WSJ: Local TV stations face a “fuzzy future”


The Wall Street Journal published a piece yesterday on the rough revenue predictions for local TV broadcasters. With revenues plunging, viewership in decline and ad revenue on a downward spiral, many local TV stations face the prospect of being cut out of the picture: “Executives at some major networks are beginning to talk about an option that once would have been unthinkable: eventually taking shows straight to cable, where networks can take in a steady stream of subscriber fees even in an advertising slump.”

“Lisa Howfield, general manager of KVBC, the NBC affiliate [in Vegas], watched last year as the broadcast-television business began to shrink. She started cutting. She combined departments. She made do with old equipment, and did away with luxuries like yearly sales getaways.

In December and January, she laid off 15 employees, or 6% of her staff. After the weatherman left last month, one of the morning news anchors took on both jobs. "It’s like a bad roller-coaster ride," says Howfield. Her station’s full-day viewership is down 7.7% this TV season from the same period last year, according to Nielsen Co., and Howfield expects her ad revenue in 2009 will be down 30% from 2008.

In December, CBS Corp. CEO Les Moonves, told an investor conference that moving the CBS network to cable would be "a very interesting proposition." Two days earlier, Jeff Zucker NBC Universal CEO, warned more broadly that the entire broadcast-TV model must change. "Otherwise it will be like the newspaper business or the car business," he told investors.”

However, any jump to cable would be five or 10 years away, according to Moonves. In an emailed statement, a spokeswoman for NBCU, where local media revenue declined 25% in Q4 2008, said the company believes TV stations are still "the best way to reach the broadest possible audience."

RBR/TVBR observation: Local TV stations are trimming their newscasts and more and more dayparts are being left to infomercials—this is the same thing that has been happening in radio for years. Yes, the television networks may someday just go to cable, but indeed not in the short term. What could accelerate negotiations between cable MSOs and the broadcast networks, however, is retransmission consent deals. That “middleman” factor could prove an issue down the road.

The litmus test will be small and medium markets. When those stations are basically carrying network programming and not much else, eventually they will go under. If this becomes commonplace, the move to go straight to cable/satellite will be accelerated.

Bottom line, if you want to succeed as a local TV station with or without network programming, find unique local content. That includes changing the local newscast if you have one to serve a younger audience. Take advantage of social media and viewers’ ability to deliver video and news. Find a reason for local audiences to tune you in and the rest will follow.

The WSJ story gave some good examples—Weigel Broadcasting, which owns stations in Illinois, Wisconsin and Indiana, has collaborated with Metro-Goldwyn-Mayer to create a content provider called "This TV" offering mostly old movies from the MGM library. Nexstar Broadcasting has launched highly local "community" websites. Stations owned by NBC Universal are piping content and ads to TV screens in supermarkets, taxi cabs and their own websites.