Stations Search For Digital Success Formula

As local broadcasters strive to get a firm grasp on (and make money from) industry-changing developments — over-the-top content delivery, digital media and changes in consumption, among others — their newly expanded businesses are still largely driven by linear TV, industry leaders say.

“Most of our revenue by a long shot is TV advertising,” says Kevin Latek, Gray Television’s SVP of business affairs, adding that any even Gray’s ancillary products, like websites and apps, are offshoots of station brands. “We are trying to emphasize our core business.”

Latek’s experience is not unique. In 2015, according to SNL Kagan, only $1.8 billion, or 8.6% of local TV’s projected $21 billion in advertising revenue, is coming from digital.

Latek’s remarks were part of a panel discussion at Kagan’s TV and Radio Finance Summit held Thursday New York, during which participants explored emerging opportunities and challenges for local broadcasters — and what they are doing about them. Execs from the Sinclair, Nexstar and Media General broadcast groups were also panelists.

The discussion was far-reaching — strategies to building out digital products, local broadcasters’ future in OTT TV, programmatic advertising and the complex relationships TV stations have with the networks as well cable and satellite companies were among the topics.

Based on the discussion, there is no industry-wide consensus on what broadcasters’ best bet for adapting to — and capitalizing on — some of the emerging opportunities, like digital media.

Gray, for instance, takes an “organic” approach to developing websites and apps, meaning that the company has “not invested a good deal of effort” into creating digital products other than those directly tied to its TV stations, Latek says.

Sinclair, on the other hand, has expanded further into that space, providing services such as website development to clients, usually small advertisers, says EVP and COO David Amy.

Nexstar also sells digital services to clients, Tom Carter, Nexstar’s EVP and CFO, added that his company’s digital arm is expected to earn $90 million-$100 million this year. More than half of that is expected to come from Nexstar websites, which are developed by its TV stations but branded differently, and supported almost exclusively by local advertisers, he says.

Yet panelists agreed that, for TV stations, successes across all platforms are predicated on their fundamental performance as the primary provider of local news and information, because that’s what consumers want, no matter how they consume it.

Vincent Sadusky, president-CEO of Media General, says local news ratings are holding their own, even “in the day of fragmentation. It’s DVR-proof and it’s attractive to subgroups in our markets.”

Sadusky says it is incumbent on stations to keep covering breaking events, and “letting people know about those events on a frequent basis,” as a means to maintain dominance across platforms.

“Someday we will have an opportunity to measure consumption away from just the television set to declare the consumption of local news in the aggregate is as strong as ever,” he says. “I believe that’s true.”