Indie Networks Show Value for Ad Buyers, Despite Obstacles - Broadcasting & Cable

Indie Networks Show Value for Ad Buyers, Despite Obstacles

Carriage funnel is putting the squeeze on more hopeful channels amid an intense competition for eyeballs
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It’s not a fun time to be an independent cable and satellite TV network, given the skyrocketing supply of programming and consolidation among multichannel video programming distributors.

Consider RFD-TV. The network that programs to predominately rural communities scored a major victory last October when Charter rolled it out across its entire cable system footprint and Mediacom gave it expanded positioning. RFD had become the ninth-fastest-growing cable network in the country. But then on Jan. 31, the roof caved in when Verizon FiOS dropped the network from its entire distribution system, costing RFD some 3 million viewers.

“We lost 6% of our total audience, including a big chunk of viewers in New York, Pennsylvania and Maryland,” says RFD founder and president Patrick Gottsch. “Losing FiOS distribution has created another tremendous challenge for us. I’m proud of who we are and the audience we are serving, but being an independent means we are at a disadvantage because we have no clout.”

Dave Campanelli, senior VP, director of national television at Horizon Media, says the marketplace has changed markedly over the past decade. “Today, new network start-ups, especially independents, can’t grow as quickly as they once could because of all the networks competing for viewers,” he said. “It’s a much tougher road.”

However, Campanelli says many independent networks, an assortment that includes the likes of Ovation, Pivot, Fuse, Reelz, El Rey and others, can bring value to brands and be part of their TV buys. They just have to continue to put on programming that draws viewers on the cable and satellite systems they are still being distributed on and be able to explain to brands why their audiences are valuable to them.

“We’ve never been shy about buying smaller, independent networks for our clients,” Campanelli says. “While you can’t overspend on them, if they can offer value and a segment of audience a brand can’t reach buying a mass general audience, they can serve a purpose.”

Campanelli says a typical mass cable buy by a major brand could include some 20 networks, “so we are always looking beyond the top tier to fill in with a supplemental audience.”

Jason Maltby, director of national broadcast television at GroupM’s Mindshare, agrees independent nets can fill a brand’s need with unduplicated reach and an audience they can’t get anywhere else. “When you buy the larger cable networks, there is a lot of duplication, so independents can be used to fill in,” he says.

One key element is for independent networks to make a strong case to the agencies that their audiences are worth reaching, even if they are small.

RFD’s Gottsch notes many of the network’s rural, farm belt viewers own as many as four pickup trucks. That has motived both Chevy and Dodge to jump on board. And because RFD has a median age audience of 75, oldest among all cable nets, it gets lots of pharmaceutical advertising. But RFD and its national ad sales rep, Sony Pictures Television, haven’t been able to convince Ford to promote its truck line on the channel.

Gottsch says RFD needs to be in more urban markets to grow its audience and become attractive to a broader base of advertisers. He believes that in each of those urban markets there is an audience segment that will watch his network. But cable operators Comcast, Time Warner and even Bright House won’t give RFD a chance.

Clearly RFD is hoping the government approves Charter’s pending acquisitions of both Time Warner and Bright House, since the network is carried in all Charter markets but only in 4% of Time Warner’s and 3% of Bright House’s.

To help motivate the FCC to approve the Charter-Time Warner merger, RFD is encouraging viewers and potential viewers from around the country to write letters in support.

If an independent network has passionate viewers, it’s smart to get them involved in trying to help convince cable operators pondering a network’s removal to keep them on the air. Asking viewers to contact the cable operators to apply pressure is a viable option.

“Nielsen is expanding its measurement base and that could be another step in helping some of these smaller networks show they have value, but it all starts with the consumers,” Maltby says. “They have to let the cable operators know how they feel.”

Another independent channel that was dropped by FiOS is the Outdoor Channel, which is now part of the Outdoor Sportsman Group that also includes Sportsman Channel and World Fishing Network.

One thing that can help independents get better noticed by brands and their agencies is more clout. In the upcoming upfront, the trio of outdoor networks will be going to market with distinctively different programming but with a combined audience of more than 80 million households.

Jason Brist, executive VP of ad sales for the Outdoor Sportsman Group, says combining all three networks will offer brands more scale.

“We are not a mass-market, tonnage ad buy,” Brist says. “But these networks each have a very desirable audience that is not a general-market audience and one that buys high-ticket items. We also have more unduplicated homes.”

Brist says not only will this upfront be the first time the three nets are selling together, but the sales operation has been reorganized so that sales execs from any of the three channels can sell ads on any of the properties, including 15 print magazines and 19 websites.

“A year ago it was tougher because we were basically selling each network separately,” Brist says. “Now we are selling all three and even though each network has its own identity, we can sell packages at scale.”

Brist acknowledges that outdoor lifestyle programming is very competitive on cable, citing competition from group-owned networks including Discovery, History, Nat Geo and A+E. But he believes bringing episodes of Duck Dynasty on Outdoor Channel to anchor Monday nights and surrounding that show with new original programming will draw more of a national audience to the network.

Outdoor Channel acquired the syndication rights to air the first six seasons (71 episodes) of the A&E series. For smaller networks, acquiring rights to air hits from larger cable or broadcast networks can increase audiences significantly. CNBC, for example, acquired the rights to air ABC’s Shark Tank repeats and that is now one of the most-watched shows on the cable network.

“We’re never going to draw a larger audience than ESPN, but we are an alternative, a less-expensive male audience brand for marketers,” Brist says.

Horizon Media’s Campanelli says the Sportsman Group’s decision to package and sell all three networks together in the upfront, with larger audience scale overall, is a “smart move.” He agrees with Brist that “they are not going to replace ESPN as a target for male sports viewers, but they can be a supplement in many brands’ buys.”

While the future of the independents won’t improve if the cable and satellite operators want to keep shedding lesser-watched networks, media agency execs see a possible light at the end of the tunnel. That would be the growth in the use of programmatic ad buying, or in the shorter term, a lesser reliance on ratings per se and more emphasis by brands being put on viewer targeting.

“If it’s no longer just about ratings than some of these smaller independents have a chance,” says Billie Gold, VP and director of buying and programming research at Dentsu Aegis Network. “If programmatic becomes the predominant way brands and their agencies buy in the future, these independents can survive and some can do very well.”

Campanelli says “a silver lining for these independents is the more the industry uses data beyond ratings to target audiences, the more these smaller networks will have the ability to differentiate themselves and stand out. Looking beyond the ratings can unearth value and make them become part of large brand’s buy.”

Maltby believes “ad dollars will always follow eyeballs,” but if these smaller independents continue to prove they have value to advertisers and have viewers worth reaching, they can survive.

It’s not a fun time to be an independent cable and satellite TV network, given the skyrocketing supply of programming and consolidation among multichannel video programming distributors.

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