’t need local stations.
To be blunt, TV stations are the middleman in a world that doesn’t need a middleman. Some form of the network-station relationship may evolve, but it’ll be very different from what we see now. That’s best for both networks and stations.
Stations have one more program source: syndication. But few programs are available exclusively to local stations. And local TV stations are still the middleman. It’s more efficient for a syndicator to go directly to cable–or directly to viewers online.
So why isn’t anyone (or everyone!) making big changes? Consolidation in the industry over 3 decades has left station groups looking for large national footprints to attract national advertisers.
That’s great news for national advertisers, but it prices local businesses out of the market. Why pay to reach viewers in a large region if your potential customers are all in one town?
Continuing business as usual puts their business and an entire industry at risk. What happens to local TV stations when they can no longer rely on ABC, CBS, Fox and NBC? The broadcasters who start planning and changing now will be more profitable than ever, enjoying a Golden Age of Local Media.
Now is the perfect time to reboot our businesses. We still have network programming driving much of our image and our revenue. In many states, political money is flowing into TV stations (although more of those dollars will start going online each political season). We have strong positions in our communities, and for now, we’re guaranteed a channel on the local cable system.
Most stations currently have more than one signal going to viewers, allowing room to experiment without risking the current product.
We can leverage our strengths to build new giants of local media.
Most importantly: with so much working against local TV, and the government continuing to look for more ways to reclaim channels, large numbers of local TV stations could cease to exist in a few short years–whether they’re driven out of business or because they just find it easier to cash out.
You need to be among the strongest stations to ensure your survival. You can’t cut your way to success. You can’t copy your competitors to be truly successful. You have to be truly innovative and truly original in your marketplace. And you have to be first.
LOCAL MEDIA REBOOT
The local media giant of the (very near) future will create a new business model. It’s a multimedia source of news, information and entertainment that’s unique to each market.
(In much of the description, I’ll use the word “station” to keep things simple. But please keep in mind, “station” means a multimedia operation of video signals and online content.)
These local stations will get back into the business of producing TV programs. The stations will produce a lot of news and information programs, as you might expect. But they’ll also produce new genres of programming:
- Locally produced documentaries (about local issues, history, events, people, art, music)
- Magazine shows
- Court shows (with cases of local and regional interest)
- Game Shows
- Entertainment competitions
- Sports programming (ranging from middle school to college-level)
- Community Events (many of which will be developed by the station itself, creating opportunities for the station advertisers on TV and at the actual event). These can include concerts, parades, and health expos.
- Game/Quiz Shows
- Sketch shows, Comedy and Drama
Ideally, the station will create partnerships with similar stations in nearby markets, creating opportunities to share content that will be relevant in nearby areas.
I see stations starting to place these programs on digital channels and online, NOW, while also reevaluating current syndicated programming. When a program contract expires, it could be a great chance to replace an expensive syndicated show with something you produce yourself–and keep all the ad time and revenue.
START WITH WHAT YOU DO NOW: NEWS
Across the country, stations have expanded their news products. They’re on the air as early as 4 AM and as late as 11:35 PM. Local newscasts are on at once-unheard of times like 1 PM and 6:30 PM.
Adding news time slots certainly increases the convenience for your audience. Whatever time they can watch, you’re probably there. But most stations have added those broadcasts while adding few or even no journalists to their staffs.
So here’s where I tell you something your audience already knows: you’re running the same news over and over! Sure, the presentation changes a bit. First, the reporter is live from the scene. An hour later, he or she has a packaged version of the story. If you’re watching and paying attention, you know there’s nothing really different about the content–we’ve just added “new and improved” to the label.
To really expand your news product means having a staff who develops stories in specific content areas or “beats.” Beats can be geographical or subject-based, such as crime, job creation, education or medical.
I can hear the journalists and managers in newsrooms around the country screaming, “but we’re too small to have beats!” In the old way of operating, that was true. But the new way of running a newsroom gives you a chance to dramatically expand your operations–and your revenue sources!
If you made it through the introduction, you might already think you know where I’m headed with this: generate all of this new content to bring more variety to your newscasts.
Yes, that’s a part of it, but a surprisingly small part. For now.
You probably think of your market as the areas reached by the signal of your television station. How limiting! You’re giving your potential advertisers only one place to present their ads (or two, if you count your website). Again, you’re pricing many of them out of the market. Here’s your chance to give them new opportunities while carving out a larger share of your advertising market.
All of those news “beats” you’re creating can be the basis for entire websites that are very targeted, either by geography or by interest. For every small town where you commit coverage, you have a website. The site becomes a new-age newspaper for the town, ad dollars come to you, all while creating new content for any platform where it fits.
Right now in your market, you probably have one or two communities that you really cover well. How many other towns in your market are lucky to be mentioned in a weather picture or a Friday Night Football clip? The answer to that question also answers another question: how many opportunities to serve advertisers are you missing?
In addition to city beats, you’ll also create content beats. Business is a big one, if you break it down into things that really affect residents: job creation, real estate and prices for food and fuel. Education, health and sports are a little more traditional for TV stations, but there’s still plenty of room to expand those beats..
For each content beat, you don’t just hire a reporter, you start a business. That business consists of a website with news from that city or for that beat in your region; a business that creates content for your TV newscasts; a business that generates opportunities for your advertisers–who’ll also need you to produce ads for them: video, audio, banner, even paid content.
