Hearst Plots Future3/03/2006 07:00:00 PM Eastern
Few people have felt the recent market gyrations of local TV more than Terry Mackin. As Executive VP of Hearst-Argyle Television and Chairman of the NBC affiliate board, Mackin’s main objective is to grow ratings and revenue in an increasingly challenging environment. Two networks—The WB and UPN—are folding. Two more—The CW and My Network TV—appeared. Once-exclusive product is moving onto the Internet and Apple’s iTunes. Mackin, who also heads the NBC affiliates “futures” committee on new digital initiatives, talked to B&C’s Allison Romano about how his stations and others can get ahead.
The CW signed up more affiliates last week, and My Network TV representatives are out pitching station owners. Your company has three stations that are in the running for at least one of these networks. How are you evaluating the deals?
We are interested in both, but we haven’t made any decisions yet. The challenge for both of them is going to be carving out a mass demo in a very competitive area. That is what The WB and UPN faced, too. Fox probably has the best track record of creating a niche brand with a younger-skewing audience, as evidenced with the Fox Network.
Both of these networks are driven by very capable Hollywood producers. The expectation is that they are gong to get it right, and there is a lot of money at stake. We’ll draft off of one or both of them; we’re looking forward to that.
A lot of stations are also considering going independent. Is that a viable option?
Definitely. We have a pure independent in Tampa [Fla.] already and, in Kansas City [Mo.] and Sacramento [Calif.], if we were independent, we have big news machines across the hall [at our sister stations] and strong localism. There is a lot of excitement at the station level right now; we could expand news and local community programming. We could produce that programming with some reasonable economics.
The broadcast networks are distributing their shows for free on their Web sites and Google, and selling them through video-on demand and iTunes. NBC even offered its new drama Conviction on iTunes before its on-air premiere. How threatening are these efforts to affiliates’ business?
The Conviction deal was driven by the marketing department at NBC and presented to the NBC affiliate board as a marketing strategy. There is no economic benefit for NBC—it is free. We’re hoping it will attract some attention to the show’s launch, but it was a one-time-only deal.
It is not a precursor for doing it with other programs, unless they come back with a new idea. With NBC, we will listen to proposals, and we are looking for common ground. My No. 1 goal is to reach a deal. The network is not benefiting from the power we have in local markets to promote these portable devices.
What would be a fair deal?
I don’t think any of the networks have come up with the model yet, but there is a lot of discussion. They are starting to see that there is a benefit to working with the affiliates. We should be a partner with them, and we should have a participation in that revenue on all portable platforms.
For example, NBC and its affiliates partnered on NBCOlympics.com, and it set records for page views and unique users. It was a success and created revenue opportunities for owners like me. I am going to have to sell a lot on iTunes to match the hundreds of thousands of dollars I gained from the Olympics site.
Retransmission consent is another hot topic for station owners right now. People were amazed by your new EchoStar deal that pays 50 cents a subscriber. Can you get the major operators to pay?
Local broadcasters have been patient but consistent in saying there’s a large value cable operators and satellite companies should place on local content and the value we deliver. They have demonstrated willingness to pay for other brands, like ESPN. We should receive something commensurate with the value of the audience we contribute. There are new players coming in now with the phone companies, and when a new player enters, they want the best programming, and they recognize they can’t do it without local broadcasters. I think retransmission consent is fair and equitable and is going to create a sustainable revenue stream for broadcasters, which is good for the economics of our business.