These are the ingredients behind our new advisory service, “Digital Strategies for Broadcasting.” Technology can drive new workflows; partnerships; revenue streams and in doing so challenge existing management and operational structures and processes. Running a broadcast company with digital media assets is quite different than running a traditional broadcast property.

BIA itself has taken the “digital plunge” with its acquisition of The Kelsey Group which extended our expertise, knowledge and relationship base into digital media. With the launch of DSB we are leveraging those resources along with the expertise, data and services BIA has served the broadcast industry with since 1983.

The explicit goal of DSB is to help our advisory clients develop and execute their digital strategies as successfully as possible. This may mean broadcasters but it can also mean assisting those firms elsewhere the local media ecosystem looking to understand and work more productively with broadcasters as partners, service providers or vendors.

For more information about Digital Strategies for Broadcasting, click here.

Click to register for our free Webinar on Tuesday, March 16, Digital Strategies for Broadcasting: Capitalizing on the Shift to Local and Digital Media.

For example, Fox Digital Media’s Jon Cody told OTTcon, “this year 50% of initial broadband connections will be wireless and 19% of viewers will connect their TV sets directly to the Internet.” The impact of OTT is most pronounced in the 18-24 demo, many of whom only do OTT and have never had cable or satellite subscriptions. These topics are being explored, debated and even somewhat resolved among attendees and speakers at OTTcon 2010 (http://www.xmediaresearch.com/ottcon/index.htm) in San Jose, California this week.

OTTcon defines OTT as Internet video delivered to the television set versus PCs, mobile video players or other devices. That’s a critical distinction because in media distribution, the end user device or set top box defines the business model by controlling the consumer interface. So as new boxes and applications get attached to the TV set, the business models will change. OTTcon has an incredibly diverse attendee mix of which is reflective of this new ecosystem including exhibitors such as Amdocs, Bandcon, Fox, BitRouter, Hillcrest Labs and Avtrek .

OTT is something local broadcasters should pay attention to. Video distribution business models are tied to the device and the device ecosystem is fundamentally changing. This will drive new relationships and reorder existing relationships. Just as local broadcasters do carriage deals (must carry and retransmission) with cable and satellite operators today; they must work new deals in the OTT ecosystem with those companies controlling the devices and consumer interfaces. This is becoming more critical as OTT becomes a dominant distribution paradigm already challenging cable and satellite in key demos.

Local broadcast television stations have been bound to the cable and satellite business models for distribution and access to a majority of their viewers through must-carry and retransmission. Cable and satellite operators provide the distribution networks but it is really their set top boxes that defines their business models by controlling access to their networks and services. The challenge OTT brings to the mix is that new types of set top boxes are connecting television sets to the Internet and this breaks open the ecosystem that has grown up around the television set.

Boxee (http://www.boxee.tv/) is an example of an OTT company redefining the business model around the television set. Boxee’s Andrew Kippen told OTTcon attendees that, “Boxee is a free software interface for interacting with television set content. This provides low friction for consumers and makes it easy to get entertainment in one place.” Boxee’s goal is to aggregate local content, make it social, offer 300 different applications, with a browser-based experience on the TV. This is the kind of company local broadcasters might work with to become a force to contend with in OTT video.

BIA/Kelsey’s new “Digital Strategies for Broadcasters” advisory service will focus on OTT video as one of its core coverage areas. For more information on this service, see xxxxx.

# # # # # # # # # #

Digital Strategies for Broadcasters is BIA/Kelsey’s newest Continuous Advisory Service. The focus of DSB is to analyze, assess and anticipate how the changing local media landscape will affect the broadcaster community and its supporting network of vendors and technology providers.

DSB will officially debut in early March 2010. We’ve already launched the companion event, “Digital Strategies
for Broadcasters,” which will be held in Jersey City, New Jersey, May 17-19. For more information about DSB, please contact Steve Passwaiter at (703) 802-2973.

For broadcasters, it is an article of faith that “localism” is a point of differentiation that adds value to their operations. Localism tends to mean local news, sports, weather, traffic, local events, coverage of local government and other promotional and volunteer involvement in the community. There’s a lot of chatter about what it takes to succeed with true “localism.” This past year has seen some notable localism failures. Other efforts are in a nascent stage

One case in point is Allbritton Communications, based in the Washington DC-area. Its television stations are affiliated with ABC, with the largest property being WJLA-TV, the ABC affiliate in the Washington, DC market.

