JESSELL AT LARGE

Promoting OTA Gain Without The Pain

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.

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.

BRAND CONNECTIONS

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.


Harry A. Jessell is editor of TVNewsCheck. He can be reached at 973-701-1067 or mailto:[email protected]. You can read his other columns here.


Comments (12)

Leave a Reply

Andrew Salomon says:

February 18, 2011 at 4:01 pm

GO FRED GO!!!

Dante Betteo says:

February 18, 2011 at 4:47 pm

That is a grat Idea. I am for OTA!

tom gillespie says:

February 18, 2011 at 4:48 pm

It’s about time! During the digital transition, I could not believe broadcasters did not get this message out as part of the FCC required PSA’s. Instead most broadcasts ran a PSA featuring an old lady fumbling with cables while trying to hook-up an analog to digital converter while the VO stated: “…If you have cable or satellite you don’t have to worry but if you don’t…” Instead the message should have been, “Now you can get more channels for FREE, and the picture will be clearer even if you don’t have an HD TV. But if you do have an HD TV, you’re picture will be much better than what you’re getting on cable or satellite. Save money, etc. “

Ashley Peel says:

February 18, 2011 at 6:21 pm

Good article. However, I believe that “cutting the cord”, on demand news and entertainment via broadband and OTA HD are grass roots movements that will grow on their own, despite some broadcasters’ internal ambivalence and/or inertia on the matter. The medium is no longer the message.

Peter Grewar says:

February 18, 2011 at 7:48 pm

Broadcasters who fear losing retransmission consent revenue as a result of cord cutting are being short sighted. Because they need to remember that it hurts the competition far more than it hurts them — and that if OTA every becomes completely irrelevant and their brand becomes “just another cable channel”, then broadcasters will lose big.

Warren Harmon says:

February 19, 2011 at 1:31 am

Way to go Fred!

Ed Miley says:

February 21, 2011 at 1:59 pm

TV stations who rely on the retransmission fees from the cable and dish operators are giving their sales department a pass to slough. There are some markets where the cable operator did not cave in to the fees and the station was pulled from those viewers — What then? Maybe the TV station goes to cable to buy airtime to promote antennas to be seen?
Thanks for this report – I needed a good laugh. …the only thing better is if it came out on April 1st.

    mike tomasino says:

    February 22, 2011 at 12:51 pm

    Maybe they could buy ads on the internet. The cable model is dead, it just doesn’t know it yet.

Derwin Cox says:

February 21, 2011 at 3:25 pm

It’s called: GETING BACK TO BASICS, which in this case is “Broadcasting” pure and simple. Not the cord, not the bird or the dish or the optics. The ads need to tie in the goodies on the DOTS and MOBILE CHANNELS as well as the top notch HD. Are you getting “Super HD” ? It’s FREE after a one-time antenna purchase. One needs to reward the installer on the basis of his performance. And it doesn’t have to be an either/or sale against cable or the bird. This is “for the man who wants it all.” Best thing to hit the neighborhood in 40 years!

mike tomasino says:

February 22, 2011 at 12:49 pm

Thanks Harry for this article, and go Fred go!!!

Cheryl Davis says:

February 22, 2011 at 2:19 pm

Fred gets it! Some markets are receiving over 30 channels over the air FREE.

Robert Epstein says:

February 23, 2011 at 8:28 pm

Most of the people here just needed to get their analog channels clearer.. now with digital this is not true anymore. . Personally I have driven around 100 or 115 persons away from cable and satellite and they thank me everytime they see me. Just because the signals look better and they are free. so i’m in accord with “Fred”..TV stations should do more to promote their free signals.


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