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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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Presentation Transcript
local television business model evolution
Local TelevisionBusiness ModelEvolution

Hank Price

Senior Fellow

Media Management Center

Northwestern University

one page history of us television
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

1980 viewer options
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)
2006 viewer options
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
slide7

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

greensboro winston salem 6 00 pm news ratings share
Greensboro/Winston-Salem6:00 pm News Ratings/Share

1980

WFMY 22/37

WGHP 18/31

WXII 14/24

Total 54/92

greensboro winston salem 6 00 pm news ratings share9
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

greensboro winston salem 6 00 pm news ratings share10
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

greensboro winston salem 6 00 pm news w 25 54
Greensboro/Winston Salem6:00 pm News W 25-54

1980

WFMY 16

WGHP 10

WXII 9

Total 35

greensboro winston salem 6 00 pm news w 25 5412
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

greensboro winston salem 6 00 pm news w 25 5413
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

slide14
“Cohort Groups do not change.”

Hazel Reinhardt

Director of Research

Media Management Center

who is your competitor
Who is Your Competitor?

Any Activity Which Uses Time

mass audiences growing smaller
Mass Audiences Growing Smaller

Survival Means Serving Fragmented Audiences

current landscape
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

slide25
YES!

(But Not All Stations)

slide26
“If we keep doing the same things the same way, we will get the same results.”

Mel Karmazin

CEO, Sirius Satellite Radio

the good news
The Good News

Not in the hardware business

No longer limited to one platform

New Technology is an opportunity

Consumers Value Brand

Strongest Marketing Machine

Video Oriented

the bad news
The Bad News

Time is Limited Must act Now!

two key opportunities
Two Key Opportunities

Consolidation

Convergence

consolidation regulatory issues
ConsolidationRegulatoryIssues

39% OwnershipCap

TV/Radio/NewspaperCross-ownership

DualNetworkOwnership

Duopolies

CableTV/BroadcastStationcross ownership

convergence issues
Convergence Issues

Brand vs. Platform

Brand Extension

Brand Advancement

Risk Assessment

Culture

traditional television model
Traditional Television Model

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.

slide33
“There are still only a few ways to reach a lot of people at one shot.”

David Burwick

Sr. VP & CMO

Pepsi Cola NA

new business model
New Business Model

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

slide35
“We must invest in digital businesses that make real profit.”

Terry Mackin

EVP, Hearst-Argyle

key challenges
Key Challenges

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

slide37
“Culture is the biggest obstacle.”

Reid Ashe

COO, Media General

slide39
“Someone is going to eat our young. It might as well be us.”

John Lavine

Dean, Medill Journalism School

which organization is best positioned to create future media businesses
Which Organization is Best Positioned to Create Future Media Businesses?

Traditional Media Company

New Media Company

traditional media company
Traditional Media Company

Platform Dependant

Resource Rich

Vast Experience

Established Culture

Adverse to Risk

True R&D Rare

new media company
New Media Company

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

barriers to success
Barriers to Success

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

21 st century media
21st 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

common misperceptions
Common Misperceptions

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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