Stations Embrace Direct-Response, Paid Programs

Shows take up real estate previously available to syndicators

When Cash4Gold bought a 60-second direct response ad in this year's Super Bowl at the last minute, it became a symbol of how deep the advertising recession really is. In years past, Super Bowl advertising sold at a premium and no inventory was left within weeks of the big game.

In this economy, TV stations and networks are running more direct-response advertising—ads that offer an 800 number so folks can respond immediately—and paid programming. Both forms of advertising have been on the rise in the past year, and that means even fewer opportunities for syndicators.

“I think it can mean a difficult path for weekly [shows] and even some strips to get cleared,” says Bill Carroll, VP of programming at Katz Media.

“When we were at KTVK Phoenix, we did a lot of original programming on the weekends. What's replaced it has been paid,” says Phil Alvidrez, founder of Magic Dust Television, which produces the weekly syndicated half-hour NASCAR Angels. Alvidrez previously was executive news director at Belo-owned KTVK. “There's no identity for TV stations when it's just paid programming,” he says. “That's our biggest obstacle.”

No organization measures paid programming, but according to TNS Media Intelligence, revenues from direct-response advertisements have increased to $1.79 billion from January to September 2008, from $1.64 billion from January to September 2007.

In paid programming, also known as commercial leasing, TV stations sell entire blocks of time to advertisers for a flat rate. In the past, paid has aired on weekend mornings and overnight, but now paid is creeping into daytime, early and late fringe, and even primetime. Typical paid programmers include diet and exercise programs, cleaning products, and skin and makeup regimes. Religious programmers—such as Joel Osteen or Joyce Meyer—also pay for their time.

While prices vary, stations typically sell a half-hour of programming for $1,000. Blocks sold to religious programmers cost a bit less, between $800 and $900 per half hour, according to Steven Ference, VP of sales for Apex Media.

Apex offers stations a third-party trade agreement in which Apex sells a TV station's time to direct-response and paid programmers. Apex then opens accounts for the TV stations, which can use that money to buy goods and services.

“There always are expenses that never hit the budget that come up from time to time,” Ference says. “These accounts become an invaluable resource for stations to pay those sorts of bills.”

Still, paid programming isn't what brings viewers back to a station day after day. “Stations are looking at any reasonable means for their economic survival,” Carroll says. “But if a viewer finds a half-hour commercial every time they tune in, that breaks up the flow of viewing to that station.”

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