© media management center local television business model evolution hank price senior fellow media...
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© Media Management © Media Management CenterCenter
Local TelevisionLocal TelevisionBusiness ModelBusiness Model
EvolutionEvolution
Hank PriceHank Price
Senior FellowSenior Fellow
Media Management CenterMedia Management Center
Northwestern UniversityNorthwestern University
© Media Management © Media Management CenterCenter
One Page History of US TelevisionOne Page History of US Television
1948 – 1960 1948 – 1960 New Experience Drives Viewership New Experience Drives Viewership Program Quality & Choice SecondaryProgram Quality & Choice Secondary
1961 – 1990 1961 – 1990 Limited Viewing Options Limited Viewing Options Control to Networks/Station OwnersControl to Networks/Station Owners
1990 – 2006 1990 – 2006 Unlimited Viewing Options Unlimited Viewing Options Control to Consumer Control to Consumer Program Quality CriticalProgram Quality Critical
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Increased Options Increased Options move Power move Power
to the Consumerto the Consumer
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1980 Viewer Options1980 Viewer Options
• Local Television (734 Stations. 4 Networks)Local Television (734 Stations. 4 Networks)
• Limited Cable Limited Cable
• Some Afternoon NewspapersSome Afternoon Newspapers
• Library Books or PaperbacksLibrary Books or Paperbacks
• Music (FM Radio, Record Player, Audio Tape)Music (FM Radio, Record Player, Audio Tape)
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2006 Viewer Options2006 Viewer Options
• Local Television (1,747 Stations, 9 Networks)Local Television (1,747 Stations, 9 Networks)
• Cable/Satellite/IPTV (75 – 300 Choices)Cable/Satellite/IPTV (75 – 300 Choices)
• VHS, DVD, TiVo, Hard Drive Devices, Servers)VHS, DVD, TiVo, Hard Drive Devices, Servers)
• Personal Video/Audio DevicesPersonal Video/Audio Devices
• Wireless DevicesWireless Devices
• Unlimited Internet Services (43% Homes BB)Unlimited Internet Services (43% Homes BB)
• Barnes and Noble/Borders BookstoresBarnes and Noble/Borders Bookstores
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The Trend Can Be The Trend Can Be Summed Up In One WordSummed Up In One Word
FragmentationFragmentation
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New York Late News RatingsNew York Late News Ratings
___1975_____2001_____1975_____2001__
WNBCWNBC 1313 8.28.2WNJU - TelemundoWNJU - Telemundo n/an/a 1.81.8WPXN- PaxWPXN- Pax n/an/a 0.60.6WABCWABC 1010 7.57.5WCBSWCBS 1111 4.54.5WNYW - FoxWNYW - Fox 8 8 4.24.2WWOR - UPNWWOR - UPN n/an/a 3.93.9WPIX - WBWPIX - WB 2 2 2.92.9WXTV – UnivisionWXTV – Univision n/an/a 2.12.1
TotalTotal 4444 35.735.7
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Greensboro/Winston-SalemGreensboro/Winston-Salem6:00 pm News Ratings/Share6:00 pm News Ratings/Share
19801980
WFMYWFMY 22/3722/37
WGHPWGHP 18/3118/31
WXIIWXII 14/2414/24
TotalTotal 54/9254/92
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Greensboro/Winston-SalemGreensboro/Winston-Salem6:00 pm News Ratings/Share6:00 pm News Ratings/Share
19801980 20052005
WFMYWFMY 22/3722/37 11/2011/20
WGHPWGHP 18/3118/31 8/14 8/14
WXIIWXII 14/2414/24 10/1810/18
TotalTotal 54/9254/92 29/5229/52NSI November 1980 vs. November 2005NSI November 1980 vs. November 2005
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Greensboro/Winston-SalemGreensboro/Winston-Salem6:00 pm News Ratings/Share6:00 pm News Ratings/Share
19801980 20052005
WFMYWFMY 22/3722/37 11/20 -50%11/20 -50%
WGHPWGHP 18/3118/31 8/14 8/14 -66%-66%
WXIIWXII 14/2414/24 10/1810/18 -25%-25%
TotalTotal 54/9254/92 29/5229/52 -46%-46%NSI November 1980 vs. November 2005NSI November 1980 vs. November 2005
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Greensboro/Winston SalemGreensboro/Winston Salem6:00 pm News W 25-546:00 pm News W 25-54
19801980
WFMYWFMY 16 16
WGHPWGHP 10 10
WXIIWXII 9 9
TotalTotal 35 35
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Greensboro/Winston SalemGreensboro/Winston Salem6:00 pm News W 25-546:00 pm News W 25-54
19801980 20052005
WFMYWFMY 16 16 5 5
WGHPWGHP 10 10 4 4
WXIIWXII 9 9 6 6
TotalTotal 35 35 15 15NSI November 1980 vs. November 2005NSI November 1980 vs. November 2005
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Greensboro/Winston SalemGreensboro/Winston Salem6:00 pm News W 25-546:00 pm News W 25-54
19801980 20052005
WFMYWFMY 16 16 5 5 -69% -69%
WGHPWGHP 10 10 4 -60% 4 -60%
WXIIWXII 9 9 6 6 -33%-33%
TotalTotal 35 35 15 -57% 15 -57%NSI November 1980 vs. November 2005NSI November 1980 vs. November 2005
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““Cohort Groups do not change.”Cohort Groups do not change.”
