TV Stations and Internet and Communications

TV stations offering video content on Web

August 14, 2006

The race for local television supremacy is leaping from the TV screen to the computer screen.

Already, WISH-TV Channel 8, WRTV-TV Channel 6, WTHR-TV Channel 13 and WXIN-TV Channel 59 have video news content on their Web sites. And in late July, WFYI-TV Channel 20 started streaming video of some of its most popular shows--including "Indiana Week In Review" and "Across Indiana"--through the Internet.

But broadcasters are intent on doing more than stream video from existing TV shows over the Internet. They're devising plans to develop original content that essentially could allow a station to broadcast multiple channels through the Web. The business model to keep these enterprises viable is still being established, but broadcasters agree the potential is immense.

"This is an unprecedented time for TV broadcasting," said Barry Umansky, the Edmund F. and Virginia B. Ball endowed chairman of telecommunications at Ball State University. "The whole paradigm of local broadcasting is changing. This is a seismic shift."

Gone are the days when local TV stations could rely on one avenue to reach viewers, Umansky said. The explosion of broadband in homes and businesses is allowing Web sites to carry video nearing the quality of digital television.

"This era we're facing presents a lot of opportunities, but also a lot of challenges," said Richard Miles, WFYI's vice president of audio services and television programming. "One of the biggest challenges is determining the business model that works for this new distribution avenue."

While a workable business model is uncertain, the new medium's potential has already caught advertisers' attention.

"Advertisers will follow the consumers, and I think consumers are trending to this medium," said Jay Schemanske, associate media director in the Indianapolis office of Optimedia, a division of Publicis Group, an advertising and public relations firm. "This emerging medium is going to be very important, and is now a part of every conversation we have with our advertising clients."

Fierce competition

All local stations are jockeying to be the market leader in this new era.

"If you've seen our Web site, you know we offer a lot more video than you can find anywhere else in this market," said Rich Pegram, WTHR general manager. "We're breaking news on our site, and we're continually updating weather and traffic news. There's a huge appetite for this, and we want to be out front."

WISH, which boasts 290,000 visitors to its Internet site monthly, produces four special weekday "on-demand" newscasts especially for its Web site, said General Manager Jeff White, and there are plans to expand on-demand content. In the last year, WISH has streamed video of such events as NCAA men's Final Four practice and Indiana Black Expo presentations.

WISH also aggressively sells advertising, including banner ads, 15-second spots woven into Web newscasts, and three- to five-minute testimonials cross-promoted through the station's TV programming.

"There's no turning back," White said. "This is a big part of the future, and we have a plan and business model to address it."

White declined to divulge WISH's business model for competitive reasons. Other local broadcasters also were hesitant to discuss potential revenue-generating ideas. Industry experts said broadcasting executives are staying mum for good reason.

More than any other broadcasting technology leap in the last five decades, the move to broadcasting video through the Internet has the potential to make or break local and national broadcasters, said Robert Unmacht, principal of iN3 Partners Inc., a Nashville, Tenn.-based media and investment-banking consultancy.

Overcoming obstacles

But the leap is fraught with problems, largely because there's no agreed-upon way to measure video viewers.

Local stations say they attract 30,000 to 35,000 Web visitors daily, with more than 100,000 page views and 2,000-3,500 video views daily. All stations said video viewership is one of the fastest-growing segments of their Web sites. WRTV, for instance, reported its online video viewership increased 50 percent from the first quarter to the second quarter of this year.

But with little agreement on a system to count viewers or an agency such as New York-based Nielsen Media Research to tabulate the numbers, there's some unrest among would-be advertisers, industry experts said.

"While some measure Web site visitors, others are breaking out video viewers," Unmacht said. "It's difficult for advertisers to see what they're getting."

Broadcasters declined to divulge the cost of advertising on Webcasts. Optimedia's Schemanske said that's because it's highly negotiable based on consumer demand.

With the ability to put volumes of video on the Internet, the paradigm shift could cause even more niche broadcasting than is now seen on cable TV. More niche broadcasting means a more fractured audience.

"TV broadcasters are terrified about pulling viewers and advertisers away from their core property," said Tobe Berkovitz, associate dean of Boston University's College of Communications. "At the same time, TV stations realize they absolutely have to diversify the way they distribute their signal or risk being left behind."

A more specific audience could be attractive to certain niche advertisers, Schemanske said. "If you have a product or message relevant to the broadcast material, that can be a powerful combination," he said.

What content works?

So far, broadcasters have focused mainly on enhancing their local TV broadcasts through Internet offerings. The Web also has been a good vehicle for offering archived news stories and entertainment shows. ABC, for instance, is streaming full episodes of four dramas: "Desperate Housewives," "Lost," "Alias" and "Commander in Chief." NBC, meanwhile, is airing expanded versions of its popular sitcom "The Office." Fox has launched an "American Idol"-related talk show.

National networks are working on a revenue-sharing formula for Internet video viewing and advertising with local affiliates.

For now, local stations are focusing primarily on local news, weather and traffic, but industry experts think they will make a jump to more original local content, including high school sports broadcasts, special features on professional sports teams, and even such things as local celebrity cooking shows and home tours.

These offerings could bring stations into more heated competition with one another and cable channels and networks.

"There's no way around it, this is going to be a war for a revenue stream that is potentially huge," Berkovitz said. "The key for local stations will be keeping content local. That is what has helped them survive other market shifts."

Forging a path

Despite the potential windfall, no clear path to the cash has emerged. Some national networks are charging anywhere from $1.99 to $7.99 to view a program through the Internet. Most local stations have opted to let viewers watch for free.

While local broadcasters are embedding ads in their Webcasts, there's no set formula. Some are running static ads along the bottom or side of Web videos, while others are embedding video advertisements--usually limited to 10 to 15 seconds--within Web programming.

"We have to be very careful with our advertising model," said Don Lundy, WRTV general manager. "This technology is about putting the viewer in control, and you can lose them with one click of the mouse."

Industry insiders are still getting a handle on the total expense to ramp up Webcasting. Each local station is reporting the addition of two to six staffers to handle the task full time, and the stations are adjusting the job responsibilities of a handful of existing staffers to work on enhancing their Internet sites.

"The investment in terms of capital expenses and personnel pretty quickly reach into the high-six, maybe even low-seven figures, depending on the size of the operation," Unmacht said. "I think this type of investment shows the potential revenue generation."

Revenue projections among local TV broadcasters vary widely. Some think it could be local affiliates' new cash cow, even rivaling the 40 percent to 60 percent of revenue currently brought in through advertising during the local news.

Pegram predicts WTHR will double its Internet revenue this year over 2005.

"We see this as a significant seven-figure business in the not-too-distant future," Pegram said. "That will just be the start."

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