The Waning Days of Syndicated TV
Local stations have a new strategy that has nothing to do with Oprah, Anderson or any other big names.
Going into the recent natpe convention in Miami Beach, the buzz was all about who would replace Oprah Winfrey and the fate of high-profile programs including Anderson, the talk show starring Anderson Cooper. But while the outside press were obsessing over those topics, many local stations and station groups had another hot topic on their minds: how to save, not spend.
Enter the world of “hyper-localism,” the new reality of local television, where home-grown shows and expanded newscasts and newsmagazines made cheaply and with native control are the emerging business model in the postrecession landscape.
“This is about people wanting to control their own destiny,” says Frank Cicha, senior vp at Fox TV Stations. “The syndication business is hit or miss, mostly miss. If you can avoid it, why put your fate in somebody else’s hands?”
This new reality comes after decades in which stations pretty much made money by just turning on the transmitter —revenue flowed in from selling ads around popular network news, sports and entertainment shows, not to mention affiliate payments from the networks themselves.
Things got tougher around the turn of the century as cable and satellite TV channels expanded into original programming, the internet stole viewers, and the costs of converting to digital loomed. Then the financial crisis hit, and stations were pummeled by huge write-downs in their book value, layoffs, cost cutting and, in some cases, bankruptcy.
“Car dealers disappeared, local real estate collapsed, travel-related ads took a hit, and collapsing banks didn’t want to show their faces on TV as much,” Wall Street analyst Harold Vogel says.
The cost of carrying top syndicated shows can be significant for even the largest stations. It varies by market, by how much discount a station group negotiates and whether it includes bartered time or just cash, but the numbers can be impressive.
For instance, Judge Judy commands a reported $145,000 a week in New York, where Dr. Phil goes for about $142,000 a week. Those numbers drop as the markets get smaller but in proportion remain a huge cost for stations. Where a top sitcom such as Two and a Half Men or The Big Bang Theory would command $150,000 a week in New York, it gets about $100,000 in L.A. and $75,000 in Chicago.
When barter is involved, the syndicator typically keeps three 30-second spots per half-hour, which reduces the cash outlay for the station but also eats up its inventory. At the height of the recession in 2009, many stations did barter deals to save cash.
Things have improved in the past year, but things are never going to be the same. Owning a local TV stations is “no longer a license to print money, and it’s not going to be a license to print money again,” says Mark Fratrik, vp of BIA/Kelsey, which analyzes local markets.
“We can hire a few people and produce something ourselves and keep all the ad inventory.” — Doug Lowe, executive vp of Meredith Broadcasting
The key to survival for local stations is to find less expensive ways to fill time, such as local news or regional magazine shows that might not get ratings as high as Oprah or Ellen but can be better for the station’s bottom line. “If we have a show that costs us $5,000 a week, that’s $250,000 a year we’re spending,” says Doug Lowe, executive vp of Meredith Broadcasting.“Instead, we can hire a few people and produce something ourselves and keep all the ad inventory. The economics work.”
Better Portland, a daytime magazine show Meredith launched in Portland, Ore., in 2007, plays off the company’s magazine Better Homes and Gardens. Now in 55 markets (Better Las Vegas, Better Connecticut, etc.), it offers national programming that stations mix with local content.
Seattle-based Fisher Broadcasting started morning info-tainment magazine The Daily Buzz to prop up faltering affiliates of the CW and MyNetworkTV, and it has spread nationwide.
“I see a huge opportunity for more regional programming and for more stratified programming,” says Colleen Brown, president and CEO of 101-year-old Fisher Communications. That has included going hyper-local with expanded news and 125 targeted websites, including 54 in Seattle and 26 in Portland. “We produce this content with virtually no added cost,” she says, “because it is taking what we have and sorting through it with algorithms to put it on the right website.”
Still stations do need big new names to drive audience interest as well. Anderson Cooper’s new show is replacing Oprah in some markets but not for Oprah-level fees (which ran over $300,000 a week in New York). While Anderson will be available in about 90 percent of U.S. TV homes, it still sold for relatively modest cash fees and bartered ads. Of course, if it becomes a hit, Anderson will be able to hold up stations for much more money at renewal time.
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