Broadcasting Still the Economy's Top Fuel

In last week's Jessell at Large column, TVNewsday Editor Harry Jessell contends that to survive and thrive, local broadcasters urgently need to bulldoze copyright barriers and start streaming content on the Internet — and to all other platforms.

Can't argue with that. After all, out-of-home viewing will bring stations an extra $1.2 billion in annual ad revenues according to the Open Mobile Video Coalition — and that's a minimum projection. So it's a no-brainer to try to deliver your signal to wherever your viewers happen to be.

But that merely addresses the physical world. The real challenge is to keep those eyeballs from straying elsewhere in the media universe. For years, stations have suffered audience fragmentation due to competition from cable, satellite, the Internet, video games, DVDs ... ad depressium.

Of course, some broadcasters' own parent companies have hastened this fate with heavy investments in cable channels and, more recently, with Web sites featuring programming that was once exclusive to broadcasters.

This has caused financial and technology gurus like Internet pioneer Marc Andreessen to declare broadcasting a dead or dying medium. Not so fast.

While cable networks have become mature and profitable, their growth rate has slowed dramatically, checked by the same competitive factors that shrink broadcast ratings. Besides, as soon as niche cable channels become successful, they throw off the shackles of "narrowcasting" to chase the broadest possible audience. Consider the changes at Bravo, A&E, Discovery, even the Food Channel. CourtTV was so hungry for a wide audience, it threw away an established brand name.

As for new media money, NBCU President Jeff Zucker earned his entire 2008 paycheck in January when he warned NATPE attendees against trading "analog dollars for digital pennies" — a lesson the Writer's Guild had to learn the hard way and the Screen Actors Guild is about to.

While there's money to be made in new media, broadcasting still attracts most of the advertising dollars.

And no wonder. Mass audience television remains the most efficient and cost effective tool for building awareness, audience and revenue. That's why broadcast ad rates have remained so high for so long, despite dwindling audience share.

The value proposition is analogous to the price of oil. If advertising is the engine that drives commerce, then broadcasting is the oil. All other energy sources are "promising" — useful and ultimately desirable — but right now today, there is no practical or cost-effective alternative to filling your fuel tank with gasoline. Not even when oil surpasses $150 per barrel.

And at the risk of stretching a point, the media world is facing its own environmental crisis. Just as Al Gore concedes we can't afford to mothball combustion engines while we hurry to perfect hydrogen fuel cells, it's insane for the media world to marginalize broadcast TV.

Instead, media conglomerates could take a page from the Prius manual and boost the value proposition of broadcast advertising by combining old and new ad models into a dynamic media "hybrid."

Web sites, social networks and the rest can be useful selling tools, especially for highly-targeted niche markets, but they are a long way from the reliability (and revenue potential) of broadcast advertising. Ironically, successful "new media" launches often depend on broadcast advertising to build awareness, audience and revenue.

Although it's great when it works, viral marketing on the Web is about as reliable a business plan as a lottery ticket. And even if lightning strikes and you become an Internet smash doesn't mean you can monetize your project. After more than 92 million viewings on YouTube, Evolution of Dance star Judson Laipply has yet to make his fortune. Neither has Jessica Rose of Lonelygirl15 fame or Amanda Congdon, who apparently overestimated her appeal beyond anchoring Rocketboom.

But although Fox has yet to achieve synergy with MySpace and AOL nearly sank Time Warner, it's still common to hear seasoned broadcast executives extol the power of "viral marketing" as a promotion tool. They point to the Blair Witch Project and the movie version of South Park — two successful projects supposedly launched "virally."

But that's only true if you ignore the millions of dollars worth of traditional ads run by Artisan Films and Viacom. And then there's the inconvenient truth of such Internet-driven flameouts as Snakes on a Plane and Quarterlife. The big media companies appear more motivated by a vague dread of being left behind than by a clear vision of how their new assets can complement proven profit centers.

So just as both conservation and innovation are necessary to solve the energy crisis, broadcasters must demand a coherent "media energy" strategy. And NBCU's Jeff Zucker is my candidate for the best guy to get us there.

Here's how:

• Rather than bypassing their broadcast properties, NBCU can create a strategy that creates real synergy. It should employ its O&O and affiliate Web sites as gateways to both MSNBC and Hulu. It can incentivize the stations to drive viewers to those sites with at least a taste of the resulting revenues. (Hulu partner Fox can do the same with its stations and Fox News Channel.) And while we're dreaming, NBCU can patch things up with Apple and create similar incentives for locally-driven iTunes purchases.
  
• The acquisition of the Weather Channel will doubtless enhance (or replace) the NBC Weather Plus digital channels. Now is the time to use this terrific new brand to cement digital broadcast partnerships with every affiliate. Even better, use the reach and power of the stations' Web sites to burnish that hidden jewel in the Weather Channel purchase: the wealth of customer data that is weather.com.
• NBC O&O'S enjoy a direct relationship with their viewers, which can be a rich source of detailed customer opinion. NBC should should make use of its local customer base to field test a range of new high-tech services — and then pass the winners along to its affiliates.

The long-term goal? To make certain we don't squander the unique resources of broadcast TV. As Harry Jessell put it: "Broadcasters should not let this slide. Being available to all people or all platforms is what broadcasting is all about. Remember: free and universal."

Market Share by Arthur Greenwald showcases innovative station projects every Monday in TVNewsday. Share one of your own success stories by writing to Arthur at greenwald@tvnewsday.com.