Our primary interest was the fall 2009 announcement of Allbritton’s plans to launch a Washington, DC focused news site that will combine with the WJLA and NewsChannel8 television and web operations. To launch this new local news site, Allbritton hired Jim Brady, the former editor of Washingtonpost.com, The site is set to launch in Spring 2010 and will have about 50 more news staffers on hand.

We recently talked with Allbritton’s SVP of Legal and Strategic Affairs Jerry Fritz, who supports Robert Allbritton (the family-owned company’s Chairman and visionary) and Fred Ryan. These three executives are the key architects of this strategy. Fritz has a long history with the company that spans more than twenty years.

While the timing seems very fortuitous, Jerry Fritz tells us it’s really the culmination of a plan that was devised back in the late 1980s, when Allbritton (who used to own The Washington Star) saw an opportunity to build a strong local franchise to compete with the newsgathering prowess of the Washington Post.

The first effort under the plan was the launch of NewsChannel 8 distributed over local cable systems. NewsChannel 8 was, at first, a separate operation from the local broadcast television station. A truly, locally focused news operation; NewsChannel 8 broke down its news for the area’s three separate and distinct geographies with a mix of local, lifestyle and political programs. It was a pioneer and in its early days, NewsChannel was a tough sell for audiences and advertisers. Its programming and appeal have grown as the product has matured and its mix of local news and lifestyle shows (Political talk to local golf) now attract larger audiences plus a mix of larger and smaller advertisers. NewsChannel 8 also has benefited from the growth in the news product on WJLA. WJLA has completely rebuilt its local news operations following a downsizing many years ago.

From its base in local television, Allbritton leveraged its core assets across media platforms to exploit some of the unique attributes of the DC market

That included developing an online newspaper to address the market opportunity of providing news, commentary and an advertising vehicle to government contractors, lobbyists, trade associations and others seeking to influence the nation’s seat of government.

Politico.com, designed to be the ESPN of politics, was Allbritton’s initial online effort under the new strategy. While Politico was designed around the Web, readers and advertisers clamored for a print counterpart. Allbritton responded with a three times-a-week print product that was quickly ramped to five days.

Since then, Politico has created a national network of newspapers and websites that share Politico stories in exchange for web ad avails, which Politico sells to national advertisers. It is a classic win-win.

In fact, Politico’s timing has been perfect. Many newspapers have closed their DC news bureaus, and local newspapers are struggling to fill the news gap. Recent filings with the SEC have detailed just how successful the operation of Politico has become in a relatively short time as revenue has topped the $20m mark and cash flows have reached seven figures.

Now, both WJLA-TV and NewsChannel 8 share facilities and some staff members as they gather, collect and present local news and information to the DC market. Adding Politico, the Allbritton operation finds itself as one of the country’s leaders in the gathering and dissemination of political news. That has positive rub off impacts on both WJLA and NewsChannel 8. Washington is still very much a company town.

So, it’s in the same vein that we look at this soon to be launched local news oriented website. Adding fifty journalists to an operation that already includes a prominent local television station and its cable news spinoff plus the acclaimed Politico gives Allbritton’s operation one of the largest news gathering operations in the market. As the company focuses on enabling its journalists to file news across any platform, it’s easy to see the combined Allbritton portfolio giving some heartache to the Washington Post (and few know that property better than Jim Brady). The company just recently brought a senior sales executive to lead the advertising sales effort for the new metro new site.

Allbritton already has a deal in place with the market’s leading news/talk radio station as well to share content and to provide weather reporting from its team of meteorologists. While it doesn’t seem that Allbritton wants to get itself imbedded into the longer view stories that the Post covers, it does seem that there’s a probable audience for hurried Washington audience members who want to get the news in an easy, connected and time saving way.

The Allbritton mission is to produce and serve unique content which has appeal beyond the Washington market. The plan is to capitalize not only on local ad spend across broadcast, cable, print and online platforms but also to get access to content syndication and barter ad inventory nationwide. Allbritton understands that it can be profitable to serve not only local audiences and advertisers well with smart execution but that this entire operation can be leveraged to grow out of market revenues. Could this example serve as a possible model for other broadcasters looking for a digital strategy that actually makes money!

Seven Philadelphia CBS-TV and radio stations have combined their news resources to create a new Digital Out of Home (DOOH) News Network utilizing 39  CBS Always On “Digital Newsstands.” The Newsstands include HDTVs and a 24 hour news ticker.

