Lots On The Plate For TVN, Broadcasters

As part of our editorial planning for 2015, my partner and TVNewsCheck Publisher Kathy Haley asked me to come up with a list of what will be the big stories in TV broadcasting during the year. Over the past week so, the list has evolved. I’ve deleted some topics, added others. Here’s what it looks like now:

Revenue: Is there ever a more important story? Of course, 2015 is a odd-numbered year, which means the political spending will be sparse and broadcasters will have to rely on core advertisers. The good news is that the auto business — spot’s No. 1 core advertiser —  is booming, thanks to a suddenly healthy economy, low interest rates, a lot of old cars in need of replacing and the remarkable drop in gasoline prices. I found a gas station here in New Jersey at $1.89 a gallon (cash only). I’m dutifully going to NATPE in Miami in two weeks. But if I really want to get a handle on the broadcast year, I probably should go to the NADA car dealers’ convention in San Francisco that same week.

The bad news is that other media continue to come hard for the auto ad dollars. Stations have benefitted from the demise of newspapers and magazines, but they now are at risk of losing those dollars and then some to local cable and digital. We will start our coverage of revenue this year with a story on auto advertising in a couple of weeks. Look for it.

Automated selling. One of the reasons that broadcasters have been losing ad sales to other media is the difficulty of buying spot. Over the past decade, broadcasters have tried to streamline the process — with ePort and whatnot — but haven’t had a great deal of success. It’s still a pain to buy, but there is hope. At the TVB conference last fall, Gannett Broadcasting President David Lougee called on his fellow broadcasters to embrace automated selling, a modified, less radical version of the programmatic selling that other media are using. “To be relevant to our local and national clients, we have to make it easy for them to buy and activate across platforms,” Lougee told the assembled. Amen to that.

We have included a good story on automated selling in the Executive Session tabloid that should arrive on your desk during NATPE week. As if to reinforce the need for automated selling, the issue also includes a front-page story of how Texas Governor-elect Greg Abbott used Big Data in his winning campaign. Big Data led the campaign to spend less on TV and more on digital. It’s a must read for broadcasters, if not a happy one.

The incentive auction: The FCC will move ahead this year with writing the rules for the incentive auction in hopes of buying up TV spectrum and reselling it to wireless carriers next year. Since this idea first emerged five years ago, the NAB has been focused mostly on making sure that broadcasters who choose not to participate in the auction don’t lose coverage as a result of the post-auction repacking of the TV band.

But the NAB’s single-mindedness was based on the belief that only a few marginal broadcasters would participate in the auction. If that was once true, I’m not sure that it still is. Based on the results of the AWS-3 auction of spectrum, it looks like there will be big bucks on the table when TV auction time comes. Just about every top broadcast executive and owner I have spoken with over the past several months says that they are at least considering selling some of their spectrum at auction.

That means the NAB may have to open a second front on this issue to make sure that the incentive auction rules are written in such a way that that broadcasters get their fair share of the auction dollars. The FCC’s goal is to buy spectrum as cheaply as it can from broadcasters and sell it as dearly as it can to the carriers.

Net neutrality: This is the big story at the FCC right now. The agency is considering stepping into the marketplace to insure that everybody using the Internet to distribute content is treated equally. No fast lanes. No slow lanes.

The NAB has been watching the issue out of the corner of its eye, but has been avoiding getting directly involved. It’s understandable. Broadcasters don’t rely on the Internet for the much of their revenue and the politics are fraught with peril. To side with the net regulators is to side with Obama and the Democrats, who have not been their traditional allies.

But still. As content creators, a growing piece of broadcasters’ future business will be tied to the Internet. And in the world of the Internet, broadcasters are among the little guys who could end up in the slow lane. At some point, the NAB may have to get engaged.

ATSC 3.0. The ATSC is charging ahead in its effort to come up with a new broadcast standard that will allow broadcasters to not only air more channels with higher resolution, but also to reach the mobile audience on smartphones and tablets. It won’t be easy. The engineers have to weigh the technical attributes of the various systems to come up with the best possible standard without being unduly swayed by the business interests of the system backers. We are getting the editorial ball rolling on ATSC 3.0 next week with the story on the challenges proponents face in implementing the new standard. It will not be compatible on any of the TV sets now in use. It will require another massive and costly transition like the one we made in the move from analog to digital in 2009.

Network-affiliate relations. We posted a story this week that concludes that the networks are now dominating the the age-old tug of war with their affiliates. And our  reporter on the story, Adam Buckman, found no reason to think that the balance of power might shift back to the affiliates — ever. The networks are demanding and getting more reverse comp from the affiliates with every contract renewal, while looking for other outlets for network programming. In other words, they are making the affiliates pay more for less.

