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How Cord-Cutting Is Shaping—Not Ending—Local TV

June 21st, 2017   ||    by John R. Osborn   ||    No Comments

A full 19 percent of U.S. adults live in households with no multi-channel video programming distributor (MVPD) services, according to a recent eMarketer report. The report also reveals that 13 percent of U.S. adults live in homes with cord-cutting viewers or (the younger) cord-nevers, segments which are predicted to grow by 43 percent from 2016 to 2020. In addition, Money magazine highlighted a forecast predicting that cable TV subscriptions will decline over the next decade by 1.5 percent per year.

These shifts in TV distribution might raise concerns, but they also offer opportunities for local stations and their advertisers. Local TV is the best feature of pay TV, according to a consumer survey cited in MediaPost, and “localism is the single most-cited attribute.”

Viewers who move to new locations, for instance, want to connect with their hometown communities. And a quick Google search for “cord-cutting options” shows that the top five sources strongly recommend getting an HD antenna with or without a DVR to ensure access to local stations.

Streaming? What? Who?

Three basic types emerge out of over 50 streaming video-on-demand (SVOD) programming providers identified by eMarketer.

  • Skinny Bundle or Linear Over-The-Top (OTT): DirecTV Now, Sling TV, Sony PlayStation Vue, YouTube TV—and even MVPDs like Comcast and Dish—are offering skinny bundles. And all of these carry ads. There’s been concern over whether local station channels will be offered in skinny bundles, as well as whether viewers will be able to find them. Most skinny bundles, however, offer at least some local TV channels in addition to network-only options.
  • Single Content Providers: These include network services (CBS All Access, HBO Now, Showtime Anytime), sports (MLB.TV, MLS Live), gaming, anime, children’s, foreign, and so on. Some of these carry ads. The issue here is whether network SVOD services will leave local affiliate stations behind. But as Variety reports, the first stand-alone TV network offering, CBS All Access, recently forged a new affiliate agreement that shares local streaming revenue and supports local stations with other streaming services like Hulu and YouTube TV.
  • Full-Episode Players (FEPs): These include Netflix, Amazon Prime Video, and Hulu. These are almost entirely ad-free, which offers an added draw for viewers. But local TV has competed with HBO, Showtime, and others for years. As quality content producers, stations now contend on a global distribution stage. In other words, content is still king.

      Taking Action—Locally

      If you’re part of a local TV station—or group that’s worried about the threat of cord-cutting—here are some steps you can take:

      • Create partnerships with every viable skinny bundle provider. Fight to remain high on the menu of channel options for your geography. Also, stay on top of new skinny bundle and other SVOD services.
      • Be aggressive with affiliated/parent networks to make sure the CBS All Access affiliate model is just a beginning for reengineering the local TV business. Could local stations receive reduced reverse compensation fees or revenue share for ads delivered in their geography by stand-alone parent network sites?
      • Reach out to hardware/software manufacturers and marketers who promote HD antennae for cord-cutters—like TiVo Roamio. Help them co-promote your station(s) in home markets. Try on-air consumer messaging to build a relationship with cord-cutting or cord-never viewers.
      • Don’t just program and promote your station against other local stations. Compete for viewers and advertisers with every other option out there. A station’s content is no longer limited by its broadcast signal!

      There’s no need for local stations and advertisers to fight the cord-cutting trend. Instead, this trend has the potential to transform the local TV business through new approaches, alternate distribution paths, fresh programming, and innovative revenue models.

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