The faltering economy is causing many stations to consider outsourcing master control and other technical back-office jobs. Among those that may provide such services are third-party firms as well as LIN, Media General, Raycom and other station groups that have already began centralcasting or hubbing.
With cost cutting looking like the only way to boost profit margins these days, hard-pressed TV broadcasters are considering outsourcing master control and other technical back-office tasks.
Broadcasters never really wanted to outsource these functions “until the double hit of the economy and the fragmentation of revenues,” says Karl Paulsen, CTO of AZCAR Technology, a systems integrator that has been working on the concept for nearly a decade.
“It takes somebody with the guts to do it and somebody to step up to the plate and say we’ll manage this for you, we’ll take it off your plate,” he says.
Among those stepping up — or at least thinking about it — are TV broadcasters that have implemented centralcasting or hubbing for their own stations. They include Raycom Media, LIN Television, Media General, Lockwood Broadcast and Fusion Communications.
AZCAR itself has dusted off an eight-year-old plan under which it would build and operate a playout center for all the stations in a market as a non-broadcaster.
According to Paulsen, the company has had preliminary discussions with several broadcasters about the plan over the past six months.
It could work anyway, he says, but a market like Denver would be ideal because the stations there recently co-located most of their transmitters.
“There’s plenty of space to do a shared facility that wouldn’t require more than 200 feet of fiber optic cable to the transmitter in the same building,” he says. “It’s built to do those sorts of things,”
Mike DeClue, an engineering consultant and former technology chief for Clear Channel Television (now Newport Television), believes AZCAR is on the right path.
“If we were smart as broadcasters, there would be a third-party external company set up in each market that would provide services for all aspects of the stations that do not compete,” he says.
“You would then be able to actually achieve some of those economies of scale. You would leverage automation to do the things that need to be done. Broadcasters need to get into the modern world. We need to have a better way of doing things.”
Raycom is talking up the idea of rivals stations within a market operating a commonly owned playout center.
“We are definitely bullish,” says Dave Folsom, Raycom vice president and CTO. “One of the things that makes a lot of sense in markets is to get together as a common group and create a business that everybody has a piece of.”
The Raycom all-for-one model targets stations within markets because interconnection costs are low.
Folsom says that Raycom’s in-group, regional hub in Charlotte, N.C., is “working well, yet has still not proved to be cost-effective” because of interconnection. “The best we can hope for — even on a good day — is a neutral cost.”
The interconnection costs would be particularly onerous in hubs involving small markets where the cost of fiber lines are “sometimes 10 times higher than it is for bigger markets,” he says. “You can connect New York and Los Angeles cheaper than you can Hattiesburg and Biloxi.”
LIN and Media General say they have been approached about providing such services for others.
“The economy is pushing people in the direction of considering this. We just haven’t gotten that far down the road with it,” says Ardell Hill, Media General’s president of broadcast services.
Media General remotely controls central broadcasts for 23 stations from facilities in Spartanburg, S.C. and Columbus, Ohio, and uses a Tampa, Fla., facility to remotely control traffic.
“I control their servers and control their satellites [and] manage the network signals the same way I would if I was sitting in a local property,” says Hill. “Our structure remains local; we just control it remotely.”
LIN, which operates 21 stations from hubs in Springfield, Mass., and Indianapolis, could accommodate other stations at the hubs, says Scott Blumental, executive vice president of television. But, he adds, there would need to be strict operational rules.
“That’s an issue that has to be dealt with when you receive or start providing services for stations that are outside your ownership realm,” he says. “There are some adjustments you can make when you own and provide services to yourself that are different than you would be able to establish in a multi-company operation.”
Another broadcaster that signed on with LIN should expect to pay a hefty monthly bill to transport finished content across fiber lines from the central site to the station, perhaps $5,000 to $7,000 a month.
“You’re talking [the salaries of] one or two people, but we’ve been able to eliminate more than one or two people in all these stations because of consolidation,” Blumenthal said.
Master control outsourcing is spawning a cottage industry of sorts with two small station groups, Lockwood Broadcast and Fusion Communications, putting themselves forward as providers.
After the credit market collapse, Lockwood began searching for a new business to supplant its buy-and-upgrade station model. It settled on encouraging other broadcasters to use a hub it built in Richmond, Va., for its own stations in Charleston, W.Va., and Huntsville, Ala.
“We didn’t set this up to run a service; we set out to run our stations,” says Lockwood President Dave Lockwood. “This is being driven by the downturn of the economy.”
Lockwood calls its offering the Broadcast Operation Service Solution or, simply, BOSS. “People love the idea,” Lockwood says. “We do all traffic, all promotion, all production. Effectively, the on-air branding is done from our central hub.”
Potential clients include banks and other creditors who find themselves owning stations after they defaulted or fell into bankruptcy. “They don’t want to be in that business,” Lockwood says. “We think we could provide a model where we run it for them.”
Fusion Communications is looking for other users for its centralcasting facility in Davenport, Iowa, which provides a locally customizable news service to stations (Independent News Network) and which will soon be providing centralized master control for four stations Fusion is in the process of purchasing.
“A company like ours saves them as much as 50 percent of their current costs and gives them a state-of-the-art digital plant that they don’t have to buy,” says Fusion partner Jeff Lyle.
Fusion says it has contracts in hand to provide playout service for several stations. Among them are two Spanish-language stations owned by Cranston, KMCC Las Vegas (Laughlin) and KTRG San Antonio (Del Rio).
Cranston President Barbara Laurence says Fusion is also providing the INN service with locally produced cut-ins.
“What we’re able to save on production we use to add more sales people,” she says. “We really want to support the community in any way that we can even though we can’t hire news anchors and people like that.”