Magna Global Pro Touts A Multicasting Future
By John Eggerton -- Broadcasting & Cable, 2/1/2004 7:00:00 PM
When Brian Wieser talks TV, ad agencies representing $30 billion-plus in media billings listen. What he said last month in a research report is that, armed with multicasting must-carry, local broadcasters could be the multichannel force to be reckoned with.
Given the amount of cable real estate they would control," says Wieser, the new—since October—national TV analyst for media negotiator Magna Global. But they will need that extra real estate: He also sees CPMs continuing to fall, with advertisers the obvious beneficiary.
Stations will have more inventory to sell and a greater ability to target audiences than they have in the past, he says. Their gain will be independent cable networks' loss, though, unless those networks can manage to morph into multicast channels and strike deals with broadcasters to get some of that must-carry space.
Sean Cunningham, president and CEO of the Cabletelevision Advertising Bureau, describes the report as "both very thought-provoking and very speculative."
Indeed, Wieser is looking down the road apiece, saying that any new multicasting landscape won't come into view, if at all, for another five to 15 years. He cites the fact that there is yet no decision from the FCC, not to mention the guaranteed appeals that will take whatever decision is made to the Supreme Court.
Cunningham agrees. "Since this is bound to be very hotly contested legislation that will likely take years to sort out and implement, the real advertiser implications depend on decisions that haven't yet been made."
Even so, Wieser advised his agencies to start checking out their options now, saying there should be plenty of new ad opportunities in a digitally sliced and diced broadcasting marketplace. That means a lot more than just buying ad time.
TVB President Chris Rohrs said that, if the FCC adopts dual must-carry, "we share the sense that there is a big opportunity. But the challenge is to do it without cannibalizing the audience and the revenue base."
Broadcasters' new channels, Rohrs says, "must be a little different from the mother-ship channel."
Wieser sees multicasting as an opportunity for advertisers to more narrowly target consumers and to invest directly in the new programs needed to fill the digital channels.
Such investment, he says, could come in the form of supplying infomercials for a new digital channel, taking a stake in someone else's multicast offering, or developing networks/channels and pitching them directly to stations. He cites Coke's $15 million investment in digital cable net College Sports TV as a possible model, pointing out that Coke is positioned to integrate its marketing efforts with the channel and to benefit directly from its success.
With must-carry protection, Wieser says, multicast channels provide a "more compelling business case" for advertiser-created nets than digital cable does. As examples of advertiser channels, he suggests an automobile-enthusiast channel created by a car company or a baby boomer channel backed by a pharmaceutical company.
Although some on the cable side have argued that they see no viable multicast business models beyond infomercial-type programming, Wieser doesn't see it that way. "Broadcasters could either strike deals to carry prefab networks or repurpose existing infrastructure, particularly news operations. There will be room for highly targeted, low-cost, creative programming."
Another potential beneficiary of multicasting could be the traditional broadcast networks, at least initially.
Wieser outlines one scenario this way: Many basic-cable networks would have to be dropped for must-carry broadcast channels; the expectation of low ratings on those channels would mean broadcasters would offer low-cost programming; some of that programming would be infomercials and home shopping; the reduction in entertainment programming would decrease basic-cable viewership; viewers would migrate back to broadcast networks, "which reclaim their status as the primary providers of entertainment programming," at least temporarily.'
Citing a kids entertainment multicast network proposed by DIC Entertainment, Wieser says the company realizes that, so long as there is must-carry, such a network, even "cobbled together" from station groups would, have enough households-some 65 million—to garner "significant" advertising revenues.
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