The Digital Newsstands have been created in partnership with Center City Direct, a local marketing and technology company. It is a division of Alternative Media Holdings, which also provides DOOH services to retailers, office buildings and other street-level installations.

Stations included in the partnership include KYW-TV (CBS), WPSG-TV (CW), KYW-AM, WOGL-FM, WYSP-FM, WIP-AM and WPHT-AM. In addition to local news and weather, the newsstands will also feature tourist information. Ultimately, more than 120 newsstands are envisioned.

Thanks to TV NewsCheck for the scoop

Now that the show will no longer be available, how will these stations fare? First, the show will continue into 2011. Syndicators and local stations will have a substantial amount of time to plan and test alternatives. It may be one of the programs presently airing or some local programming yet to be developed. The time slot that Oprah has been occupying for many stations is one that is quite attractive, so investing in a new program is justified. Besides it’s own time period dominance, The Oprah Winfrey Show has added importance as it often leads into the stations’ local news programming. That’s helped to justify the fees charged to stations by CBS’ Syndication arm.

The considerable amounts that local stations have been spending for airing Oprah could easily be spent on alternative syndicated programming, or instead, on developing local programming. Profitability of this time slot might actually increase with these substitute programs.

Finally, while the size of the audiences that Oprah attracts are still very large, the ratings have been decreasing. The Oprah brand name on local stations is still very important and she’s helped launch other well known personalities such as Dr. Phil and Rachael Ray. For stations that carry Oprah, having this announcement happen in the middle of the all-important November sweeps might be a temporary boost to the ratings. However, given that the show won’t officially end until September 2011, those increases are likely to be temporary. The decrease in audiences may level off or continue downward over the remaining period of the show. Nevertheless, the impact in lost audiences is not as significant as it would have been several years ago. But, there’s no doubt that a badly battered industry certainly can’t relish the loss of one of its most widely popular personalities especially if it turns out that part of this exit is being driven by her desire to play a larger role in the development of her cable project (OWN) in partnership with Discovery.

The full economic impact of the Oprah show ending will not be known for a few years. Syndicators and local television stations will have an opportunity to be creative in the quest to find some programming that will distinguish itself in an ever increasing competitive marketplace. Let’s see what they create!

Though posted under Mark Fratrik, both Steve Passwaiter and Neal Polachek contributed to this post.

WZMY-TV or “MyTV New England,” is a local broadcast television station that covers the Boston, MA marketplace from its perch in Derry, NH. It has been evolving its own hyper local format since ShootingStar Broadcasting bought it in 2004. CEO/President Diane Sutter says the goal has been, “to combine the reach of TV with the personalization of radio and the interactivity of the Internet.” WZMY provides a mix of syndicated, My Network TV and station produced programs typically featuring vignettes sponsored by local merchants. In short, she refers to this strategy as “radio with pictures.”

We spoke with Diane Sutter last week to learn about her accomplishments with MyTV New England over the past five years, and get a sense of where she’s seeing future opportunities.

Even though WZMY operates in the large, competitive Boston, Massachusetts television market, its goal is to be local and that means being available (the first person listed on WZMY’s “contacts” page is Diane Sutter) and connected to the community. When the “community” is 10,000 square miles, it’s a challenge to get hyperlocal. WZMY does it by putting local people and businesses on the air in MyTV infomercial programming intermixed with main stream programs like”The Unit,” “Office” and “Law and Order.”

BIA/Kelsey: Diane, you’re trying to develop a “hyper local” strategy with a broadcast television station. How does that work? How can you take a traditional mass medium like television and make it hyperlocal?

Diane Sutter: Localism is hard to achieve in a 10,000 square mile market area let alone hyperlocalism! Local is not just about news and weather, though they’re important topics. At My TV New England, we get hyperlocal by finding a niche not served by other stations and serving it. We identify and focus on common themes and develop relevant programming based on the “MyTV” format of putting local people on the air in our on air ID’s and station promotional spots. We’ve used viewers on our ID’s since day one. We use a mix of people to do these and sprinkle those throughout our broadcast day.

For example, there are lots of moving parts in a wedding. Brides will drive a fairly long distance to get all their planning and shopping done. We produce a local show several times which focuses on the local wedding business. By targeting local merchants with services ranging from attire to venues to catering we can put together episodes that can get pretty hyper local. We have local merchants sponsor each segment and often appear themselves. We produce vignettes running 2, 3 or 5 minutes for example, and sell these segments. We typically sell out a half hour episode with these vignettes. We also have “regular” 15 or 30 second commercials running between the vignettes which makes for sort of a situation where we say, “we now interrupt this local infomercial to bring you a commercial” . . . but it works!

