Stations may not be promoting the advantages of replacing cable and satellite with a rooftop antenna for a couple of reasons: fear of losing retrans revenue and not wanting to alienate cable systems that advertise on their air. But one stations thinks it’s found a solution: convincing a local antenna installer to advertise. I’m guessing the station can generate more in revenue each month from antenna installers than the company will lose in retrans revenue. And even if it doesn’t, the station will benefit in ways harder to calculate: from strengthening broadcasting as a local advertising medium, weakening rival cable and sending the message to Washington that broadcasting is here to stay.
Promoting OTA Gain Without The Pain
Broadcasters face a dilemma.
They understand the importance of the over-the-air signals that set them apart from all other TV media. Because of their transmitters and tall towers, they can boast that they reach every set in every home. Sorry cable, satellite, home video and broadband. You come up short.
The universal coverage gives broadcasters a critical business advantage, allowing them to draw larger audiences and charge advertisers more. And each OTA-only home makes it that much more difficult for the feds to take away or downgrade broadcast spectrum as they are threatening to do.
This is why TV stations are willing to sign big checks to maintain transmission facilities and cover enormous electric bills each month.
If you believe Nielsen, the universe of antenna-only homes has dwindled to just 10% of the 114 million TV homes. That’s too low. It would be far better for the advertising and political health of broadcasting if that percentage were nudged higher and the reach of satellite and cable were reduced commensurately.
To grow the percentage, broadcasters could start running an on-air campaign, urging viewers to dump cable and satellite, get a good antenna and return to broadcasting. It includes the most-watched programming, it delivers superior HD and it’s free.
There is already a small, but growing, grassroots movement in which subscribers are cutting the cord (shelving the dish?) and opting for free antenna TV and whatever TV they get via broadband, what’s known as over-the-top (OTT) television.
So, why don’t they? Why don’t TV stations promote over-the-air TV?
First, most network affiliate TV stations have become mini-cable networks that collect fees from cable and satellite operators. These retransmission consent fees are now significant and they are based on the number of subscribers.
That means that every time that a consumer cuts the cord and opts for antenna TV or OTT, the TV station loses 25 cents or 50 cents of whatever it managed to squeeze out of the pay TV operator in the last negotiation.
Second, for many TV stations, cable operators are important advertisers, spending heavily on spots to acquire new subs and keep existing ones from straying. They wouldn’t look kindly on TV stations that were telling folks to dump cable.
So, here’s the dilemma: If broadcasters do nothing, the OTA-only audience may shrink or grow so slowly that broadcasting loses its marketplace edge and some of its spectrum. If they promote OTA-only, they alienate cable advertisers and lose retrans revenue.
Ah, but I have a solution — a third way.
It comes from a station sales and marketing manager in a top-25 market who at this moment prefers to remain anonymous. We’ll call him Fred.
Fred’s idea was to get a local TV antenna installer to advertise. Using Google, it did not take Fred long to find a guy who installed antennas as part of a home theater business. Fred contacted him and soon sold him on some spots that would tout the cost-savings of migrating from cable or satellite to broadcast. SAVE $80-$90 A MONTH!!
With that pitch, Fred says, the installer figures he can get in the door and perhaps upsell consumers on some other services.
Fred intends to schedule the ads during the noon news, hoping to reach older viewers who might be looking to save money and will actually know what a TV antenna is. He also plans to run them on a Spanish-language multicast channel, knowing that Hispanic viewers make up a disproportionate percentage of over-the-air viewers.
Fred acknowledges that the campaign is not big money, but it is new business, which comes in handy when you have to show year-to-year growth.
Cable advertisers can’t really complain. It’s not the station telling people that cable’s a lousy deal. And stirring up competition is what advertising is all about. In fact, if cable operators see ads telling consumers to dump cable, they may be more motivated to air ads trumpeting the benefits of cable.
Now, it is true that every new OTA-only home that Fred’s installer creates, Fred’s station group may lose, say, 25 cents a month in retrans revenue.
But my guess is Fred can generate more quarters in revenue each month from antenna installers than the company will lose in retrans revenue. And even if he doesn’t, Fred’s station and the group will benefit in ways harder to calculate from strengthening broadcasting as a local advertising medium, weakening rival cable as such and sending the message to Washington that broadcasting is here to stay.
The installer’s flight doesn’t start till March. Neither Fred nor the installer knows how it will go — whether the campaign will fizzle or result in antennas sprouting up on rooftops all over the city.
I will check back with Fred in April and see how things are going, but I don’t think the rest of the industry has to wait for the results of the experiment.
My suggestion is that every GSM is the country get on Google right now and follow Fred’s lead. Find an installer who wants to grow his business in a big way and show him how.
If every one did, they really could reverse the decades-long slide in OTA-only homes, secure broadcasting’s place as the No. 1 TV medium — free and universal — and pick up a few bucks in the process.
That’s not a dilemma at all. That’s an opportunity.