Will Scripps Station Users Pay to Play?

Group’s bold online paywall strategy may produce real revenue—or real exodus

By Michael Malone -- Broadcasting & Cable, 7/18/2011 12:01:00 AM

If the future plays out as Scripps President/CEO Richard Boehne hopes, users of the station sites in his group will be coughing up a little cash to access premium content in the coming months. The 10-station group is testing multiple models that would see users pay to access unique enterprise content, and Boehne hopes to debut the initiative at some of the stations around the end of the year. While commercial broadcast television has long prided itself as an ad-supported free service for the community, Boehne is adamant that standout stations can get cash for content.

“I really believe this environment of free content is not sustainable for the high-value content we produce,” he says. “Long-term, it’s not a sustainable model.”

The recent recession pushed stations to find revenue in all corners of the market, through initiatives as varied as basketball tournaments and dating services. Yet Scripps is looking to put a price tag on the most elemental piece of a station’s raison d’être: its content. It may be an uphill climb.

“A quasi-paid model is not beyond reach,” Steve Ridge, president of television at Frank N. Magid, says via email about the concept in general. “It is simply beyond tradition and the current mindset in most [TV station] organizations.”

If Boehne sounds like a newspaper exec when talking about paywalls, it’s because he is. In addition to the Scripps stations, which include WXYZ Detroit and WCPO Cincinnati, he oversees papers in 14 markets from Scripps’ Cincinnati base. There aren’t many examples of successful paywall models in the newspaper world; local papers with such a strategy include the Arkansas Democrat Gazette, Albuquerque Journal and Newsday (N.Y.), and global brands such as The Wall Street Journal and The New York Times. Scripps’ Commercial Appeal (Memphis, Tenn.) is testing a paid model too.

It’s rare in local TV. Newsday parent Cablevision, for one, charges $4.95 a month or $48 a year for those who do not subscribe to its cable service to access its News12.com. “There are not a lot of good paid models out there that are working,” says Boehne.

Stations made $450 million on the Web in 2010, reports BIA/Kelsey, which forecasts that figure doubling by 2015. Borrell Associates forecasts station Web revenue growing 17% in 2011.

Ridge says Magid is working with a number of media outlets, including TV stations, to examine the viability of paid content. “Our in-depth research with consumers to understand the threshold for defining ‘premium’ makes it clear that few, if any, stations are currently in a position to charge for virtually anything,” he says. “A more thoughtful approach, realignment of resources, and further investment will be required to create unique content that hits the sweet spot.”

Boehne is shooting for that sweet spot. He won’t offer details about what may be considered premium for competitive reasons, but does say things like “analysis and color commentary” may find themselves behind the wall. “We’re testing several concepts right now, but the guts of it is real enterprise reporting and original content,” he says.

"We won't take what we do today and put it behind a pay wall-that wouldn't make much sense."

Boehne has been pushing for such a strategy for some time. Speaking at the UBS Media and Communications Conference in December, he said of Scripps' newspaper and TV content: "We're going to experiment much more aggressively to try to create these models and take that high-value premium content and derive much more revenue from it than we do today."

In the FCC's recently released "Information Needs of Communities" study, Boehne said the key to such a strategy is sterling content that's exclusive in the market. "Our job depends on great original content and agenda setting," he said.

While some salute Scripps, its ambitious pay-to-play plans have some industry watchers shaking their heads. "I'd be very surprised to see any significant movement among broadcasters to put up pay walls in the next five years-it's just not the right model for broadcasters," says Bob Papper, Hofstra University journalism chair and director of the annual Hofstra/RTDNA local news surveys. "The last thing broadcasters should be doing is looking to newspapers for business models."

Gordon Borrell, CEO of Borrell Associates, says there's simply not much of a market for paid local content. "I don't see any data that supports local content being wallet-worthy," he says. "Research shows that consumers don't value local content enough to pay for it."

Boehne says the venture will probably lose money at the start, but hopefully will pay off long-term. "I think we'll regret it if we look back in a few years," he says, "and realize we weren't more assertive on these platforms."

E-mail comments to mmalone@nbmedia.com and follow him on Twitter: @StationBiz