Local television business model evolution
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Local Television Business Model Evolution. Hank Price Senior Fellow Media Management Center Northwestern University. One Page History of US Television.

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Local TelevisionBusiness ModelEvolution

Hank Price

Senior Fellow

Media Management Center

Northwestern University


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One Page History of US Television

1948 – 1960 New Experience Drives Viewership Program Quality & Choice Secondary

1961 – 1990 Limited Viewing Options Control to Networks/Station Owners

1990 – 2006 Unlimited Viewing Options Control to Consumer Program Quality Critical



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1980 Viewer Options

  • Local Television (734 Stations. 4 Networks)

  • Limited Cable

  • Some Afternoon Newspapers

  • Library Books or Paperbacks

  • Music (FM Radio, Record Player, Audio Tape)


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2006 Viewer Options

  • Local Television (1,747 Stations, 9 Networks)

  • Cable/Satellite/IPTV (75 – 300 Choices)

  • VHS, DVD, TiVo, Hard Drive Devices, Servers)

  • Personal Video/Audio Devices

  • Wireless Devices

  • Unlimited Internet Services (43% Homes BB)

  • Barnes and Noble/Borders Bookstores


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The Trend Can Be Summed Up In One Word

Fragmentation


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New York Late News Ratings___1975_____2001__WNBC 13 8.2WNJU - Telemundo n/a 1.8WPXN- Pax n/a 0.6WABC 10 7.5WCBS 11 4.5WNYW - Fox 8 4.2WWOR - UPN n/a 3.9WPIX - WB 2 2.9WXTV – Univision n/a 2.1Total 44 35.7


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Greensboro/Winston-Salem6:00 pm News Ratings/Share

1980

WFMY 22/37

WGHP 18/31

WXII 14/24

Total 54/92


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Greensboro/Winston-Salem6:00 pm News Ratings/Share

19802005

WFMY 22/37 11/20

WGHP 18/31 8/14

WXII 14/2410/18

Total 54/92 29/52

NSI November 1980 vs. November 2005


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Greensboro/Winston-Salem6:00 pm News Ratings/Share

19802005

WFMY 22/37 11/20 -50%

WGHP 18/31 8/14 -66%

WXII 14/2410/18-25%

Total 54/92 29/52 -46%

NSI November 1980 vs. November 2005


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Greensboro/Winston Salem6:00 pm News W 25-54

1980

WFMY 16

WGHP 10

WXII 9

Total 35


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Greensboro/Winston Salem6:00 pm News W 25-54

19802005

WFMY 16 5

WGHP 10 4

WXII 9 6

Total 35 15

NSI November 1980 vs. November 2005


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Greensboro/Winston Salem6:00 pm News W 25-54

19802005

WFMY 16 5 -69%

WGHP 10 4 -60%

WXII 9 6-33%

Total 35 15 -57%

NSI November 1980 vs. November 2005


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“Cohort Groups do not change.”

Hazel Reinhardt

Director of Research

Media Management Center


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Who is Your Competitor?

Any Activity Which Uses Time



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Mass Audiences Growing Smaller

Survival Means Serving Fragmented Audiences


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Current Landscape

Media Usage All Time High

Cohort Groups Decide Content/Platform

Choices Rapidly Expanding

International Barriers Less Important

New Media Development Accelerating

New Media Generally Unregulated

Economic Pressure Growing


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Can Stations Survive?Can Stations Grow?Do Stations have a Future?


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YES!

(But Not All Stations)


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“If we keep doing the same things the same way, we will get the same results.”

Mel Karmazin

CEO, Sirius Satellite Radio


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The Good News get the same results.”

Not in the hardware business

No longer limited to one platform

New Technology is an opportunity

Consumers Value Brand

Strongest Marketing Machine

Video Oriented


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The Bad News get the same results.”

Time is Limited Must act Now!


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Two Key Opportunities get the same results.”

Consolidation

Convergence


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Consolidation get the same results.”RegulatoryIssues

39% OwnershipCap

TV/Radio/NewspaperCross-ownership

DualNetworkOwnership

Duopolies

CableTV/BroadcastStationcross ownership


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Convergence Issues get the same results.”

Brand vs. Platform

Brand Extension

Brand Advancement

Risk Assessment

Culture


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Traditional Television Model get the same results.”

Mass Audiences watch programs linearly.

Sold as Commodity. Large Advertisers pay for access to Audiences.

Stations compete against other stations. Non-television competitors ignored.

Success measured by size of audience and revenue as compared to other stations.


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“There are still only a few ways to reach a lot of people at one shot.”

David Burwick

Sr. VP & CMO

Pepsi Cola NA


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New Business Model at one shot.”

Targets Audience Fragments

Non-Linear, On Demand

Unlimited Channels

Broadband a Key Delivery System

Offers New Products/Services

Audience Measurement Not Standardized

Extends Reach for Large Advertisers

Targets Smaller Advertisers now using Newspaper/Radio

Opportunity for Direct Consumer Payment


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“We must invest in digital businesses that make real profit.”

Terry Mackin

EVP, Hearst-Argyle


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Key Challenges profit.”

Research and Development

Individual Business Plans (Revenue/Expense/Profit)

Products Must Be Hard to Duplicate

Brand Extension or Stand Alone

Growth Potential

Staff Allocation

Culture


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“Culture is the biggest obstacle.” profit.”

Reid Ashe

COO, Media General



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“Someone is going to eat our young. It might as well be us.”

John Lavine

Dean, Medill Journalism School


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Which Organization is Best Positioned to Create Future Media Businesses?

Traditional Media Company

New Media Company


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Traditional Media Company Future Media Businesses?

Platform Dependant

Resource Rich

Vast Experience

Established Culture

Adverse to Risk

True R&D Rare


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New Media Company Future Media Businesses?

Strategic Vision

Vision tied to providing relevant, differentiated stories, messages and experiences that engage the audience and are measured for their results.

Welcomes Change

Culture Supports Vision and Change

Rewards and Metrics


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Barriers to Success Future Media Businesses?

Inside-Out Thinking

Adversity to Change

Risk Avoidance

Ignoring Fragmentation

Failure to Extend Established Platforms

Failure to Invest in New Media

Thinking Platform more important than Strategy

Lack of Strategic Planning


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21 Future Media Businesses?st Century Media

Technology Growth Accelerates

Consumers Determine Which Technologies Succeed

Consumer use of Time Key Determiner

New Media does not replace Old Media

Established Media Companies in Best Position to Create New Media

Strategy More Important than Technology


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Common Misperceptions Future Media Businesses?

Mass Audiences going away

#1 Stations will survive

News Slogan is Station Brand

Our News Product is Unique

Viewers Hate Commercials

News Viewing Habits change as viewers grow older

We have plenty of Time



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