For us, hyper local is putting local merchants on the air to share their solutions to the everyday problems our viewers have. We do this with the MyTV format from weddings (“My Elegant Wedding”) to where to eat (“My Favorite Restaurant”) to taking care of your home (“My Home and Garden”). We even ran a show, “MyINK” featuring some of New England’s leading tattoo parlors. That’s local and personal.

BIA/Kelsey: What’s the competitive environment like for an independent television station trying to go hyperlocal in the Boston market?

Diane Sutter: Well, you could say we’re doing a great job of running the bases but haven’t quite crossed home plate yet. We definitely see ourselves as moving the needle. The challenge is to find an important niche that we can both service and defend. For example, we’re in a market where 1.7 million of 2.4 million homes are on Comcast and unlike broadcast television they can sell regionally by system. They have five times our sales staff. When Comcast’s advertisers get large enough to buy three or more regions, they get promoted to Comcast Spotlight service which is very compelling. We’ve also got 24 hour news and sports channels, some of the country’s leading broadcasters in the market with network programming, news, weather and sports. It’s a tough place for an independent station. As advertisers start moving more of their spending into digital media, that also becomes a growing challenge for us. I’ve seen a big paradigm shift in the market over the past five or six years. A stand alone station like ours used to have it a lot easier!

BIA/Kelsey: What’s your formula for standing out in the market and being successful?

Diane Sutter: I tell you what; it starts with operating on a scale to be profitable. We need to keep our table balanced to succeed. The four legs on our table are (1) the viewers; (2) our advertisers and community leaders; (3) station ownership; and (4) the staff. It’s my job to lead the effort to use our resource to serve these four critical groups. There may be a lot of things we could do, but given limited resources I need to ask how any major initiative advances the ball for these groups and at what cost for any given opportunity. Since we’re a television station we can do production, creative services, news, weather and promotion. But we need to balance our capabilities and resources with our opportunities.

For example, WZMY used to have a news program because we thought that was an important thing to do for the community and to be a broadcast leader. But we stopped doing that show mainly because in a market like this, we simply couldn’t figure out how to be unique in a way that mattered. What we did do was to execute a strategy to help the community in a different way. We have one of the most recognized and talented weather personalities in the Boston market and he’s out in the community at least three to four days a week at various events. That’s a place where we can make a contribution to the market and stand out. In a sense, our strategy here for leveraging station personalities and tying programming into the community is like what some of the Spanish-language television stations do so well.

We also used to do “MyTV Prime” which was a live, interactive talk show. It’s the kind of thing you’d expect to see on radio but we’re doing it with television. It was a very well balanced program with a diversity of viewpoints on important subjects from 3-4 different people. Now, that’s unique and something that was defensible from likely competition. Were it not for the creation of MyNetwork TV, it’s likely we’d still be doing this in prime. We may try to recreate this somewhere else on our programming schedule in the future. We’ve also got “MyTV Club” which again is formatted in a personalized way like you’d see in radio. I guess, generally our formula for success is sort of, “radio with pictures.”

Radio’s a great personal medium and we see extensions into independent television that make great sense. Our goal is to have a conversation with our viewers. I take this seriously. If you go to the MyTV New England web page and click on “contacts” you’ll see me listed first. I get and answer emails from viewers every day. We make every effort to answer all viewer emails within 24 hours.

BIA/Kelsey: How about your sales strategies. Where do you hire from and how do you train? What kind of accountability are advertisers demanding?

Diane Sutter: We’ve got to think differently. It’s not just thinking out of the box, the box is gone! We need to have new approaches in sales. Hiring someone who’s worked for an affiliate doesn’t really work for us. The selling of this station is just too different for them.

We’ve got some traditional sales folks who are well schooled in selling television time. But for all their strengths in selling airtime packages, some of our other inventory can be a bit daunting. It doesn’t make sense to set people up to fail. Put them where they’re strong and hire around them. That’s our approach. They do have some familiarity with the interactive side but they can ask for the assistance of our other sales resources that are more comfortable in the selling of our digital assets. Some of these items are a bit technical and we don’t expect them to know everything about them. We look at our sales talent pool and bring new blood on board in way that complements and extends what we have, particularly on the digital platforms – mobile and web. We are getting ready to announce our new multicast partner shortly and that might cause us to shift how we sell a bit. We’re also looking into the possibility of hiring a digital only sales team but we’re not there yet.

