Local TV is on its way out. To those who haven’t read Kip Cassino’s brilliant argument around this (The Next Digital Victim: Local TV), I urge you to do so. Kip compares this year’s TV station buying frenzy with a similar event in 2005 involving newspapers. He makes a compelling case that it was exactly the wrong time to buy newspapers, just as today is exactly the wrong time to be buying TV stations.
I agree with Kip completely and think 2015 will be the tipping point. Oh, broadcast TV will still be around years from now, but everything about it will be different. Think not? What happened to radio in the 50s when TV “took” all of its programming? It morphed into something different, and that’s exactly what’s going to happen to local TV. To the person who rightly predicts the morphed model goes the title “prophet” and the prize that most prophets get is a knife in the back. Oops!
Just before Kip published his piece, he summarized his thoughts in an email exchange with Street Fight. The word he used to define local TV’s future was “bleak”:
It’s 90 percent seen over cable, not through antennas. Retrans has become a major revenue source, and it doesn’t own branding any more. It is an open question when the first network will cut its broadcast ties entirely, move to cable (or cable-like) distribution, and spend its time on news, sports, and producing entertainment. Right now, the car manufacturers are starting to move their marketing dollars to better fit the new facts of media. These two behemoths are like the metro newspaper industry was before its fall — clinging to ever-larger aggregations while the core of its market disappeared.
I remember discussions about Kip’s “open question” with people like Cory Bergman and Steve Safran of Lost Remote, and I wrote a prediction about it in 2005 after ABC made the decision to sell programs direct to consumers via Apple’s iPod. Here’s what I said at the time:
Now that ABC has broken the mold, the others will follow suit. And once it’s discovered that people will pay a couple of bucks for programs on demand, other “sizes” of the programs will follow as well. Only the distribution method remains in question, and technology will take care of that.
I was stunned by the initial reaction of the current ABC affiliates board chairman, WLOX-TV GM Leon Long. He said that given the choice of watching a program on a two and a half inch screen and a 50-inch HDTV with surround sound, people will choose the latter. This misses the point completely.
The prebundled media model is dead. Broadcasters can slow its demise, but it cannot put the genie back in the bottle.
(Respite bonus link: Video Killed the Radio Star “We can’t rewind, we’ve gone too far.”)
So let’s assume that local TV, like local radio did before it, morphs into something different. What would that look like? How would it make money? What content would it or could it produce that would accumulate an audience that it could sell (BIG question)? Is one-to-many still an advantage of any sort? Will the new model in any way resemble the old? Let’s think about this for a minute and draw some conclusions based on bigger trends that we know we can count on.
Everything is moving to mobile, even the so-called “TV everywhere” concept. But mobile means the Telcos, and they’re not so broadcast-friendly. In fact, they want the spectrum TV currently uses. Moreover, the device manufacturers would ALL have to carry the MDTV chip in order for the one-to-many value proposition to make any sense at all in a mobile world. What’s the likelihood of that? I wouldn’t bet on it unless there was something in it for the Telcos, too. Could be. When they win the spectrum battle in Washington, they’re going to need local news departments to provide the same emergency coverage that is currently found via cable (and a few people using antennas). So there’s one thing that’s going to have to be worked out. Verizon might cut a deal with former CBS affiliates while AT&T does an agreement with the old ABC stations. Admittedly, this is conjecture, but if enough spectrum is left at all for broadcast signals, this is one way partnerships could be formed that will lead to all devices carrying the chip.
Everything is going unbundled (and sooner or later, a la carte). People want to view their TV on-demand, wherever they want to watch it, and to be able to pass it around to share with their friends. This doesn’t bode well for a business that’s based on infrastructure, so local TV is going to have to come up with something that fits this paradigm. I hate to say it, but local TV is so wound around the “monetizing infrastructure” model that the unbundled solution may come from outside the industry.
Video killed the radio star. Just as radio did, local television will also likely find audiences through niches. What are the best niches to own in town? Who will be the local sports TV station, for example? In some markets, there are already all-news stations, so that’s another possible niche. What else?
Will the syndication world adapt to fill the programming needs of three, four, five or more local stations? I suspect we’ll see this attempted at first, but in the end, the digital culture finds middlemen to be an error and routes around them. If I’m a syndicator, will I make more money creating my own network via local broadcasters, or simply streaming my programs for viewers to buy?
The winds of change are in the air for local TV, and we’re not far enough downstream to come to any absolute conclusions about what’s next. Like Kip, I don’t believe the current model will be sustainable — at least not as profitable as these companies want and need them to be — for very much longer. There’ll be a political blitz next year, but after that, I’m just not sure how many will make it through 2015. Remember, too, that the political world is increasingly experimenting with what will work best for their candidates downstream. An enormous ad year for TV stations in 2014 most certainly isn’t a foregone conclusion, even if you’re lucky enough to be in an important state.
Frankly, broadcasting’s big enemy, the Telcos, may end up being their best friends down-the-road. Wouldn’t that be something?
Terry Heaton is President of Reinvent21, a consulting company specializing in business reinvention for the 21st Century. He’s an internationally-recognized creative expert on all things web-related, especially as they relate to local media.