Hazel ReinhardtHazel ReinhardtDirector of ResearchDirector of Research
Media Management CenterMedia Management Center
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Who is Your Competitor?Who is Your Competitor?
Any Activity Which Any Activity Which Uses TimeUses Time
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Who Determines Your Who Determines Your Future Success or Failure?Future Success or Failure?
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Mass Audiences Mass Audiences Growing SmallerGrowing Smaller
Survival Means Serving Survival Means Serving Fragmented AudiencesFragmented Audiences
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Current LandscapeCurrent Landscape
Media Usage All Time HighMedia Usage All Time High
Cohort Groups Decide Content/PlatformCohort Groups Decide Content/Platform
Choices Rapidly ExpandingChoices Rapidly Expanding
International Barriers Less ImportantInternational Barriers Less Important
New Media Development AcceleratingNew Media Development Accelerating
New Media Generally UnregulatedNew Media Generally Unregulated
Economic Pressure GrowingEconomic Pressure Growing
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Can Stations Survive?Can Stations Survive?
Can Stations Grow?Can Stations Grow?
Do Stations have a Future?Do Stations have a Future?
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YES!YES!(But Not All Stations)(But Not All Stations)
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““If we keep doing the same If we keep doing the same things the same way, we will things the same way, we will get the same results.”get the same results.”
Mel KarmazinMel KarmazinCEO, Sirius Satellite RadioCEO, Sirius Satellite Radio
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The Good NewsThe Good News
Not in the hardware businessNot in the hardware business
No longer limited to one platformNo longer limited to one platform
New Technology is an opportunityNew Technology is an opportunity
Consumers Value BrandConsumers Value Brand
Strongest Marketing MachineStrongest Marketing Machine
Video OrientedVideo Oriented
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The Bad NewsThe Bad News
Time is Limited Time is Limited Must act Now!Must act Now!
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Two Key OpportunitiesTwo Key Opportunities
ConsolidationConsolidation
ConvergenceConvergence
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ConsolidationConsolidationRegulatoryRegulatory IssuesIssues
3939% % OwnershipOwnership CapCap
TVTV//RadioRadio//NewspaperNewspaper CrossCross--ownershipownership
DualDual NetworkNetwork OwnershipOwnership
DuopoliesDuopolies
CableTVCableTV//BroadcastBroadcast StationStation cross cross ownershipownership
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Convergence IssuesConvergence Issues
Brand vs. PlatformBrand vs. Platform
Brand ExtensionBrand Extension
Brand AdvancementBrand Advancement
Risk AssessmentRisk Assessment
CultureCulture
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Traditional Television ModelTraditional Television Model
Mass Audiences watch programs linearly.Mass Audiences watch programs linearly.
Sold as Commodity. Large Advertisers pay for Sold as Commodity. Large Advertisers pay for access to Audiences. access to Audiences.
Stations compete against other stations. Non-Stations compete against other stations. Non-television competitors ignored.television competitors ignored.
Success measured by size of audience and Success measured by size of audience and revenue as compared to other stations.revenue as compared to other stations.
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““There are still only a few There are still only a few ways to reach a lot of ways to reach a lot of people at one shot.”people at one shot.”
