EXECUTIVE SESSION WITH JIM BELOYIANIS

SEEKING THE UP IN THE COMING DOWN YEAR

The Katz Television president thinks that, without the heavy political spending, national spot revenue for 2007 with be off as much as 10% from 2006. But he also believes he can grow the other ad categories and better exploit his client-stations' increasingly attractive Web sites.

Tough comps. All that political money pouring into TV stations in the weeks leading up to the Nov. 7 elections is just going to make 2007 national spot revenue look that much worse—as much as 10% worse, according to Jim Beloyianis, president of Katz Television Group, which sells national spot for some 400 TV stations through three independently operated rep firms.

But, in this interview with TVNewsCheck Editor Harry A. Jessell, Beloyianis says there is plenty of life in national spot and reason for optimism.

The domestic auto companies could bounce back and start spending heavily again, he says, and the movie studios are already recognizing the error of too much network.

If he can just convince the packaged goods and pharmaceutical companies of what auto marketers and politicians already know—geo-targeted spot sells—all would be well.

Beloyianis also believes that TV stations’ Web sites can be an attractive complement to national spot buys, if the combo is properly packaged and marketed. He is taking steps to make sure it is.

An edited transcript follows.

BRAND CONNECTIONS

According to TVB, national spot revenue in 2007 is going to be off seven to nine percent compared with 2006. Do you agree?

It’s going to be more than that—down eight to ten percent and that is because ’06 will finish stronger than what was originally projected. So since you have a higher base for ’06, the percentage difference—’07 versus ’06—will be greater than what was projected back in September.

And that’s all because of political.

Yes. I’m looking at huge political growth. A year ago, everyone was saying that they didn’t expect ’06 political to be within 15 to 20 percent of ’04. Now we expect it to be significantly higher. What’s more important is comparing political for ’06 to political for ’02, the last non-presidential election year. Political is up 41 percent in ’06 compared with ’02.

Do you have the TVB forecast for ’06?

They forecast an increase of 10.5 percent to 11.7 percent.

Okay, right now, I think it’s going to finish closer to 12 to 13 percent. So you see, with a higher base for ’06 than what was anticipated back in September, the decline for ’07 will be greater.

What’s the rest of the business look like in 2007? There’s been a lot of softness in auto, retail, fast food and packaged goods. Is any of that coming back?

There have been a number of issues that have affected the domestic auto makers that still need to be resolved, so it’s hard to project what their spending levels are going to be. But if we can look at their foreign competitors, you see that they continue to increase expenditures on spot and TVB did an analysis that shows that those very same brands have increased their market shares.

Automotive people have been very astute in using local market television to introduce their new brands, move out their existing inventory and do all the things that the auto industry requires to continue to grow.

So you don’t sit around worrying about auto so much even though because you believe that if the domestics could  figure out how to make a car, they would come back to you and that’s proved by the fact that foreign auto makers are increasing their expenditures in spot.

Yeah, but I don’t want to say the domestic auto makers don’t know how to make a car because I don’t want to insult our advertisers.

That’s me talking.

But the way that the foreign brands are increasing their share is not only by making a very good car, but by promoting it on spot television. Auto will continue to be our number-one advertiser on television.

What about those other categories I mentioned.

They are not allocating a sufficient percentage of their media plan to local market television. That is the challenge of the rep community and the TVB. They must continue to meet with the planning community at our agencies and with our advertisers to reinforce the concept of geo-targeting because geo-targeting is the cornerstone of planning local market television campaigns.

You know you have interviewed other broadcasters—[Clear Channel’s] Don Perry or [NBC’s] Jay Ireland or [News-Press & Gazette’s] John Kueneke and they all talked about how well local is doing. Well, why is it that television would be so strong for local advertisers? It’s the same reason that it does so well for automotive and political—because it delivers the message.

When I first started in this business there were three networks. When you bought broadcast you were buying time on the three networks and then you’d use spot television. Back in those days, the packaged goods companies were putting roughly 15 to 20 percent of their broadcast dollars into spot TV. Today, that number is probably lower then five percent.

They’re buying a number of the six over-the-air networks. They’re buying a number of the 18 or so dominant cable networks. They’re buying a number of the six or seven major syndication companies. Now, it’s fine that they buy any one of those or all of them, but by putting 75 or 80% of their advertising money into what I call a national network medium, they are buying a huge amount of redundancy.