Essentially, we’ve got two kinds of sellers – transactional and developmental. The transactional sellers are the traditional sales people who can harvest existing relationships and opportunities. They’re great at that. The developmental sellers are the hunters who can prospect, qualify and bring home new accounts and business. They need to carry more of the mindset of an ad agency resource who can piece together various elements into a coordinated campaign for the advertiser.

Now on accountability and performance metrics, we don’t subscribe to Nielsen and haven’t for years. I inherited that contract when we bought the station. As everyone knows Nielsen is a large expense in a market like Boston. However, I think we’ve only lost one account due to our stance. Our Nielsen numbers are relatively small so we can’t play the numbers game. We sell results; we have to. Our plan is working but it’s a very different philosophy from traditional network affiliates. This is a little different for television sales folks. But with more and more media platforms and increasing advertising inventory available, it gets down to results and accountability pretty quickly. We need to be on different platforms.

One way we’re doing this is with our permission marketing and lead management. We don’t just sell air time, we’ve got the ability to offer mobile SMS text ads, we’ve done promos with radio and newspapers, and we’re creating web sites independent of the MyTV brand. We focus on the service not the brand we provide our advertisers.

As an example, we’re working to get car dealers back in the advertising market. We’re creating vertical web sites without the station or dealers brands as integral to the sites with the idea of promoting a single web site for an aggregate audience. Once we drive them to the site, we will manage leads by zip code. Car dealers will buy their zip codes and that’s how we’ll route customer queries. It’s a fair and transparent process that advertisers will understand and value. We’ll get paid on a cost per lead as the power of our television station really drives web traffic.

LIN TV Corporation (TVL/NYSE) is a public company with 27 television stations in 17 markets, reaching about 11.5 million households each week. This makes LIN one of the largest television group owners in the country. LIN’s stations typically rank first or second in the Nielsen ratings, both overall and in their news time slots. In addition to its owned and operated television properties, LIN has a growing digital business, more than 50 television station and niche web sites, as well as mobile offerings, including two very popular iPhone and BlackBerry applications recently released. We spoke with LIN’s President/CEO Vince Sadusky to get his thoughts about the firm’s adaptive digital strategy and what he believes are growth platforms for LIN going forward.

BIA/Kelsey: Vince, you just purchased Red McCombs Media, an online media and services company. How does this fit in with your television stations, web sites and mobile initiatives?

Vince Sadusky: It’s kind of funny; we weren’t actively looking to buy. We just saw a good opportunity in RM Media to bring in some excellent sales and marketing expertise to help us get where we want to go. We’ve had a partnership with them and found it to be incredibly helpful. Plus, they have an outstanding customer service culture that we really liked. This fits very nicely with our strategic plan. And you know, the company had a fair amount of revenue on a standalone basis with positive cash flow!
Generally, we hold ourselves out there as folks willing to do partnerships and deals. I make regular trips to the West Coast to keep the discussions going. We’re open and interested in talking. I have to say that sometimes we’re dealing with young folks and new companies that don’t know what “on air” means but they do understand audience reach so that’s a part of the television business that’s impressive to them.

BIA/Kelsey: Tell us more about your strategic plan?

Vince Sadusky:Well, we had a new management team come on board a couple of years ago. We really wanted to reshape LIN TV into a digital media company. Our goals were to grow and diversify our revenue base; become a significant player in the digital media market; develop a national footprint and get into the performance-based marketing game. We focused initially on our web properties and grew that revenue contribution from 1-2% to 12% of overall revenues by the second quarter of this year. We sold the value of the web sites independently of our television properties to maximize value and revenues. We found that advertisers were willing to pay premiums for our station branded web sites but didn’t want to put all their digital money into just one web site. So that was fine and it provided good growth, and will continue to, but would also limit our future revenue growth potential.

The second issue was coverage for national online advertisers. While we’re in 17 markets with our stations, that’s only 9% of the country. This actually limits our attractiveness to national advertisers. No matter how good one of our television stations web sites are, at the end of the day, it’s only one market. Unlike our TV stations, our web sites can go national with their geography. However, the only significant access we had to the national ad market was through ad networks. Our experience is that ad networks make for an unstructured platform that we can’t really control. For example, we’re news leaders in our market and that reputation is important to us. With Google’s contextual advertising, there was a story about a woman’s murder and her husband was the prime suspect. The story identified him as a dentist and Google served up a dentist ad in the right column. We’ve also had FOX ads appear on our CBS station’s site. In the television business we’ve got procedures to prevent this kind of thing.

