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Originally featured on BroadcastEngineering.com
Jul 13

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7/13/2009 10:00 AM  RssIcon

falling-advertising.jpgI grabbed the news story from FT.com because it was titled, “U.S. TV prepares for $2 billion ad shortfall.”

OMG, what had I missed? Are broadcasters careening toward disaster? Was the sky falling and I’d missed the forecast?

The news story’s first sentence said, “The U.S. television industry faces a $2 billion slump in advertising revenues during the next four years as advertisers turn away from broadcast and cable networks, according to a new report.”

The second sentence continued, “Digital video recorders that allow viewers to skip through commercials have knocked confidence in broadcast and cable advertising while younger, tech-savvy audiences are deserting their TV sets to spend more time online.”

Wow. If that’s not enough to make you tweak your resume so you look like an accountant or cowboy — anything but a broadcaster — what is? The death of broadcasting as we know it is but years away according to FT.com’s story writer.

Don’t panic

Wait a minute. I’m a skeptic, and in the course of writing these blogs, I try to examine a variety of resources. Everything is viewed with caution until more than one reliable source says the same thing.

The original source for the story was FT.com. It claims it got the information from Global Media Intelligence, a division of Screen Digest. I located the research firm’s press release and woe and behold, it portrayed an entirely different perspective. Let’s compare what the research company’s press release said with the spin added by FT.com’s writer Matthew Garrahan.

The headline from the actual press release said, “Major U.S. broadcaster-backed online networks claim over half of free online TV in U.S.” Hey, that sounds pretty good. But, wait, there is more.

“The online web-based TV services of the four major U.S. TV networks — ABC Full Episode Player, CBS Audience Network, NBC.com and Fox.com — together with Hulu, the joint venture between NBC Universal, News Corporation and Disney, accounted for a combined 53% of an ad-supported U.S. online TV market that generated $448 million in revenues in 2008. The remaining share of revenues was made up of the online video services of major sports leagues, video services from traditional online portals, and direct services from other major channel groups and content owners."

The findings have just been published in "U.S. Networks claim half of free online TV market," a report from Screen Digest, which goes on to state that the combined dominance of the leading broadcaster-supported platforms will drive the total ad-supported model for the distribution of online entertainment programming, news, sports and events in the United States to more than $1.45 billion in revenues by 2013.

In contrast, third-party platforms such as YouTube, Joost and other portals, which have no direct vertical affiliation with major rights holders, nor direct access to premium content rights, will struggle to aggregate ad-supported movies and TV shows. As a result, third-party, ad-supported video platforms may have to either diversify into new forms of their own original programming, exit the content aggregation business and offer technology and advertising solutions to the content owners’ and broadcasters’ own services, or settle on the low-margin business of becoming affiliates of the player-platforms distributed by the content rights holders themselves. My emphasis added.

071309_fig1.jpgThe research shows that broadcasters and cable currently have 66 percent of the U.S. ad-supported online TV revenues. (See Figure 1 to the left.) The next nearest categories are Hulu at 15 percent and “others” at 15 percent. Broadcasters are kicking butt in delivering online content.

After carefully examining both the FT.com story and the press release upon which it was based, I’ve come to the conclusion that Mr. Garrahan must have something against U.S. broadcasters. The press release was in no way as negative as he made the “news” out to be. His story was, at best, misleading. In any case, his story did not properly portray this industry’s success in adapting to the new marketplace.

Broadcasting is not headed into the toilet. This industry is effectively using new technology and delivery methods to maximize performance, audience and revenue.

The next time you (like me) panic upon an Internet headline, pause. Then locate the actual source of information to verify whatever was said.

Sources:

Actual press release

I’d provide the link to the FT.com fairytale, but let’s stick with the facts.

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