Last month’s column discussed the disruption currently challenging local television broadcasters. The mass movement to streaming television away from over-the-air and cable viewing has dramatically decreased local television’s audience reach.
To understand the opportunities ahead, we must first grasp the new landscape as we navigate this period of local television disruption.
Three predictions for local TV
This is an easy one: declining cable and satellite subscriptions is an ongoing trend. According to eMarketer, the number of non-pay TV homes (those not subscribing to cable or satellite) surpassed pay TV homes in 2022. By 2026, non-pay TV homes will reach 80.7 million compared to 54.3 million pay-TV homes. This shift is driven by the rise of cord-cutting and cord-nevers, significantly impacting local communities. Local affiliate or retransmission consent fees charged by networks to their affiliates must now be spread among fewer subscribers, driving up costs seen as “broadcast fees” on cable bills.
Local community media, or local cable access programming, gets most of its funding from cable franchise fees. As subscribers decline, the funding for these primarily non-profit entities is at risk, threatening their existence and the local content they provide.
We will likely see only two local news stations survive in most markets. The economics of creating more hours of similar newscasts no longer make sense. TV groups like Sinclair are already shutting down local news and replacing it with generic regional and national news. Typically, there are one or two strong stations in a market, while stations three and four struggle to break even. As network fees increase and audiences shrink, we will see fewer stations.
Consolidating two “super” stations in each market will lead to larger, less fragmented audiences and higher ad rates for the surviving stations. However, with fewer cable subscribers, the overall ad inventory will decrease.
Where will local content go? Local content will need new homes as we transition from over-the-air/cable/satellite to streaming. With fewer local news stations and the contraction of community media, questions arise about where local content will thrive. Will content become more regional and generic?
How will we serve local communities effectively? For example, will Bucks County, Pennsylvania, residents only see Philadelphia TV content? In an era of targeted advertising, will consumers and local businesses increasingly use search and social media for local content?
Network affiliates will look vastly different. Networks, which once relied heavily on local affiliates for distribution, now use platforms like Amazon Prime, Apple TV, Hulu and Disney+ for live sports and other programming. More new content appears on Netflix, Amazon, Paramount Plus and Peacock than on network television.
As networks need local affiliates less for national distribution, the power of local station groups has diminished. Imagine a scenario where a prime market station loses its network affiliation. It might go independent, syndicating content or focusing on local news and original content. Stations like WJXT in Jacksonville, Florida, and WFMZ in Allentown, Pennsylvania, are successful independent local news stations.
What if companies with other business lines stepped in as new networks to subsidize the local news business? Think of companies with extensive content libraries, advanced digital advertising and delivery infrastructures, and significant first-party data. Companies like Netflix, Amazon and Apple could become the new local networks.
Strategies for news media publishers
As local television shifts, news media publishers have an opportunity to fill the gaps. Here are some recommendations for local news media publishers:
Connected television (CTV) offers a wealth of ad inventory in local markets. Local businesses have been slow to move over, and publishers can become trusted partners by leaning into CTV. If you decide to create your own channel, this will serve you well. Whether you use a managed service provider or direct order management partner like Ribeye or Vibe, start selling CTV today.
Dare to experiment. Don’t copy traditional TV formats. Television stations often look similar because they can’t risk experimentation. As a news media publisher, you have the freedom to innovate. As YouTube creator Casey Neistat advised at the NAB Show, “The only way to succeed in this space is to make something new, make something different, make something that’s truly unique.”
There is no shortage of great content, but there is a shortage of context. Use your position as a trusted market media brand to curate content from various creators. A project like Sidestage, which curates content to tell a market story, shows how effective this approach can be.
Free ad-supported streaming television (FAST) channels represent a secret to video monetization. Unlike video-on-demand with pre-roll ads, these 24/7 streaming channels offer a passive discovery experience. The economics behind linear TV drive the growth of platforms like Pluto, Tubi and the Roku Channel.
Creating a 24/7 channel is now easier than ever. Telvue offers user-friendly systems for newspaper publishers that are ideal for launching a channel. We used them at Calkins in 2016 with great success.
Once your content is organized as a channel, it can be distributed to many places simultaneously — your website, OTT and mobile apps, cable headend or FAST platforms.
Conclusion
The local TV landscape is changing, presenting numerous opportunities for innovation. Local communities will always need to be informed, and local businesses will always need effective ways to tell their stories. By embracing these strategies, news media publishers can thrive amidst the disruption and continue to serve their audiences effectively.
Guy Tasaka is a seasoned media professional with a 35-year track record of leading change in the industry. He has collaborated with renowned organizations such as Macworld Magazine, Ziff-Davis and The New York Times, where he honed his expertise in research, strategy, marketing and product management. As the former chief digital officer at Calkins Media, Guy was acknowledged as the Local Media Association's Innovator of the Year for his work in advancing OTT and digital video platforms for local news organizations. He is also the founder and managing partner of Tasaka Digital, specializing in helping media and technology companies navigate business transformations using his extensive experience and forward-thinking approach. Guy can be reached at guy@tasakadigital.com.
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