It’s Vital To Think Beyond TV’s Linear Roots

From its earliest days, the business model for TV stations has been identified as the best medium to deliver a live audience to advertisers. This past Sunday’s Super Bowl demonstrates once again that the broadcast medium still delivers. This year’s NFL championship delivered a record 114.4 million U.S. TV viewers, a 2% gain over last year’s, and an even larger audience of 118.5 million viewers for its half-time show.

But as we know, delivering a huge audience has become increasingly difficult, particularly as millennials have grown to represent the highly coveted 18-34 segment of the consumer market. Super Bowls aside, this generation is not typically interested in appointment viewing.

What can be lost in the conversation is that it is appointment viewing, not television content, that can limit the size of a television audience. Market data consistently demonstrate that millennials love to watch many of the shows that were created for broadcast television.

For example, the recently released joint research study on consumer attitudes toward television viewing, conducted by NATPE and CEA, showed all three generations — millennials, genXers and boomers — rate comedy TV shows as their favorite genre.  The difference is how and when they choose to experience them, with more than half of millennials opting to watch these shows via an online streaming service.

In addition to licensing their content to streaming media providers, TV networks are responding to the shift for “on-demand” access to their content through TV Everywhere solutions available from cable MSOs and other MVPDS. And when it comes to accessing shows directly from the network, “there’s an app for that.”

But what about local television?

The FCC’s answer can be seen in a plan to buy back broadcast TV spectrum and then sell it to the mobile providers whose cellular networks need more bandwidth to support this exponential growth in demand for video streaming. And there are certainly some broadcasters who have been studying the FCC’s plans for the “reverse auction” and calculating how much they can make by cashing out on the value of their broadcast license.

Ironically, the interest in turning broadcast spectrum over to the wireless industry is coming at a time when broadcasters are demonstrating their ability to offer streaming media and related services. As a field trial involving WKOW Madison, Wis., demonstrated last summer, ATSC 3.0, a next-generation standard for broadcast video, successfully delivered 4K ultra HD content and two mobile TV streams in a 6 MHz channel, all with optimized indoor reception.

On the plus side, broadcasters who are required to move to new channels as part of the upcoming broadcast spectrum auction can use part of the $1.75 billion reimbursement fund to go toward the cost of equipment needed for transitioning to the ATSC 3.0 standard.

However, TVNewsCheck Editor Harry Jessell pointed out that getting ATSC 3.0 reception chips into smartphones is going to require the support of cellular carriers who would appear to have little incentive to offer a feature that could “undermine their data plans.”

As Jessel explains, TV broadcasters can get a good idea on how difficult it can be to forge that type of partnership by looking at the experience of their radio broadcasting brethren in getting FM radio chips installed and enabled on smartphones. There’s no doubt that it has been a slow process, but the availability of Nextradio on devices offered by six of the country’s top wireless carriers helps to illustrate the potential. It also wouldn’t be the first time the broadcast television industry worked out a win-win-win proposition with a competitor that was fueled by strong consumer demand.

While there may be a few who are ready to run for the exits, especially in light of these challenges and the FCC’s incentive, there are many more television broadcasters who have long recognized their brand — and business model — isn’t limited by their linear TV audience.

As part of their transition to TV Everywhere, stations have focused on the cross-platform delivery of their most popular content: local news, sports and weather. Extending beyond the limitations of a short segment within the 30-minute news program, these stations are taking the video that in a former era would have found itself on the cutting room floor to create on-demand content that also ranks high in demand by their viewers. This content includes in-depth coverage of local sports, updated weather forecasts and streaming live video feeds of breaking news.

Local television’s expertise in audience delivery has also extended into these beyond-broadcast forums for reaching and engaging with consumers. Local promotions departments, which excel at driving tune-in, are showing that the station’s ability to create cross-platform promotions to drive viewers to an advertiser’s digital storefronts is also very effective in delivering audiences to its own digital content.

Finally, other digital media platforms can only dream about the customer relationships that are have been forged between viewers and a local TV station’s on-air talent. Highly regarded news anchors and meteorologists often have more followers on Facebook and Twitter than many local businesses and “pure-play” digital media properties.

These strong, interpersonal relationships have been honed by years of community outreach activities that have also extended beyond on-air broadcasts of telethons and celebrating local heroes to include a broad spectrum of community outreach projects like food drives, emceeing fund-raising events and visiting local schools and hospitals. The difference nowadays is that these appearances and interactions can reach far beyond the audience for an on-air segment reporting about them to include a worldwide audience connected to a plethora of social media venues.

As the industry’s association for financial management, MFM is working very closely with television stations to identify and evaluate revenue generation opportunities that will allow their stations to remain an integral part of the local media market.

In fact, the co-chairs for our upcoming CFO Summit, which will be held later this month, are David Amy, EVP-COO of Sinclair Broadcast Group, and Marc Manahan, SVP-CFO of Univision Local Media. David and Marc have put together a lineup of expert presenters on topics specifically selected to help the industry’s senior financial management address the challenges facing today’s media organizations.

Topics such as programmatic ad sales, the FCC auction, next-gen broadcasting and TV Everywhere will also be explored at Media Finance Focus 2015, the 55th annual conference for MFM and BCCA, the media industry’s credit association.

In addition, our Distance Learning Seminar series, which will tackle the topic of program content management this month, covers subjects selected by industry members for industry members. More information on these and other educational programs may be found on our website.

We often attribute the phrase “the medium is the message” to media analyst Marshall McLuhan. While he did observe that “with telephone and TV it is not so much the message as the sender that is ‘sent’,” the actual title of his book on the subject was The Medium is the Massage.

Applying McLuhan’s axiom to the challenges facing today’s TV stations suggests that the appointment TV model was the massage applied to content that would be delivered by an “always on” medium which conformed to a calendar of days and hours. On the other hand, digital media, which is file-based, is ideally suited for addressing the consumer’s interest in “on-demand” viewing.

It is important for us to consider that video content, like comedy TV shows and local news programs, may be massaged by a particular medium, but it is not limited to it. To do otherwise means missing opportunities to expand your businesses and thereby limit your futures to a scenario where the medium actually becomes the message.

Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary. She can be reached at [email protected]. Her column appears in TVNewsCheck every other week. You can read her earlier columns here.