To get more control over context and presentation of content and get access to significant growth we targeted national spending. Clearly, we felt we needed to go outside the ad networks to get there in a way that we could be comfortable with the environments we were creating and the value we were receiving.
That’s when we started working with RM Media and had a terrific outcome. We very much enjoyed their creative minds, execution and experience. Their backend solution was great for verifying ad campaigns and really opened up the “black box” to clients. They could follow campaign performance on a daily basis and loved it. RMM offered money back performance guarantees based on click-through rates or some other relevant metrics. RM Media can target by demo, geography, context, behavior or psychographics. And they continually monitor CPM, CPC and CPA metrics so campaigns are effectively tracked and fine-tuned to achieve campaign and ROI goals.

BIA/Kelsey: Your acquisition of RM Media clearly supports your goal to develop a national footprint and have more control over your digital inventory. How about in your local markets, any benefits there from this acquisition?

Vince Sadusky: Definitely! Say for example you’re selling a local car dealership or a fast food franchise for their specific geographies down to zip codes. We could always provide banners and video pre-rolls but now with RM Media we can provide an ad network catering to their demos and provide a full, interactive ad campaign with ROI accountability built-in.

There are local advertisers we couldn’t touch with our television stations. For example, in Providence, Rhode Island there may be a local sporting goods store guy who sells to the junior high and high school teams. He can’t afford TV but he can afford a geo-targeted digital campaign. We give him video pre-roll and he looks like a pro and loves it. We can do a whole interactive ad campaign for him based on IP addresses in his part of the market. This kind of robust and accountable ad campaign is a terrific thing for local advertisers. They can play with the big boys now. This takes a lot of time on our part to provide the education to these small businesses but it’s a significant growth area for us.

BIA/Kelsey: Well, let’s talk about that education effort and generally your approach to sales, sales training and sales management. There are a lot of approaches being championed? What’s your secret sauce?

Vince Sadusky: We have a two-pronged approach to sales. Our history is in the television business and that requires a certain skill set for a successful sales person. It’s different with digital media. We trained our existing folks as best we could to transition into digital media as well as television. It worked in some cases but not in others. We have great sales people on the television side and we didn’t want to lose them. So we set them up to succeed where they’re strong instead of trying to force fit them into digital media sales. It doesn’t make sense to try to have everyone selling everything.

The thing is that with performance sales it’s a whole different language than it is selling ratings. It requires accountability value propositions, metrics and guarantees that just aren’t first nature to our traditional sales teams. We’ve hired interactive sellers who are really pros. We will have the traditional AEs partner with the interactive AEs where it makes sense. The on-air sales team often makes introductions for our digital sales team and that works well. The television salespeople feel comfortable talking about numbers and video pre-rolls with their existing books of business. To develop new business on the digital side, it’s all about the interactive AEs doing what they do best.

BIA/Kelsey: You’ve talked about the value but also the limits of web sites branded around your television stations. How do you grow outside that branding, do you have vertical web site strategy?

Vince Sadusky: We haven’t been interested in purchasing sites. I’ll tell you why. We’ve seen lots of traditional media investment go into verticals. Here pricing and valuation is based on traffic, not profitability. At LIN, we’re keeping our eye on the bottom line and we’re not sure what these vertical web sites are worth in terms of profitability. We know we can get some great content to our web sites where business models such as revenue sharing and syndication are in play and we’re comfortable there. We have developed vertical sites where we think it makes sense. We’ve got micro sites around some of our shows. In Green Bay, Wisconsin one of our local shows, “Living With Amy” at 10am generated so much traffic, we split her off into a separate site. We haven’t tried to do this on a larger basis with national content though.

BIA/Kelsey: Speaking of content, how does user generated content and social media fit into your plans?

Vince Sadusky: What we do really well is deliver professionally-produced news and entertainment. Our focus is to extend how people can consume this content across platforms. We don’t want to do just a couple of newscasts. We want to offer that content across platforms – on-air, mobile and web. We do need to be smarter on the interactive side. We look at social media and see the buzz but wonder how effective it really is for advertising. We’re not necessarily interested in being the first in or even early followers, we look for sustainable, profitable business models. We’re still new to the digital game, we are still figuring out what works.

