April 17, 2007 4:00 AM PDT

Local TV stations face Net threat

LAS VEGAS--The Internet is the cause of much fear and loathing here at this gathering of broadcasters.

Some attendees of the National Association of Broadcasters conference this week are worried that local television affiliates will be the next business species to be endangered by the Internet.

The warning signs are ominous for local TV outlets. Last month, NBC Universal and News Corp., parent company of Fox Broadcasting, helped establish a new online video network that will distribute full-length movies and TV shows across some of the top Internet portals. CBS announced its own video network last week.

Is there a place in this direct-to-consumers business model for local TV stations?

"Plenty of people are worried," said Richard Jones, general manager of Bay City Television in San Diego, which oversees the Fox affiliate in San Diego. "It's still so new nobody knows for sure what's going to happen. But there is some real concern about shows that have been seen a lot of times on the Web and whether it will affect ratings."

The pressures building on affiliates hit home for Jones on a recent flight when he noticed the man sitting beside him was watching Fox's 24.

"He told me he missed the show during the week so he downloaded the episode on his iPod," Jones said. "He wanted to get caught up by the time Monday's new episode aired. That's what we're dealing with."

Certainly, the outlook for regional broadcasters appeared troubled long before the Web. Over-the-air broadcasters have been challenged by cable and satellite distributors for decades and for the past five years by DVD sales. The Internet is just the latest technological threat to come along and carve another slice from the $75 billion market for TV advertising.

roundup
Internet and TV collide in Vegas
At National Association of Broadcasters conference, showgoers tune in to the latest electronic media technologies.

It may also be the worst. A long list of rivals--mobile carriers, Apple, Joost, YouTube, NetFlix, TiVo, Sling Media and others--are all offering audiences alternatives to traditional broadcast TV. And most of the newcomers can offer features like on-demand viewing.

Two decades ago, it was a different story. Affiliates wielded much more clout because the networks needed local stations to promote and broadcast their shows around the country and paid dearly for that. The affiliates also represented a bustling market for reruns.

Now some wonder whether the Web gives networks even more clout when cutting deals with their affiliates.

"It's a question of leverage," said Doug Wills, a former spokesman for the NAB, who is now a marketing executive for Redback Networks, which offers video-centric routers. "Virtually all the networks have announced broadband offerings in the last year. There is no question that within 10 years people will be getting high-quality video from the Web. The temptation is probably there for the networks to ask their partners to pony up more money."

Calls to CBS, ABC and NBC were not returned Monday.

Among the nation's top four networks, Fox has shown the most willingness to cut its affiliates in on Internet revenues. Last month, Fox announced a landmark plan to distribute shows such as 24, Bones and Prison Break to the Web sites of 200 affiliates. Fox will also share ad revenue generated from the online offering.

Some local broadcasters, however, are trying to be creative as they confront Internet challenges.

Diane Sutter, CEO of MyTv, which operates Boston's Channel 50, has asked viewers to produce their own TV shows; her station will broadcast the best.

"It's silly to focus on which formats or mediums are better," Sutter said. "We should be focusing on enhancing viewer experience using broadcast, Internet, podcasts and whatever else we can."

The news isn't at all bad for local affiliates. The overall industry grew by 8 percent last year, and many are expecting continued growth this year. The switch from analog to digital signals could also represent a big payday for local broadcasters. In March 2009, broadcasters must switch to digital signals, and some local affiliates may find a market for the spectrum they own but don't use, said Steve Carlston, managing partner of VegasTV Partners, the parent company of KTUD in Las Vegas.

"It's kind of a burgeoning territory," Carlston said. "People have said cell phone companies as well as others may want our extra space. It's still early and we haven't made it the highest priority, but we'll definitely start taking a good look at the potential market soon."

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14 comments

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Love it when...
...the internet is referred to as a "Threat".

I remember when the betamax was also considered a threat, as well as the vhs, and the dvd.

I don't think the laser disk was ever a threat to anyone.

In the music industry, the cd was considered a threat to the LP, just like the lp and cassette was a threat to the 8-track.

I guess as a society, we look at anything new as a threat, that's probably why we're so slow in adopting new technolog like E85, Hybrid and Eletric Cars.

