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Broadcast television is a mature business; there is not much opportunity for growth from the current, linear product. The television networks know this and are responding accordingly. In fact, Bob Iger, CEO of The Walt Disney Co., which owns ABC, came right out and admitted this during the company’s upfront presentation in New York. He said the company’s approach is “basically to reduce pretty dramatically our investment in content, specifically aimed at those traditional networks.”
This is clearly demonstrated by the content being offered for the upcoming season. TVNewsCheck’s Paige Albiniak observed the announced primetime schedules are “mostly reality, unscripted and game shows alongside their long-running franchises, most of which are procedurals.” The “high-end dramas and sitcoms” are few and far between.
This shouldn’t be a surprise when one looks at the viewership declines. Take, for example, the changes in the last 10 years. In 2013, Nielsen’s rating results show CBS’ The Big Bang Theory had the 2013-2014 season’s highest viewership with an average 23.1 million people watching an episode within seven days of its airing. The next four highly watched programs are: NCIS (CBS) with 24.4 million, Saturday Night Football on NBC, 21.7 million; NCIS:LA (CBS), 17.9 million and Blacklist (NBC), 16.9 million. NBCU’s Law & Order: SVU and CBS’ Undercover Boss are tied for the 49th place with a weekly average of 9.1 million viewers.
In 2023, the top 21 most-viewed broadcast programs are all sporting events. No. 22, Fox’s Next Level Chef, Season 2, Episode 1, shows 16.8 million viewers, just slightly better than the average for Blacklist 10 years earlier. One has to jump down to the program in the 40th viewership position in 2023, to find another non-sports, non-special offering. (The Grammy Awards are in position 36 with 13.4 million viewers.) CBS’ 60 Minutes, Season 55, Episode 17 (featuring Britain’s Prince Harry and music producer/composer Hans Zimmer), has 12.5 million viewers. Granted, 2023 numbers are affected by the writers’ and actors’ strikes, but the trend is still clear — the networks are offering fewer scripted programs and a decreasing number of viewers are watching linear television. It’s live events — specials and sports — that drive appointment viewing.
Network bosses are acting rationally when they work to maximize revenue from reverse compensation fees charged to affiliates. With national advertising dollars falling, reverse comp is the cash cow of the mature business. Business strategists generally advise milking the cash cow for as long as possible.
That approach isn’t helping cash-strapped local broadcasters that are trying to attract and retain viewers. In addition to paying more and getting less from their national content providers, they have challenges with the content they produce locally. This is particularly true with local news. Sean McLaughlin, VP of news for Graham Media Group’s local media hubs, reports that he’s seeing very few qualified applicants for reporter or anchor openings and that those who put themselves forward for entry-level jobs aren’t prepared to do the work. He says they don’t even know the basics.
Part of the problem is compensation, and that is only going to get worse. The Federal Trade Commission recently decided to virtually eliminate noncompete agreements. Many local broadcasters believe these are essential to protecting their investment in local talent. I disagree and would argue that competitive pay and a good working environment will go a long way in fixing the problem.
On top of that, the Department of Labor just announced an increase for the minimum weekly salary for those employees exempt from overtime compensation. By all accounts, this will deal another blow to station budgets, which rely upon the exemption. The minimum will increase in two steps, ultimately adding to a 65% hike by Jan. 1, 2025.
The real challenge is not how to rob Peter to pay Paul. Certain stations may be able to replace a highly compensated employee (or two) with someone in a lesser pay grade to find the dollars needed to attract new talent or bump up wages to keep all employees categorized as exempt in that same classification come Jan. 1. That’s just delaying the real problem.
Business 101 teaches that, after milking the cash cow (or while milking that cow), mature products and businesses move into the transition or wind down stage of their lifecycle. That’s the next step for local broadcast; management needs to be planning for it now. Transition is an exciting opportunity for those who are up to it.
Despite the current challenges, local broadcast stations have a lot of strengths they can build on to transform their businesses. Among them, and in no particular order, are:
- Local news is the most trusted by all Americans according to January 2024 research from Pew; party split is almost negligible when compared to responses to national coverage.
- Thirty-two percent of Americans prefer linear television for local news; that’s second behind digital at 48% (comprising news website/app at 26% and social media with 23%).
- Stations have deep expertise in producing video content.
- Local stations have reputations developed by serving the community for many years.
- Extensive libraries of historical content offer stations content that can be repurposed.
- Digital subchannels can be used for station experimentation.
- Stations have multiple outlets for self-promotion.
- They also have dedicated employees who want to participate in the station’s success.
- Finally, they can draw on long-standing relationships with local businesses that want to promote their products and services.
Leaders willing to transition their businesses must keep in mind that the first two stages of the business lifecycle are start-up and growth. These stages require investments of time, talent and dollars; they are rarely profitable in the first year or more.
While thinking about this piece, I came up with a number of ideas for ways stations can raise revenues and cut costs to support the next stage in a station’s lifecycle; I know there are many more.
A suggestion I’ve floated before is developing content targeted at specific communities in the station’s viewing area. A few other thoughts include developing a local (and sponsored) real estate program, producing a series of cooking shows in conjunction with a grocer or creating a series of specials devoted to local history. The plan for each station will be unique.
Regardless of which path your station selects, I encourage you to make teaching basic budgeting to all employees a priority. I was astonished the other day when I talked to a station-level person who wanted to propose a new project and had no idea how to present revenue and expenses or how to measure outcomes. That skill is going to be crucial for every member of your team going forward.
Broadcast television is a mature business. Complaining about things that cannot be changed, such as new regulations and the broadcast networks’ demands for increases in reverse compensation payments, is not going to change the situation.
The options are to transition or to wind down, to innovate or to get out of the business. Those that continue to tinker around the edges, to take last year’s plan and simply adjust revenues and expenses, are opting to go out of business. Broadcasters who want to continue to serve local audiences need to make and implement new plans now.
Former president and CEO of the Media Financial Management Association and its BCCA subsidiary, Mary M. Collins is a change agent, entrepreneur and senior management executive. She can be reached at [email protected].
Resistance is futile.
no one wants to work for graham.
Excellent article. Those who CAN… DO. Those who CAN’T… COMPLAIN. Enough of the whining. Yeah, it’s challenging. Guess what? So is 90% of life. That’s the point. Lead, follow, or get out of the way.
All of these solutions are meaningless if the local station CEOs from Scripps, Nexstar, Graham, Gray etc refuse to empower GMs and stations to experiment. All of these solutions are futile if GMs continue to refuse to pay employees a livable wage. 2% and 3% increases are ridiculous. Change is in the hands of the corporations who own these stations. Nexstar is earning big bucks. Think Perry Sook is going to allow his stations to experiment and risk losing money? I doubt it.
I have an idea I liked a show called To Catch A Contractor ran on Spike and now Paramount Network ran for 3 seasons 2014 to 2015, it could be any type of scam that doesn’t have to be just contractors for weekends a half an hour.