The Free Ride is Over

Gone are the Olympics and gone is the election, and now broadcasters must work with the basics of their trade: quality programming and aggressive sales. As I’ve written about often, 2005 looks like a difficult year. New gadgets will flood the market over the next few weeks, and it sure looks like technology is driving us to video-on-demand, portability and easier digital recording.

It’s just not a sit down and watch TV world anymore, and even if it was, broadcasters would still have to deal with constant pressure from cable and satellite. Can you remember when some of the niche channels were just junk? I can, but they get better and better with every passing year. For crying out loud, even the History Channel is offering some compelling stuff these days.

Tim Hanlon at Starcom MediaVest Group says it’s time to take stock. “I think there’s a dual need,” he says. “One, to be concerned about what you say on the airwaves (because the FCC will continue their indecency pursuit, now that a moral “mandate” has been secured); and to re-think the business (via new technologies like HD, multi-casting, VOD, data-casting, etc.) beyond simple one-way, top-down, ad-supported broadcasting — technological change is politically agnostic!”

The business is really what’s in trouble. People lose their jobs when managers can’t make the bottom line, and we could see a lot of that next year. James Marsh, broadcast analyst for SG Cowen, also has a dual concern.

“We sense the underlying spot ad market is quite soft, he told me today. “TV broadcasters in swing states have been lucky enough to have political advertising to fill this lack of demand, but the free ride is over. We expect competition in the advertising environment to intensify as TV broadcasters start to deal with soft ad market that radio and newspaper have been contending with for 12 months.”

“Longer term,” he adds, “TV broadcasters need to find a better strategy to deal with local cable and the internet. In fact, even political could be at risk over time. Now is not a bad time to make sure they continue to get more than their fair share of political advertising in 2006.”

The Internet is no longer a luxury for broadcasters as they look to make budgets in 2005. It is absolutely essential that stations have a valid Internet strategy in place to make up the revenue they will surely lose.

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