Monday, July 30, 2012

Will It Rain Today in Terra Haute?

For many years those in the commercial TV business knew that the ownership of a local TV station, even in a small market, was a very lucrative endeavor. Even stations at the bottom of the ratings were able to achieve profit margins that were the envy of many other businesses in their communities. Today, while there is still money to be made operating a local commercial TV station, especially if you happen to be located in a “battleground state,” the profit margins have significantly contracted.

The recent protracted negotiations between WLWT and Time Warner Cable are emblematic of these changes. Like it or not, local TV stations and cable and satellite providers are joined at the hip. They need each other. In the Greater Cincinnati area, as is the case in most parts of the country, the vast majority of viewers of local stations do not watch using an antenna but rely on either the cable company or satellite provider to tune in these local stations. Most recent surveys show that in the Cincinnati area more than 86% are connected to either a cable or satellite service.

For sure some households may use an antenna, but the majority of viewing is wired. No local station can survive if less than 15% of their targeted audience can’t see the programs. The cable companies know this and are reticent to pay the local stations’ higher fees for the rights to include the stations on their systems. The cable company’s position is that it is providing a service to the local station. The local TV station’s position is that they provide the programming that is the reason that people subscribe to cable.

In the recent stand off between WLWT and Time Warner Cable, the cable company tried to have their cake and eat it. Betting that the majority of viewers would miss the NBC network programs more than the local programming, the cable company imported the signal from the NBC station in Terra Haute, IN. So local Cincinnati viewers could see their favorite fare from NBC but not any local or syndicated programs from WLWT. Cincinnati viewers could watch the traffic reports for I-70, hear the game stats from the Terra Haute Minor League Rex baseball team or take in highlights of the Vigo County Fair. They would not be sure if Loveland would see rain, but could follow a passing storm in Terra Haute on WTWO Live Doppler.

 While the WLWT / Time Warner tiff will be settled, look for this discussion to continue as the TV landscape continues to change. With on demand and online services proliferating, newspapers producing as much video material as paper and ink, and citizen journalists reporting the news before the TV crews are dispatched, local TV station dominance and profitability might well change.

 Oh yes, 30% chance of rain today in Terra Haute.


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