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Analyst is Lukewarm on the Future of Local News

NEW YORK: Rich Greenfield of Pali Capital is bearish on the future of local news, given the condition of the auto industry and the explosion of competition.

“We believe the local TV business is in secular decline, albeit the decline trajectory post-2009 auto-related trauma is unlikely to be anywhere near as rapid as we are witnessing in newspapers and radio,” Greenfield wrote in his blog. “While revenues/profits may bounce whenever the economy recovers, we have a hard time believing that local news, weather, traffic and sports at 7 a.m./5 p.m./ 6 p.m./11 p.m. can sustain viewership levels, and in turn, advertiser interest over the next several years.

“In the A25-54 demos, local news viewership has fallen 20 percent over past four years and is down far more severely in the largest markets--over 30 percent in New York and Los Angeles.”

Greenfield said competition among local news sources “is increasing at an accelerating pace.” He noted how ESPN had launched a localized version of “Sportscenter” replete with local ads and Web site in Chicago. Other outlets are ramping up localized Web sites, including NBC Local Media, the Huffington Post and a non profit called Voices ofSan Diego. Then there’s increasing pressure from mobile video availability on smartphones, the users of which watch less TV then their non-smartphone peers.

He advocates the local news-sharing strategy that many stations have adopted. In New York, for example, WCBS-TV, WNBC-TV, WNYW-TV, the Fox affiliate, and WPIX-TV, The CW, have a news sharing arrangement.

“News sharing is not a new concept, in fact on a national basis, Fox News, ABC and CBS have been partners in National News Sharing since 2000,” Greenfield wrote. “Yet, on a local basis, local news sharing has only begun to catch on within the past several months, led by Fox and NBC, which started a beta test of the concept in late 2008.

“The idea behind LNS is for all general news, non-investigative stories, two or more stations create a separate newsgathering team where the video content is shared by all the partners within the joint venture. This enables stations to reduce costs and/or redeploy resources to increase investigative journalism--what supposedly differentiates one station from another.”

Among network affiliates doing local news, Greenfield noted that all but those in the ABC camp appear to be cutting costs.
“While ABC is the market leader in a good portion of its TV station O&O markets, we simply cannot understand why they do not want to participate in LNS, even as ABC affiliates such as Scripps are participating,” he wrote. “It would appear that ABC does not want to impact the quality of its local newsgathering, however, LNS is invisible to viewers and is a way to reduce costs in a declining business.
“ABC’s O&Os will now end up with the highest cost structure in the local TV markets it operates in and may not even have the opportunity to participate in LNS--i.e. in New York, the benefit of a fifth partner is rather marginal for the existing players, who also may not want to help the ratings leader.”