David BurwickDavid BurwickSr. VP & CMOSr. VP & CMO
Pepsi Cola NAPepsi Cola NA
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New Business ModelNew Business Model
Targets Audience FragmentsTargets Audience FragmentsNon-Linear, On DemandNon-Linear, On DemandUnlimited ChannelsUnlimited ChannelsBroadband a Key Delivery SystemBroadband a Key Delivery SystemOffers New Products/ServicesOffers New Products/ServicesAudience Measurement Not StandardizedAudience Measurement Not StandardizedExtends Reach for Large AdvertisersExtends Reach for Large AdvertisersTargets Smaller Advertisers now using Targets Smaller Advertisers now using
Newspaper/RadioNewspaper/RadioOpportunity for Direct Consumer PaymentOpportunity for Direct Consumer Payment
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““We must invest in digital We must invest in digital businesses that make real businesses that make real profit.”profit.”
Terry MackinTerry Mackin
EVP, Hearst-ArgyleEVP, Hearst-Argyle
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Key ChallengesKey Challenges
Research and DevelopmentResearch and Development
Individual Business Plans Individual Business Plans (Revenue/Expense/Profit)(Revenue/Expense/Profit)
Products Must Be Hard to DuplicateProducts Must Be Hard to Duplicate
Brand Extension or Stand AloneBrand Extension or Stand Alone
Growth PotentialGrowth Potential
Staff Allocation Staff Allocation
Culture Culture
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““Culture is the biggest obstacle.”Culture is the biggest obstacle.”
Reid AsheReid AsheCOO,COO, Media Media
GeneralGeneral
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Will new Digital Businesses Will new Digital Businesses take audience from traditional take audience from traditional
Television?Television?
YesYes
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““Someone is going to eat our Someone is going to eat our young. It might as well be us.”young. It might as well be us.”
John LavineJohn Lavine Dean, Medill Journalism SchoolDean, Medill Journalism School
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Which Organization is Which Organization is Best Positioned to Create Best Positioned to Create
Future Media Businesses?Future Media Businesses?
Traditional Media CompanyTraditional Media Company
New Media CompanyNew Media Company
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Traditional Media CompanyTraditional Media Company
Platform DependantPlatform Dependant
Resource RichResource Rich
Vast ExperienceVast Experience
Established CultureEstablished Culture
Adverse to RiskAdverse to Risk
True R&D RareTrue R&D Rare
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New Media CompanyNew Media Company
Strategic VisionStrategic Vision
Vision tied to providing relevant, differentiated Vision tied to providing relevant, differentiated stories, messages and experiences that stories, messages and experiences that engage the audience and are measured for engage the audience and are measured for their results. their results.
Welcomes ChangeWelcomes Change
Culture Supports Vision and Change Culture Supports Vision and Change
Rewards and Metrics Rewards and Metrics
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Barriers to SuccessBarriers to Success
Inside-Out ThinkingInside-Out ThinkingAdversity to ChangeAdversity to ChangeRisk AvoidanceRisk AvoidanceIgnoring FragmentationIgnoring FragmentationFailure to Extend Established PlatformsFailure to Extend Established PlatformsFailure to Invest in New MediaFailure to Invest in New MediaThinking Platform more important than Thinking Platform more important than
StrategyStrategyLack of Strategic PlanningLack of Strategic Planning
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2121stst Century Media Century Media
Technology Growth AcceleratesTechnology Growth Accelerates
Consumers Determine Which Technologies Consumers Determine Which Technologies SucceedSucceed
Consumer use of Time Key DeterminerConsumer use of Time Key Determiner
New Media does not replace Old MediaNew Media does not replace Old Media
Established Media Companies in Best Position Established Media Companies in Best Position to Create New Mediato Create New Media
Strategy More Important than TechnologyStrategy More Important than Technology
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Common MisperceptionsCommon Misperceptions
Mass Audiences going awayMass Audiences going away
#1 Stations will survive#1 Stations will survive
News Slogan is Station BrandNews Slogan is Station Brand
Our News Product is UniqueOur News Product is Unique
Viewers Hate CommercialsViewers Hate Commercials
News Viewing Habits change as viewers News Viewing Habits change as viewers grow oldergrow older
We have plenty of TimeWe have plenty of Time
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Current Television Station Business Model Not Viable
in the future without Change