Soon you’ve done what Patch.com couldn’t: you’ve created a series of strong local websites in a region that are supported by local advertisers that are committed to their communities. .
How far can it go? Can you create a 24-hour news “channel” for every community you serve? It might not look like Fox News or CNN, and you probably wouldn’t want it to. The ability to provide on-demand, up-to-date, custom local news was far-fetched just a few years ago. Now, you can do it and you SHOULD do it before someone else does.
Don’t outsource anything local. Traffic? Your people know the area better than anyone. Why pay someone else to do it? Instead, offer to sell your traffic service to everyone else–even your staunchest competitor. The same goes for other commonly-outsourced products. Don’t pay a stringer for overnight news–do it yourself and sell it to your competitors. You can even sell weather and certain non-competitive news coverage. Can you quickly aggregate election returns and pump them out on a wire to other media–even sending it directly to their websites? Sure, you are helping your competitors, but YOU get paid for THEIR success.
Controlling your programming gives you limitless chances to create value for advertisers.
First, you’re controlling all of the inventory. You’re not limited to the 2-3 minutes of local advertising per hour during network programming. And you no longer give up half of your ad time to barter spots during syndicated programming.
That doesn’t necessarily mean you should immediately start loading up with local ads. There’s a chance to create more value for both advertisers and viewers. Your channels can stand out by limiting the clutter of commercials. That means the remaining spots stand out, which is great for advertisers–and you can charge a premium for clutter-free breaks. It also means fewer interruptions for viewers–and fewer reasons to change channels.
You are also free to experiment with alternative types of advertising, such as title sponsors for shows and PBS-style underwriting.
When you create customized news programs for individual communities in your market, you create great opportunities for businesses to reach people near them. Those businesses can target the people who are most likely to become customers. Those ads can run with your content online–or even on TV through such arrangements as providing a customized feed to the cable companies in those communities. You can also create custom streams that go directly to set-top boxes such as Roku.
We don’t have to limit new revenue to our TV channels and websites. When we create community events, we will partner with sponsors who’ll want a presence at the event–and who’ll help make the event a success.
Are there under-performing radio stations in your market? If you’ve beefed up your news operations, radio can be one more outlet for your product–and one more outlet for your advertisers. Don’t limit to one station. Smaller location-niche stations drive more loyal listeners and help advertisers target their customers. If even more radio signals are available, expand your existing businesses to include formats like business radio and health.
Once your sales team is equipped to serve advertisers, wherever they want to advertise, and you can produce ads in any form, you have yet another business. It’s an agency that can place ads on properties you don’t own. Don’t think of it as helping your competitor. Think of it as making money no matter where an ad is running.
All of this requires more people than most traditional TV stations have employed in the past. That’s okay, since we’re creating new opportunities for revenue. We’re also creating entirely new businesses. It’ll be a culture shock in an industry accustomed to doing more with less. Now we’ll do much more with more.
In many stations, that will mean a space crunch. At first, that could mean renting temporary space or creative solutions like encouraging some employees to work-from-home. Ultimately, it may mean expansion, moving or even building a new workplace. What a great problem to have!
Small and medium market stations will be the first to revolutionize local media. It’s much easier to change quickly at that level. And small-medium stations already have a more intimate relationship with their viewers and their customers. Change will come to large markets, but it will take longer.
This is a great opportunity for small ownership groups to build their business rather than sell them to larger group owners. The possibilities for expanding this business are endless. Even if you’ve saturated your market, when you own your content, there’s nothing to stop you from expanding into under-served cities in nearby markets.
The first owner to create this new business gets another opportunity: the chance to sell a franchise. Stations around the country will need a blueprint to create their own new businesses.
It’s also a great opportunity for someone with money to get into the TV business. While consolidation has been the trend for several years, we’re at a point where station groups are forced to spin off some stations to stay within federally-mandated limits. If the network-station relationship deteriorates quickly, we could even see a sell-off of stations at all levels.
It’s inevitable that there will be other ways for local stations to ensure their success and survival into a new age. What I’ve described is my way, building a business that’s built on creating engaging, relevant content for local viewers and value for local businesses. In this new world, I see competition as win-win. We each create unique content and unique business. That’s great for viewers and advertisers–and local television.
I’ve worked in local television for the last thirty years, through the glory years of local news. I watched closely as the world changed around us. From my position in local newsrooms, I witnessed the successes and the missed opportunities.
Through it all, I believed then–and still believe now–that local stations have missed great opportunities to serve their communities well. They tried to emulate cable networks and think larger and larger. In the process, they left cash on the table from local businesses who needed to reach potential local customers–but couldn’t afford and didn’t need to reach an entire market. They’ve handed over much of their sales effort to outside agencies. They’ve all but forgotten how to create local content. (Go from one city to the next and you’ll see very little variety among TV stations.)
On top of all of that, they tried to cut their way to success, budget wise. They found they could put on several hours of news a day with the same staff that used to produce one hour. They found they could run two or even three stations for the price of one. In the process, they gave up much of their ability to create content and serve their communities.
I kept my ideas to myself, thinking surely I’d find the reason I was wrong about all of this. But time is proving me to be right about most, if not all of it.
Now it’s time to create my vision.. Now is the time for a broadcasting company–or someone who wants to buy local stations–to enlist my help to create the new golden age of local media.