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© Media Management Center© Media Management Center

Local TelevisionLocal TelevisionBusiness ModelBusiness Model

EvolutionEvolution

Hank PriceHank Price

Senior FellowSenior Fellow

Media Management CenterMedia Management Center

Northwestern UniversityNorthwestern University


One Page History of US TelevisionOne Page History of US Television

1948 – 1960 1948 – 1960 New New Experience Drives Viewership 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


Increased Options Increased Options move Power move Power

to the Consumerto the Consumer


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)


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


The Trend Can Be The Trend Can Be Summed Up In One WordSummed Up In One Word

FragmentationFragmentation


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


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



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



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


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



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



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


““Cohort Groups do not change.”Cohort Groups do not change.”

Hazel ReinhardtHazel ReinhardtDirector of ResearchDirector of Research

Media Management CenterMedia Management Center


Who is Your Competitor?Who is Your Competitor?

Any Activity Which Any Activity Which Uses TimeUses Time


Who Determines Your Future Who Determines Your Future Success or Failure?Success or Failure?


Mass Audiences Mass Audiences Growing SmallerGrowing Smaller

Survival Means Serving Survival Means Serving Fragmented AudiencesFragmented Audiences


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


Can Stations Survive?Can Stations Survive?

Can Stations Grow?Can Stations Grow?

Do Stations have a Future?Do Stations have a Future?


YES!YES!(But Not All Stations)(But Not All Stations)


““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


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


The Bad NewsThe Bad News

Time is Limited Time is Limited Must act Now!Must act Now!


Two Key OpportunitiesTwo Key Opportunities

ConsolidationConsolidation

ConvergenceConvergence


ConsolidationConsolidationRegulatoryRegulatory IssuesIssues

3939% % OwnershipOwnership CapCap

TVTV//RadioRadio//NewspaperNewspaper CrossCross--ownershipownership

DualDual NetworkNetwork OwnershipOwnership

DuopoliesDuopolies

CableTVCableTV//BroadcastBroadcast StationStation cross cross ownershipownership


Convergence IssuesConvergence Issues

Brand vs. PlatformBrand vs. Platform

Brand ExtensionBrand Extension

Brand AdvancementBrand Advancement

Risk AssessmentRisk Assessment

CultureCulture


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.


““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


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


““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


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


““Culture is the biggest obstacle.”Culture is the biggest obstacle.”

Reid AsheReid AsheCOO,COO, Media General Media General


Will new Digital Businesses take Will new Digital Businesses take audience from traditional audience from traditional

Television?Television?

YesYes


““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


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


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


New Media CompanyNew Media Company

Strategic VisionStrategic VisionVision 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


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


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


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


Current Television Station Business Model Not Viable in the future without Change

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