Retransmission consent. Steady increases in reverse comp would not be so bad, if the affiliate were assured of steady increases in retransmission consent fees from the MVPDs. But I get the sense that broadcasters may soon hit a ceiling on what they can wrest from cable and satellite. Broadcasters lost a round in 2014 when Congress passed a law saying that duopoly stations not commonly owned could not jointly negotiate for retrans fees. There are more rounds to come as the cable and satellite industry press Congress and the FCC for further relief.

First-run syndication. This has always been a high-risk, high-reward business. Warner Bros.’ Dick Robertson used to go around with a list showing that only one in 15 or so talk shows make it. Nonetheless, because of that high reward (think Oprah), the big Hollywood studios continued to offer a steady string of big-budget talkers. Three years ago, it was Katie. Then, it was Queen Latifah and then Meredith. None were winners, although there is still some hope perhaps for Meredith, which is still in its rookie season.

Given the still high risk and uncertain reward, the question has to be asked, Is the day of the single-host, big budget talk show passed? There is nothing of the sort being readied for this fall. We reported yesterday that Tribune withdrew a Craig Ferguson talk show from the market after it failed to gain traction with broadcasters.

Demand for first-run shows from Hollywood is not particularly great, either. In fact, major station groups like Tribune, Scripps and Raycom have decided to fill daytime and prime access with shows of their own making. The broadcasters may not grab as many viewers with the DIY shows, but they get to keep all the inventory and equity. Let’s see if this trend builds.

Consolidation. After a blizzard of deals that reshaped the industry in 2012 and 2013, the station trading slowed a bit in 2014. The big deals of the past year were the Media General-LIN and Scripps-Journal mergers. Putting the brakes on things was the Wheeler FCC. With its crackdown on JSAs and SSAs, it was more difficult to engineer deals among the top station groups. Also, the acquisitive Sinclair was sidelined, having effectively bumped up against the FCC’s national ownership cap.

Some analysts and brokers tell me that there will be more big deals this years, but what they might be are not readily apparent to me. However, I would expect to see some smaller deals, possible swaps, as station group regionalize and otherwise attempt to make their portfolios more manageable.

Streaming. TV stations need to get their programming into mobile devices and until they implement a new broadcast standard (see ATSC 3.0 above), the only way to do that is to stream them across the Internet and wireless networks. Each of the networks and their affiliates have made progress — ABC, NBC and Fox through their TV Everywhere initiatives and CBS through its CBS All Access service. All Access is more interesting, since it is a pay service ($5.99 a month) and independent of MVPDs.

The broadcast lawyers killed Aereo in 2014 after a long legal battle that wound its way through the Supreme Court. But the Aereo service was a good idea. With All Access, CBS has developed a nice pay platform for streaming broadcast signals. Now, it needs to invite the other networks and affiliates to share it.

Dish’s Sling TV made all the noise at CES this week. But what would you rather pay $20 a month for? Sling with its package of ESPN, TBS, TNT and a bunch of niche channels. Or, All Access with America’s four most-watched networks. Of course, to really make it work, CBS, NBC and Fox have to clear the digital NFL rights.

Newsgathering. Electronic newsgathering has undergone a quiet revolution over the past few years as a cadre of innovative vendors have put wireless phone technology to work in getting news video from the field to the station. Assuming the cell network isn’t jammed or crippled by a storm, a reporter can go live from just about anywhere with the bonded cellular technology. It will continue to evolve, slowing displacing more costly microwave and satellite links.

The other half of the newsgathering story is drones. Congress and the FAA are racing to catch up with the drones. They will fail. The technology is simply too appealing, too capable to keep grounded while Washington tries to figure out how to regulate it. You’ll see more drone footage in newscasts because of the big loophole in the current rules. A TV station can’t fly a video drone without getting into trouble, but it can buy video drone footage from third parties with impunity. And there are plenty of third parties willing to break a few rules.

Reinventing local TV news. We have been on the lookout for efforts of stations to stretch beyond crime, fires, accidents and weather and to come up with new ways of presenting the news. It’s absolutely imperative that stations do so. Every study I’ve seen shows that young people shun local news and I think it’s wishful thinking to say they will come around once they settle down.

I don’t mean they should pander to the young folk. They already pander too much to the old folk. In The Interview, the funny movie that caused Sony so much trouble, celebrity talk show host Dave Skylark (James Franco) tells his producer Aaron Rapaport (Seth Rogen)  that the first rule of journalism is to give the people what they want. No, says Rapaport, “that’s first rule of circuses and demolition derbies.” That hit the mark as satire often does.

So, there’s a good long list. That should keep us busy this year. Did I miss anything?

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