Of the categories that have been most resistant to your pitch, which do you think is the best prospect—the one most likely to embrace spot?

Well, I think the movie category has the potential to bounce back because they went to more of a national plan and movie ticket sales declined. Now, they started spending again and ticket sales have either stabilized or gone up. So that’s a category that I’d like to see us increase even further because you can show real results.

I think the fast food category is going to be a natural. They have changed a lot of their menus. They’ve gone from just burgers to salads and low-fat meals. I think there’s a great opportunity there to show improvement. But the one that we’re working with most diligently is the packaged goods. We’re trying to demonstrate that buying the national network media is fine, but not to the extent that they are doing it now.

Who gets it? Who is actually moving money into spot right now from elsewhere?

Well, I don’t know if they’re putting more money in from other media, but the guys who recognize that spot can make their cash register ring are the telephone companies—they have been huge, cable, the financial categories, the banks, the insurance companies. They’re not in all markets and they’re getting huge, huge results from advertising on spot.

By their nature, those kinds of companies don’t have a national footprint so spot is perfect for them.

Right and these are companies that are generating record sales and using the medium to accomplish. So it is my premise that if we’re doing it for those companies why can’t we be doing it for fast food, for the packaged good companies, for movies, for pharmaceuticals?

But those categories have companies with national footprints. McDonald’s, Yum Brands and the others don’t have that fundamental reason to go spot.

But if you’re a national brand like a pharmaceutical, and you generate, let’s say, 80% of your sales in one third of the country, why are you buying network? If you feel compelled to buy network, that’s fine. Put 20 percent or 30 percent of your money in network. But last year pharmaceutical probably put 90 percent of its money into network.

Why can’t you guys make spot buying easier. I was at the AAAA Media Conference last March. Everybody’s talking about EDI and the problems with getting it done. I’m going to go back there next year and it’s going to be the same discussion. You talk about it, but you can’t make it happen.

One of the ways that we can help national agencies steward local—I mean make national spot buys in our local markets—is to improve EDI so that we can make the medium more user friendly and easier for them to implement multi-market national spot buys. We have made huge inroads in the last four or five years in accomplishing this, but there’s still work to be done. It’s really interesting when you look at what we’ve accomplished. The television business is far ahead of the Internet.

Agencies have greater EDI problems with Internet buys than they do with local television buys, which to me I find amazing to hear because you would think that the Internet people would be so far advanced in terms of having their systems being easily stewarded, but right now the agencies cannot track the Internet business that they place as well as they can track the television and radio buys that they’re making.

Are you really making progress or are the media agencies going to say…

They’re going to say that it hasn’t happened fast enough. Everybody is trying to work together and it is something that is not a hundred percent, but it is further along then than where it was two or three years ago and for us to be able to make our medium again a larger percentage of the broadcast buys, we are going to have to make full EDI a reality sooner than later.

When I interviewed [Clear Channel Television’s] Don Perry, he said that Katz and other reps are going have to get up to speed on digital media if they expect to have a future. He said that you have some initiatives. What are you up to?

I can’t talk about everything right now, but I believe that we are at a point right now where local television stations have the opportunity to be dominant not only over the air, but also over their excellent Web sites. To date, the bulk of the Web inventory that is being sold is being sold as Web-only inventory. We believe that the greatest upside for an advertiser is to be able to marry their over-the-air schedules to stations’ local Web presence.

We have two specialists that are working within the television group. One is a gentleman by the name of Rob Russo and he’s been working with national advertisers to better utilize local television together with streaming video on stations’ Web sites. That’s something that has not been developed to the extent that I think it can be developed.

What we’re looking to do is sell over-the-air schedules that promote a brand and then be able to offer a position on our Web sites to stream additional information on behalf of the brand. The primary message goes out over the air and, if the advertiser then wants to direct viewers for more information, there’s an elegant mechanism to do that on the  Web site.

The other specialist is Peter Chrisanthopoulos. Peter meets with agency heads and local broadcast heads to present our numerous cross-platform opportunities—a combination of over the air and Web—and he is doing that together with Rob Russo on a regular basis. We’re most diligent in trying to give our agencies and our advertisers a better way to use local television to move their product.

And there’s more to come.

Yes. We also have what I call a very high-level task force that was put together to evaluate additional Web-related opportunities.


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