20 to 30% of the Views Outside their DMA

The intersection of the February 17, 2009 DTV transition and the broadband video revolution and the ensuing business model disruptions was a recurring topic at NATPE. It is clear from the presentations that the broadcast networks are striving to adapt to changing business models, as evidenced by the amount of content that is available on broadband and the number of new “channels” they are developing. The local broadcasters face a larger struggle, as network broadband video threatens to cannibalize their audience share.

The networks are not abandoning the local broadcasters and are helping them through this point of transition. Jeff Zucker, President and CEO of NBC-Universal, talked of a strategy where broadcast affiliates play to their strength of being the local player. In addition to news and local sports, a big strength of the local broadcasters is their established ad sales teams.

The focus of Jonathan Leess, President and General Manger of CBS Television Stations Digital Media Group, is to help broadcast stations make the transition to digital and broadband. He suggested that broadcasters will have to blend network feeds, 24/7 local content and third-party content in their broadband and multicast to create, “a quasi-cable experience,” for the audience. 

There are companies, like Titan TV and Retro Television Network, which are helping broadcasters become these mini-cable systems by syndicating content, s for both their broadband and multicast channels. Leess group is actively looking for local content providers to augment programming from their network affiliates. He said that this is an, “excellent opportunity to monetize their digital spectrum.”

Leese made a very interesting observation that, “20 to 30% of their [local broadcasters’ broadband] audience is coming from outside their DMA.” The implication was that this is a good thing, because it means a bigger market for the broadcasters. This is a significant statement, as it points to a possible break down in the historical geographic barriers that have given off-air broadcasters cable exclusivity in their markets.

That is, as the broadcasters derive new ad revenue from outside their market, the broadcast industry may find it in their interest to support non-exclusivity for even their off-air operations. At the beginning of 2008, it may seem hard to believe that the broadcast industry might possibly have such a change of heart, but, thanks to technology and the DTV transition date, we will be seeing some major and unpredictable disruptions.  

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