At 4:32 PM -0400 7/5/08, Albert Manfredi wrote:
Makes sense to me.In the macro sense, there have to be advantages for the networks to have a presence in the local OTA market, or there wouldn't be any OTA left. Even if that advantage is purely for the retrans consent agreements they can get from the MVPDs in the area (and I'm not saying it is). I've never ever understood how NBC could be so dismissive of the Gainesville market. Nor why the customers haven't raised a stink about it.
The major advantage is that 85% of their audience subscribes to cable and DBS (>93% in Gainesville). Carriage is essential for survival of the OTA signal for the remaining 15%. But carriage ALSO means more revenue via retrans consent.
Customers have not raised a stink about the lack of a local NBC affiliate, as they are not missing a thing. We have a solid local news presence with WCJB (ABC), which is VERY WELLL ENTRENCHED having had no competition for more than 30 years. WJXT (Jacksonville) did manage to capture a meaningful news audience in Gainesville, but WGFL (our local CBS affiliate) is struggling to develop a local news audience. The market has simply proven to be too small to support multiple local news organizations (WOGX tried and failed). So all that matters is access to the NBC network programming. I might add that WESH is a news and weather leader in Orlando, so some folks in Gainesville/Ocala LIKE having access to the superior news and weather coverage by WESH.
I *think* that Craig told us that more and more, local affiliates are paying the networks to carry their content? Did I remember this right?
Not exactly. At one time the networks paid the local affiliates cash to carry programs AND gave them commercial inventory within highly rated programs. The payment of compensation to stations is all but non-existent today, and the number of commercial minutes that the networks give to local stations has been reduced. In many cases the networks have asked for compensation for popular programs, but this usually means that the stations are giving back local ad slots to the networks. And now the stations are getting retrans consent money based primarily on the perceived value of the network (not local) programming.
The next logical step in all of this is going to be when the networks start asking for a chunk of the cash the stations get in retrans consent payments. At that point local TV is going to become economically inviable and the networks will bypass stations and go direct with cable and DBS...
Or, if they can keep broadcast alive for another 5-10 years, the networks may simply bypass everyone and deliver their content direct to consumers via the Internet.
If true, then that would make this even more of a mystery. Because this is more similar to the Euro OTA model, which seems to do quite well.
Because broadcasters were the preferred way to get content in most European countries and State broadcasters held most of the power, things evolved down different paths. Many state broadcasters do not rely upon ad revenue, and most of the new content that is offered via multi-channel OTA services like Freeview is purchased from global suppliers, mostly U.S. based.
The micro argument might go something like, if an OTA NBC affilate is created in Gainesville, then fewer people might be lured to the MVPDs, and NBC loses out. The obvious counter argument is, it's more likely that NBC will simply lose the OTA audience. It is not likely that just one program would convince MVPD subscribers to drop their subscription.
Bad analogy. Having a local NBC affiliate in Gainesville would only grow the audience a tiny amount because almost everyone already uses an MVPD. I can't think of a single prime time show I watch on NBC - and with the de-emphasis on sports (other than the Olympics), it is rare that i even watch WESH. In the last month I have watched the NBC U.S. Open coverage and one Tonight show.
Something doesn't add up.
Your math...The networks are evolving away from local broadcast to deliver their content. They have little interest in sharing revenues with new affiliates.
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