Local stations have dominated the television business for decades, but their place in the media market is sliding. With a decline in overall viewership and dwindling advertising revenue, local stations may be forced to change their business models. Stations are scaling back their operations, cutting weekend programming and news staff.
According to Bernstein Research, ad revenue is expected to drop 20 to 30 percent this year. Broadcasting is also facing difficulties associated with the digital transition. Congress recently voted to push back the transition to June, meaning that most stations will be running two types of transmitters, adding substantial costs. Meanwhile, Nielsen estimates that as much as 5 percent of television households are currently unprepared for the move to digital broadcasts.
What really makes local stations nervous is that executives at some major networks, including CBS, are entertaining the idea of placing some of their shows on cable networks. Such a move could allow networks to gain a steady stream of revenue from subsriber fees. However, as CBS's chief executive, Leslie Moonves, notes, any move to cable would take place 10 years from now.
To cope with change, stations are increasing online content and sending content to mobile devices such as cell phones. While cuts in news staffs are common, some stations are expanding news programming with the hope that original content will bring in more revenue. Stations owned by NBC Universal are beaming content and ads into television screens in supermarkets, taxi cabs, and other new venues. (Read more)
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