I wonder what will be a threat tomorrow?
Posted by thedreaming (573 comments )
Reply Link Flag
Active vs. Passive entertainment
Yes, local TV faces competition on many fronts, but there is still a place for local network TV. Local stations provide local coverage and community affairs as well as top-rated network programming in a passive medium that can be had for no fee and a nominal one-time outlay for a TV. As the digital transition proceeds, viewers will find that broadcast digital and HD programming are far superior to anything deliverable by satellite, cable, or broadband due simply to the HUGE bandwidths required to deliver quality reception. It will be awhile before consumers have access to the bandwidth required to receive a 20 mbps+ 1080i picture over the 'net.
Posted by sastvguy (1 comment )
Reply Link Flag
Local TV Stations Are An Anachronism
Anything they can offer, the internet can offer better - soon, we'll be watching HBO and the premium content networks streamed, in addition to the regular network TV networks which are already broadcasting over the internet. The problems for the local TV networks were trumpeted first in 1972 with the addition of cable TV. This latest round is merely the death knell of an industry that's long been technologically obsolete. And, yes - sadly, we are still forced to watch the network's pre-spin ad's on the internet. La plus ce change...
Posted by i_made_this (302 comments )
Reply Link Flag
LOVE
LOVE-Exciting new way to meet that special person. Establish a relationship. Fall in love and get married. videodatinglove.com
Posted by videodating (1 comment )
Link Flag
The end is near, but not THAT near...
There will be a day when television and radio towers dissappear (almost completely) from the landscape... but it's decades from now. At the moment, networks need happy affiliates to provide mass reach for big, real-time events (like the Super Bowl) where ad revenues are astronomical. You can't watch those on an iPod (yet... but give it time!)
Posted by imario (2 comments )
Reply Link Flag
Local stations
with their dumb news won't be needed in 5 years. HAHA Bye-bye!
Posted by paulsecic (298 comments )
Link Flag
years from now- only if you are ignorant
I download ALL of the TV series we watch. We no longer schedule our lives around TV. That includes the superbowl which we watched the next day. Used to be you could use a VCR to do this. Now you just need to know the correct torrent site.
Posted by niftyswell (3 comments )
Link Flag
Towers
You will never see them dissapear completely

Local fire departments require them to transmit their radio signals
WIPS use ethier towers or water towers
Cellular phones use them (More are being added for this use daily)
Posted by tagno25 (20 comments )
Link Flag
It is strange
I thought this comment was alittle strange, I am not sure how it is in the rest of the country but here local stations are not showing reruns, hardly at all, If you miss a episode you are out of luck, I think it helps rather then hurts them though. If the man could not get caught up he probably would not watch Mondays episodes because he would not know what was going on. The could broadcast their signal on the net if they wanted to but they dont. Things happen power failures, cable is out, you forget to hit record on the DVR, if you miss an episode you have to wait for it to come out on DVD.

The pressures building on affiliates hit home for Jones on a recent flight when he noticed the man sitting beside him was watching Fox's 24.

"He told me he missed the show during the week so he downloaded the episode on his iPod," Jones said. "He wanted to get caught up by the time Monday's new episode aired. That's what we're dealing with."
Posted by NoThomas (1 comment )
Reply Link Flag
Adapt or Die
All a local TV station is, is an interface for the "content". All they need to do is provide the same thing online and they are still in business.

It can be done. I'd rather access a lot of content with one site than One item of content on each of 200 sites.

These guys should pay me to think this stuff up. Naturally I left out the part about how they could do it. Does the RIAA call that intellectual property?
Posted by Renegade Knight (13748 comments )
Reply Link Flag
Bandwidth?
My HD channels are delivered via a cable outlet in my wall ... my high-speed internet is delivered via the exact same cable outlet in my wall. So I don't really see the basis in your bandwidth assumptions.
Posted by PerlAddict (3 comments )
Reply Link Flag
RE:
RIAA and Intellectual now thats an oxymoron. Personally the only way the OTA stations like NBC, ABC etc will succeed with their web offerings is to offer an Mature/Uncut streaming area for a fee. This will enable folks to see Letterman, Leno or whatever without all the cuts in a show or movie due to nudity,violence, oe language
Posted by jafarm66 (54 comments )
Reply Link Flag
Local TV Moving to the internet
On Monday CNN and MSNBC together served about 20M streams during the day to (mostly) office workers who wanted to know about the VT tragedy. That's about the same as the combined audience for NBC and ABC that day. Clearly the audience for live TV on PCs (esp. for cube farmers) is ready to go and to grow. If local stations had been delivering live news programming via the net (as some did in the cities near Roanoke), they'd have grabbed part of that audience. And if viewers will watch news on the PC they'll also watch Dr. Phil and Heroes. But local broadcasters, networks and syndicators to get their acts together. Hang together or let Google and Joost hang you separately.
Posted by phoneranger (1 comment )
Reply Link Flag
Networks should dump the live-wireless one-way setup and begin buying and supporting internet broadcasting. It is just logical. Tear down the towers and start investing in fiberoptics and using that sponsor money to give us all access to real high-speed internet that the rest of the world already has now.

Join as one giant union, of news delivery agents, and build that universal communications platform. All they have to do is build, or invest in bandwidth. The professionals already know how to do the rest.

(They have the leverage to force realistic prices from the top ten ISP's that are ripping us all off. There just needs to be a designated FREE net access, for those unable to purchase the net. Controlled by the same set-top tv digital boxes which process the signals from the RF towers now. Keeping that one-way style of data, but actually being able to listen too. EG, no "surfing" on those devices.)

Heck, mix and match... Internet for "tv on demand" of available network archives.. trickle-fed and then played. While the towers spew data in large volumes, as the "download". (You need that upload ability for "correction" of error data too. Wow, you could get more relevant and searchable commercials and discounts, when you need them. Who knew Media could actually be interactive... like, um... the net, but without viruses.)
Posted by JD_Mortal (2 comments )
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