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End of Local TV News

by John on 05/18/2013

Journalists have some great opportunities.  However, they will need to acquire some skills in entrepreneurship or form partnerships with some technologically up-to-date folks.

Here’s why.  It appears that the economic theory of creative destruction is about to wipe out local TV stations and, as a result, local TV news.

Making predictions on the media is not easy.  Technology is changing.  Various news markets have different needs and will consume news in different ways.  And media consolidation has created a powerful lobby that will try to stop innovation.

Still, the news is not good for local TV stations.

Just this week Senator John McCain introduced legislation to try to keep cable and satellite fees down.  The bill would allow cable and satellite customers to pay from a la carte menus.  In other words, you pay only for the stations you watch – not the 500 channel universe.

That could crush local TV stations.

People will probably choose only one local station.  It will be based on either what local news they like or what network prime time show they watch.

But that means the majority of TV stations in each market will lose retransmission fees paid by cable outlets.  And in today’s TV world, most TV news stations rely on cable retransmission fees for half of their revenues.  Not many businesses can survive when half their gross revenues are cut.

Granted, there is a good chance that McCain’s bill won’t pass or even get a vote.  The broadcasters and the major TV networks are big campaign donors and lobbyists.  They aren’t going to give up their profits and control of distribution and content.

But there are other problems for TV stations.

Aereo is a new disruptive company that offers subscribers local TV programming on their computers, tablets, or smart phones for $12 a month.  But Aereo doesn’t have to pay retransmission fees to local TV stations to use their programs.

And the courts are siding with Aereo.  A number of courts have ruled that Aereo is no different than a VCR.  Previous court decisions allowed people to record a show on VCR and not pay rights to the station or network.  So, as long as Aereo is recording local TV stations off the public airwaves then it’s OK.  Technically, Aereo is just giving its customers a VCR-like copy of shows except over a computer, tablet, or smart phone.

As Aereo spreads to more cities, more cable outlets will refuse to pay those retransmission fees to TV stations.  Why would cable companies pay those fees when a company like Aereo is airing the same content and not paying anything?

Ironically, it was Aereo’s court successes that led to the broadcast networks threatening to move all of their programming to cable or pay-per-view.  In turn, that threat from broadcasters led to McCain’s a la carte bill.

Already, local TV stations are in trouble.  Advertisers are not interested in expensive 30-second spots that fail to target or give the advertiser enough feedback from customers.  Local newscasts are losing viewers to the Internet and other sources – even for breaking news.  Many stations rely too much on paid programming.  And others are outright political partisans without any regard for a good portion of their audience.

So if the McCain bill becomes law, if the Aereo model spreads to more cities, and if networks pull their primetime program breaks then there is a good chance the majority of TV stations will go bankrupt or will be forced into agreements with other local news outlets.  The problem is so many of these TV stations are owned by conglomerates that have had to finance the old and more expensive broadcast technology.

Either way, the local stations that survive will have to produce good local programming that pertains directly to their audiences.  And those audiences might not be categorized as cities but neighborhoods.  Whatever the model will be most of the old technology stations will not exist or will look totally different from today.

The TV stations that survive will do so by cutting costs.  The big costs are employees.  Already, older and more expensive journalists are no longer in the business.  As a result, journalists will probably become independent contractors selling their stories and segments back to TV stations.

That’s where local journalists can take advantage of a community’s need for credible news and information.  Again, it is hard to predict what will happen in each local market.  But these things are certain.

Each market will need strong investigative journalism to stand up and question elected officials and those in power.

Each market needs video content to accompany good journalism.

Each market needs journalists who will interact with the public and use content from the public that will be overflowing as communications technology improves.

Right now, journalists have the technology to undercut what local TV stations do.  Take a look at Tim Poole, a new age journalist who has covered events like the Occupy Wall Street demonstrations with smart phones by streaming them to computers and tablets LIVE.

What many citizen and entrepreneurial journalists don’t have is someone with technology protecting them.  Eric Schmidt and Jared Cohen, of Google fame, have penned a new book that future journalists should read.  One of their suggestions for journalists: find someone who can encrypt your site and protect your sources from governments and criminal enterprises.

Now it’s your turn.  What do you see and what do you want in this new media age?

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