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Sunday, January 25, 2015

Roundtable: The Future of Spot Broadcast from Some Old Pros

The one question that I often get from readers is where I believe the conventional broadcast markets will be several (7-10) years from now. Naturally, that is an almost impossible question given the rapid rate of change in the media world today. While I knew that no one person is going to get it right, especially your correspondent, I decided to ask several people whom I valued as sharp observers of the media scene and clever practitioners of the art of negotiation. All have been in the business for at least 30 years. I never worked with any of them under the same roof and I did compete against two of them from time to time. Each is still in the business but, even the youngest, will likely be retired in 7-10 years. To protect them and their remarkable candor, that is all I will say about them.

While we did not really sit together around a table, I will report in a format that assumes that we were:

Don--How do you think negotiation will change in the years to come?

Buyer #1--“Whenever you read about rules of negotiation or take a seminar concerning it, two things usually stand out--
1) Try to create a win-win situation where the station or interconnect is pleased and you and your client is as well.”
2) “Always be willing to walk away. This second point is key. For decades, we could always walk away from a radio station and we could usually buy around a TV station in any market. Sometimes, if a TV station were really dominant, we would be forced to buy a lighter schedule than normal but we had to give them something. Soon, and I cannot tell you when, we may simply not buy the medium period in a market. Recently, a longstanding client and I made a market trip to a DMA ranked somewhere between 80-110. We had not done it in at least 7-8 years. People were surprised and pretty happy to see us as we have continued spending in this small market when many national accounts have dried up. At one station, which is still a leader but with diminished numbers as all broadcast and cable players are experiencing, a sales manager would not budge on rates or meet any of our requests for promotions or other special features. My client simply said, “Fine, we just will not use TV here this year”. The sales guy said you can’t do that. It will kill your business. I mentioned what we do in network TV and told him that digital could make up the slack nicely. We left and the general manager of the station came running out coatless on a frigid day waving frantically. He apologized and said his young hot shot did not understand how the world was changing. We thanked him and my client held firm.  The digital team did a few things locally but we bought no TV. We were down 2.5% nationally but flat in this Podunk town."

    “Years from now, this may be the norm. We will do media mix much heavier on a market by market basis. If we cannot get the conventional people to make realistic concessions, we will not buy them at all.”

Buyer #2--You sound like Don beating the drum for market by market planning as he has for the last 30 years. It is not going to happen. Maybe a few small but hardworking shops will try to do it or the occasional mid-sized will, but no buying service on earth is going to waste time on that type of labor intensive approach. Once TV is approved they will execute. Also, you need client buy in to let you change a plan in mid-stream.  Few are going to give you carte blanche authority to change the plan on the fly. The idea is sound and fits the new world we may see in a few years, but it is just not practical.  The future is already set in stone. We will have fewer people and more work to do. A broadcast exchange could be the answer but not this.”

Don-- “Any other ideas on the future marketplace?”

Buyer #3--“We have heard about this for years but TV will become a much stronger Direct Response medium. A network sitcom may have a couch or a car in it. You click on the couch and order it and go back to the show. Or, click on a car and you can set up a test drive at a dealer near you. Some of this may be available to local advertisers as well. This could provide much needed revenue to the station. If things do not change they are in real trouble. Many that I deal with already have an appointment with the dustbins of history.”

Buyer #4--“The stations need to face reality. They talk to me as if it were 20 years ago. I too went on a rare market trip in 2014. My last call was at a station who had me watch their evening news and then the sales and general managers took me to dinner. The sales guy kept saying how great the station was and I was getting annoyed. I should not  have had that third glass of wine but when he asked me again how great the station was I said, “Yes, you are the best looking horse at the glue factory.” The GM roared but the sales guy was insulted. I know you need to talk up your product but, face it, local news is often horrible in the mid-sized and smaller markets. The GM drove me back to the hotel and we had a good laugh. He “gets it” but his staff does not.”

Buyer#2--“At some point, the network affiliates will just fade away. Look at the demographics of local news. It is old and increasingly downscale in so many DMA’s. An on demand model will probably emerge from the ashes. Also, it will continue to erode gradually although Neflix, Hulu and Amazon are certainly speeding the process up.”

Buyer #1--“What about Google and Apple? Google has lots of potential with You Tube and both companies have billions lying around. Maybe one will buy Viacom or Disney."

Buyer #2--“Why would anyone want to buy Viacom?”

Buyer#1--“For content and programming expertise.”

Don--any trends that you watch closely?

Buyer #2--“I am all over what upscale millennials are doing. They will be the leaders of tomorrow. The young women are particularly interesting as some do not even have TV’s. How do you reach them? Well, you cannot with traditional media. They are the group that will kill radio and put the last nail in the newspaper coffin. Yet, they have big buying power.

Buyer#1--“I agree but do not follow them all that much or as much as I should. They are several years ahead of the pack so if they have abandoned TV others will see how they are getting video and follow suit.”

Buyer #4--I still look at shrinking ratings. Sales suffer these days if we put too much on TV. And with all the other devices in play while the set is on, even our best creative does not break through as it used to.”

Buyer #3--“The economy. The millennials are largely broke. Lots of low paying jobs and big college debt. I do not see an easy road ahead for these kids.”

Don--are stations preparing for their demise or new role in the media world?

Buyer #2--“Nope. I ask even the old goats whom I have known forever. The network owned and operated stations get it but they say little to me at least. The smaller group operators are often in denial. For them, there is no mid-course course correction option in the cards.” (editors note--quite a statement!)

Buyer #1--“You get vague comments from a few but 90% have not come to terms with what is going on and, more importantly, what is going to happen.”

Buyer #3--“The poor bastards are dealing with debt service. They have to send the money every month to headquarters regardless of the media landscape. In radio, it is the worst. No, they are not reflective. They have to hit their tabs or come close each quarter. It has to be a nightmare. The smart ones know that TV and radio do not work as well as they used to even a few years ago.”

Buyer #4--“Those over 50 say just let me get to retirement with my job and pay intact. It is hard to oversee a dying enterprise.”

Don--how about each of you? How are you treated within your own companies?

Buyer #4--“Hey, I know I am a dinosaur but the CEO and I are joined at the hip. The young digitals in media and creative think I am a jerk but they are afraid of me. I try to reach out to them and I do learn from them. My days are numbered and I know it. I am not rich but I will be comfortable. The business has been good to me.”

Buyer #1--“We, as a company, are way behind the times. I am the progressive one if you can believe it. A few years from now, I will be there to shut off the lights. It has been one hell of a ride.”

Buyer #3--“Absolutely no comment.”

Buyer #2--“My influence is declining and I understand why. A couple of the young digital creatives have told me that I am more respectful than veterans they worked with at previous shops. I will play it out until the ax falls. It still is fun but, obviously, not like the “80’s.”

Don--this was great fun. Any parting shots?

Buyer #2--“Let’s do this again in 10 years if Don is still lucid.”

Don--Very nice!

Buyer #1--”We need a drink.”

Buyer #3--”Too early for me in my time zone.”

Buyer #4--“You never were much fun.”

Please note that the language was cleaned up a bit and fractured syntax was corrected up to a point. Also, a good amount of material was edited and may be used in the future in very targeted posts.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or place a comment on the blog.

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