We have released iPhone and Blackberry mobile applications that have been enormously popular. Our Mobile, Alabama television station released an iPhone app that was one of the top 10 iPhone apps! We view mobile as about the state of advancement of the web five years ago. It’s early days from an advertising business perspective. People do love their cell phones and they’re in the game for the latest and greatest upgrades and smart phones. We also know that people value their local news and weather. We want to be there for them.

BIA/Kelsey: There’s a lot of energy around television suddenly discussing it’s a wireless medium that can offer mobile video on cell phones. Is this an important growth area to LIN?

Vince Sadusky: We view mobile video like we do Web 2.0. We got started behind the 8-ball on the web side. But now, we’re in the video game. That is what we do. So we’re much better off in the mobile video game from day one. We have good, relevant content. People can get their national information, shopping and so on from a variety of sources. But for substance and relevance, they’ll want their local news. That goes to our strength in story telling with television using moving pictures, sound and our narrative power. We are cautious about the ad load with mobile. We don’t want to turn people off. We need to figure out the right balance.

BIA/Kelsey: Any final words, Vince?

Vince Sadusky: Well, like I say, we know what our strengths are and we also know where we have to learn. We set some new goals for ourselves in building out a digital media business while leveraging our strengths in local television. It’s working but we still have a lot to figure out.

BIA Commentary:
First off, we want to thank Vince for taking the time to talk with us. We saw the item on the RM acquisition and thought it an interesting move particularly since investment capital is rather short these days.
The acquisition of RM makes LIN a more effective interactive player as they now have a full service digital agency behind them. Further, the ability to come to the realization that just being able to offer one local website (your own) to advertisers might not be enough to coordinate a successful digital ad effort is a big moment for a historic TV company. TV operators have never ever worried about not being able to offer enough reach. The acquisition of RM and the ad network it has under contract gives LIN’s digital sales teams the ability to look more like problem solvers to local businesses who are struggling to understand how to successfully implement digital media into their existing ad spending. LIN now offers solutions not exclusively tied to their own properties. We believe this is a good space to occupy and helps position LIN as a solution provider that is agnostic to any one specific solution. As broadcast companies take on more platforms, we believe this “ad agency” mentality is a philosophy that is destined to work for local media sellers.

To start with, economic conditions facing all businesses are unclear. While there have been some recent positive news coming from some sectors, there is still a feeling that things are going to get worse before they get better. The percentage declines may not be as bad as in previous months, but they are still declines.
Next, the impact of new media and other advertising vehicles continue to change the position of broadcast and cable networks. Availability of some of their programming on the Internet impacts the significance of the original airing of these programs. The continued expansion of DVDs into additional households may also change the values of the advertisements on these networks.

Finally, the advertising marketplace is a bit sluggish, at best. Because of the economic downturn and the changing media consumption, advertisers are very apprehensive in committing sums. Moreover, the contraction in the automobile industry, with the reduction in lines and dealerships, has a depressing impact on spending. Advertisers are going to wait to see that people have jobs and are spending before committing large sums.
In this environment, what is going to occur in the next few weeks? What percentages decreases will the upfront commitments lead to? Which of the networks will look the best once all the dust is settled?

Some predictions:

1. The percentage decrease in revenues generated by over the air networks commitments will be in the 15-20% range.
2. That percentage decrease will be extremely misleading as the percentage of time sold will be down considerably. Advertisers will be more cautious in committing sums while the economic recovery is starting. The networks will also be cautious in committing too much time at depressed prices that are prevailing now.
3. NBC will be noticeably hit with the introduction of Jay Leno five nights a week. Caution on both sides will be present since it is not clear what levels of audience will tune in every night at that earlier hour. Even with these lower advertising revenues, this still may be a profitable move by NBC.
4. The other networks will benefit from the uncertainty created by the NBC programming move. Many advertisers will still need to get in front of large audiences, and the other networks with their more traditional prime time programming will take advantage of their positions.
5. Cable networks will continue to make substantial gains in their upfront revenues. Many of their original programming is attracting noticeable audiences with good demographics. For many advertisers, these programs are now viable substitutes to getting their message out.

When it is all said and done, the upfront season will come and go. Winners and losers will be crowned. Only once the full season is completed, with the final results of how the economy responds (how quickly and how strongly) will we know which network fared the best.