Local TV

Will Scripps Station Users Pay to Play?

Group’s bold online paywall strategy may produce real revenue—or real exodus 7/18/2011 12:01:00 AM Eastern

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

March