Diginets Reflect TV’s Past, Drive Its Future

A surprise in my interview earlier this month with Larry Wert, the new broadcasting chief at Tribune, was his enthusiasm for multicasting — the broadcasting of niche networks on digital subchannels.

“They are very meaningful,” he told me. “I have been part of a couple of start-ups on digital channels and since joining Tribune I am very impressed with what they have accomplished with Antenna TV and now This TV. They have become very significant businesses for us.

“They are more lucrative right now than online, that’s for sure, and they are still growing.”

I have to discount the remarks to some degree since Tribune is deeply involved on the network side of the multicasting business. It owns Antenna TV and a partner with MGM in This TV. Wert has to talk up multicasting if Tribune is going to sign on more affiliates for the so-called diginets.

But still I believe him when is says that multicasting is a “very significant” and “meaningful” business. I’ve begun to hear that elsewhere. The multicasting feature by our Kevin Downey that we ran on Wednesday — part 2 of a three-part special report — confirms Wert’s assessment.

Downey notes that several networks led by Me-TV have amassed broad coverage and cites a couple of credible sources who suggest that the diginets are delivering at least $200 million in revenue a year. That’s meaningful in anybody’s book, although most of that money at this point is going to the networks rather than to the station-affiliates.

More evidence that there is something to multicasting turned up in a survey of TV station general managers that we began conducting this week. The results are still preliminary, but they indicate that stations are now deriving on average about 5% of their revenue from broadcasting on subchannels. That is right around the generally accepted percentage for share of revenue from websites and other digital services.

That multicasting is doing as well as it is is due, I think, to the success broadcasters have had in getting cable carriage for the diginets. Michael Kokernak, a consultant who tracks the multicasting business, says that most of the affiliates of the top diginets have been able to secure cable carriage through their retrans negotiations.

That cable carriage has tremendous value, even if the channel positions are usually poor. Here in Chatham, N.J., on the FiOS system, the positions are not so bad. We have a good collection: Cozi TV, Antenna TV, Live Well, Bounce TV, This TV and a bunch of Hispanic networks like Estrella and Mega TV. They are clustered with channel numbers in the high 400s, where the SD channels end, but just below where the HD channels begin. So they are not hard to find if you know where to look.

(In prepping for this column this morning, I watched the end of a 1971 Sean Connery movie, The Anderson Tapes, on Antenna TV (ch. 465). Not bad, and the commercial breaks were an acceptable minute or two rather than the five or six minutes you get on basic cable.)

Aside from the revenue potential, multicasting benefits broadcasting in another way.

As I have argued here many times, it is important for broadcasters to sustain a healthy level of OTA-only homes.  Not too many that they would cut into retrans revenue, but enough to maintain broadcasting as the only mass TV medium — the one that reaches every set in every home.

Multicasting helps with that. When cost-conscious consumers contemplate cutting the cord — dropping cable or satellite — and subsisting on broadcasting alone, I think their resolve would be strengthened by the presence of diginets, which are, in essence, basic cable channels.

Today, multicasting is small, but it could someday be big.

Most of the multi-billion-dollar cable networks that have been nibbling away at broadcasting for the past three decades started out as broadcast rerun channels. The late Chuck Sherman of NAB once told me one that if you wanted to see the history of television, all you had to do was tune to basic cable. Now, you can tune to the diginets.

I see Antenna TV, This TV and Me-TV evolving just as Viacom’s TV Land did. The Viacom network launched in 1996 stuffed with classic TV shows like Gunsmoke, The Honeymooners, Hogan’s Heroes and Hill Street Blues. Today, it still relies on off-net shows (it ran an Andy Griffith block from 8 a.m. to 1 p.m today), but it also mixes in well-produced, scripted originals like Hot in Cleveland, The Execs and The Soul Man.

The key of course is tapping into the $30 billion that cable and satellite pay out to programmers each year. Once a network starts getting fees, it begins an inexorable upward spiral. That’s what the history of cable networks teaches anyway.

Retransmission consent provides the mechanism, but if diginets are going to get a nickel (per sub, per month) of the cable/satellite outlay, they have to show they are willing to make a serious investment in original programming and able to attract measurable audiences.

Diginets that want to break into the big time will also have to invest in an HD feed for cable. Most diginets are SD because of the bandwidth restraints of broadcasting.  As far as I know, the only diginet in HD now is Disney/ABC’s Live Well.

Who will be first to get cash from the MVPDs? My bet is on Bounce TV, the African-American-oriented network that came charging out of the blocks two years ago. In this week’s story, COO Jonathan Katz promises more than 100 hours of original programming next year on top of big-budget movies and live college football and basketball.  This fall, I look forward to sampling My Crazy Roommate, a new sitcom “in the tradition of 2 Broke Girls, Laverne and Shirley and The Odd Couple.” That’s quite a legacy to live up to.

Over the past several years, diginets have come and gone, and I would expect more coming and going as the marketplace sorts out the weak from the strong. One network that is coming this fall is TouchVision, a 24/7 news channel founded by media veterans Lee Abrams and Steve Saslow. TVNewsCheck will have more on the venture next Tuesday.

If broadcasters follow through and move to a new, more powerful broadcast standard in the next few years, they will find they have a room for more diginets — even in HD, if they wish. That opens up all kinds of new possibilities.

I think our 26-year-old tech reporter Andrew Dodson has a good idea — a “classic” TV channel for those who grew up in the 1990s. He wants to see Full House, Family Matters, Perfect Strangers and Step by Step. “It would be ABC’s classic TGIF programming block every night of the week,” he wrote.

One idea, from an earlier column of mine, is to bring Oprah back to broadcasting by reinventing her foundering OWN cable network as a diginet. At least in broadcasting, the network will get the moral and promotional support of broadcasters — the same folks that made her fabulously wealthy in the first place.

So, as a champion of free, over-the-air television, I am encouraged. As Wert said, multicasting seems to be developing into a sound business with genuine upside. Right now, it’s been said, the industry stands on a three-legged stool — auto, political and retrans.

A fourth leg would make the biz a lot sturdier.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.