1/22/2010 11:31 AM
by Brett Moss
FCC Chairman Julius Genachowski got the attention of broadcasters recently by bringing in as an advisor a law professor who has floated the idea that the broadcast spectrum, as currently configured, might not be sacrosanct. It might not be the most efficient use of that spectrum.
I hate to be the bearer of bad news for broadcasters, but he and others like him will get their way in the long run.
Ultimately all most broadcasters have is that little piece of spectrum they control. Traditional broadcasting’s days are numbered. The business model is already in bad shape. There are people, e.g. wireless phone (re: smart phone) network companies, who have noticed this. Colleagues laughed at me awhile back when I talked about political forces taking away broadcasters’ spectrum. For once I can say their mocking was misplaced! It’s going to happen. It’s just a matter of when, how much and who manages to keep theirs.
I do think radio might actually dodge the big bullet by being such a small target — for a while. When people are hunting elephants, the squirrels can rest (but should still keep one eye open!).
The TV guys should be worried. They rent/lease valuable property (spectrum) that others are eyeing enviously. Their revenues are going down and will continue to drop for some time. But they will hit a bottom, somewhere.
The question will be how many of them can generate enough local/regional ad revenue to survive. National advertisers eventually will abandon most markets for highly targeted cable/Internet/mobile advertising.
How long before the networks start seriously shedding their expensive O&Os? When that happens don’t be surprised when they become purely cable networks. ABC in St. Louis is pretty much the same as ABC in NYC and ABC in Duluth, Minn., in prime time. They really don’t care about the rest of the clock but they’re paying the costs of operating those stations 24 hours a day. From a cable/Internet standpoint they can distribute programming and sell national advertising at minimal costs. But not quite yet.
For future local independent/former network TV affiliates it will be musical chairs. They’ll become more like traditional UHFs relying on syndication and reruns for programming. Most local TV news operations will die because they are too expensive and everyone will realize that three or four news operations in one market is repetitive. Perhaps some salvation will come in the “radio-ization” of TV with “channels” nicheing themselves like radio stations do now. One will become an all-news (and probably survive in larger markets) while the others juggle formats.
They’ll have to find a lot of local advertising to keep themselves alive. And drastically cut costs.
Somewhere along the line their ratings will become so small that few viewers will care (or notice) when they go away. An all-news local might generate enough transient viewers to warrant survival but how many other stations can survive in the post-Oprah world (especially when viewers watch Oprah on the Oprah Channel)? Maybe the TV broadcast spectrum gets whittled down to a handful of stations in each market?
As I’ve indicated, all a local station really has is its little bit of spectrum. It uses that spectrum to deliver content. Once that content is available elsewhere, the station becomes redundant (not to its owner but to the network and maybe the viewer). The station has to justify the use of that spectrum to keep it. It’s going to be hard to justify that use when the local audience gets ABC’s content via cable/Internet or an Internet-fed wireless/mobile connection directly from ABC. And Verizon and AT&T and T-Mobile and so on are screaming for that spectrum (and so are your kids because Apple just Tweeted a message telling them about lack of spectrum as an explanation why the dancing kitten video is twitchy tonight).
On the other hand, all the big TV networks really are, are content providers — ultimately like HBO or USA Network. They don’t necessarily need local affiliates for delivering their content anymore (or in a few years).
I recently read a piece on “Over-The-Top” (OTT) cable/Internet (IP) experiments. These are years away but they are coming. You’ll have a cable box/home server with flash memory. It will allow cable networks and national advertisers to send you highly targeted ads that are stored and then can be played in the TV feed that you are watching — Food Network, ESPN, Lifetime, doesn’t matter. This is far more attractive to advertisers than paying ABC national or local affiliate rates to put a one-size-fits-all ad in front of a bunch of people, 98% of whom don’t care at all about your product.
And consider this: “Mobile content” users, the “kids,” think in terms of two-way or interactive media. When it finally sinks in that the “TV” is nothing more than a jumbo monitor on an enormous international computer network, and that it should operate that way, things will radically change.
Imagine watching a baseball game and having the option of making the news/score crawl along the bottom go away with a click of a mouse (the modern remote is an inferior UI) and being able to pop up the stats of the batter (John Smith) or pitcher merely by clicking on them or some “widget.” Or having the option of clicking on a flashing dot in a corner that is labeled, “Smith game-winning World Series home run replay.” You click on it and in a box you see the replay. You like the play and you see it again if you want. Maybe it’s the sponsored “Dominos Star Play of the Day.”
Cha-ching! That’s money! And if you click on the sponsored version, you can immediately access your IP phone and order a pizza. Maybe a discount comes along with ordering off of the replay. In the future world of this type of media, it’s all just data, so it can be remolded on the fly. Browser TV is an accurate description.
Broadcast TV is passive and there doesn’t seem to be any realistic way of changing that. Modern digital media is different. Imagine this if you’re an advertiser: the Oprah Network plays the Best of Oprah — the show where she gave away a Ford Fusion. Or a viewer chooses to download that program from the network. What if Oprah’s people have presold Ford to have an ad in that show, whenever and wherever it is played. Now here’s the killer app — there is no prepped Ford ad in the show, one that might be last year’s model. Rather a flag in the show tells your set-top box (or smart phone) to download the latest Ford ad. Or perhaps it is redirected to download an ad for the local Ford dealer. It could download the ad while the show rolls. Just-in-time advertising.
The wireless guys have big plans. More than a few won’t work or take several technical generations to implement. But the story over the holidays that AT&T was crimping iPhone purchases in the NYC area, supposedly for lack of spectrum, needs to be taken seriously. When more people are watching via cable or the smart phone, do you really think traditional broadcasters will be able to hold onto their spectrum?
That report on OTT boxes noted that people under the age of 30 really take this iPhone/mobile content thing seriously. Few of us older folks do, but the viewers of tomorrow do. Who gets more attention?
But as I said, this is a few years away and there is a lot to work out; we may very well be watching this finally happen from the Old Broadcasters’ Home. Yet the groundwork is being laid. Appointment TV on a local affiliate is not the wave of the future. If I owned a local TV station I’d start thinking about selling before the market goes soft(er) or gets flooded.
The radio broadcasters might be able to hold out in a “ghetto.” The spectrum slice is so small it might not be worth the trouble of acquiring. Radio needs to bang the “local” drum as loudly as possible. Be the “emergency” service available for when there are digital network outages. It might help to return to some older types of programs. The kind that TV producers ignore.
Local stories and shows would help. The “international” computer network probably won’t do “local” very well (not at first anyway — but there’s always “cable access”). Maybe half a dozen people listen to your public affairs programs; but if you put the mayor and a local congressman on regularly they might think it is in their interest to keep you around — at least until the demand for your spectrum becomes so overwhelming they understand the political equation has changed. Brett Moss is gear and technology editor of Radio World.