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Bring It On-Line

When students from an Oklahoma elementary school decorated a state capitol Christmas tree with old lotto tickets, it sparked a political firestorm. Coming so close on the heels of a hotly contested state lottery, the tree was deemed in poor taste.

Then the media poured in: The Associated Press, newspaper The Oklahoman and local TV stations jumped on the story. News on the tree—and its eventual removal—immediately went online, but ABC affiliate KOCO Oklahoma City went a step further. On the front of its Web site, the station streamed video of the tree of tickets and an interview with the offended official, state Rep. Randy Terrill. “This tree did not deliver Christmas joy to everyone,” said KOCO reporter Kevin Tomich, capping off the brisk, minute-long video clip.

Across the country, TV stations like Hearst-Argyle–owned KOCO are taking on newspapers, Web sites and all comers online—and challenging them with video and exclusive online newscasts. Indeed, many stations say they are just beginning to flex their broadband muscles, offering rich video clips of dramatic news and displaying real-time traffic reports and weather by a local meteorologist.

Viacom is relaunching all of its CBS station sites with prominent video and daily lunchtime Webcasts. The Fox Television Group, under new management, plans to expand local news online and plunge into wireless products, such as alerts on cellphones. Hearst-Argyle Television’s station Web sites feature video players embedded on the home page and allow users to create virtual newscasts from a video library. Three Washington stations are experimenting with video podcasts, short programs for playback on computers and MP3 players.

“Broadcasters finally understand that their market share is shrinking and their ability to grow revenue is limited,” says station consultant Jerry Gumbert, managing partner of Dallas-based Audience Research & Development.

The market for online news is exploding. Twenty-nine percent of Americans say they go online regularly for news, up from virtually zero a decade ago, according to the Pew Research Center. The migration has caused tectonic shifts across media sectors, shrinking the audience for TV news—both national and local—and sending shockwaves through the newspaper industry, which has seen readership tumble sharply in the past decade. According to the Pew study, 71% of adults 18-29 say they get their news online, yet only 46% say they regularly watch local TV news. In the early 1990s, 75% of Americans said they watched local news.

TV Stations’ Edge

News has never been cheaper or easier to find. In an instant, a hunt on Google or Yahoo! search engines calls up headlines from bloggers, networks, newspapers, magazines and countless sites. For all their losses, newspapers have moved aggressively on the Internet, drawing new readers and attracting new advertising revenue, particularly from classified ads. Online-community site Craigslist has become a top site for classified ads, and founder Craig Newmark is mulling a news service of his own.

By 2009, more than 70 million Americans are expected to have high-speed Internet access, according to Kagan Research. As technology improves and more people upgrade to broadband services—an ideal environment for video clips—TV stations think they have an edge. Thirty-second video clips and exclusive Web programs are certain to beat the competition, they say. “TV stations have assets to gather news 24/7,” says station adviser Seth Geiger of consulting firm SmithGeiger. “Now they need to take advantage of delivering news 24/7.”

Advertisers are leading the shift, moving away from traditional strategies and pouring millions of dollars into the new platforms. They spent $12 billion on online advertising in 2004. That was less than TV’s roughly $60 billion, but online advertising has the momentum. By 2009, it will surge to $25 billion, according to investment firm Merrill Lynch. Leading the way are blue-chip companies such as Procter & Gamble, Mitsubishi and Toyota, which have cut back on TV spending in favor of new platforms, including the Internet and cellphones.

The early sales efforts of local newspapers have paid off: Of $2.7 billion spent on local online advertising last year, newspapers nabbed $1.19 billion, and TV stations got $119 million of the ad pie, according to media-research firm Borrell & Associates.

For now, the power of a hometown newspaper’s brand is a big draw online. “The newspapers have a little leg up, but we are extremely competitive,” says Ric Harris, executive VP/general manager of digital media and strategic marketing for NBC Universal’s TV-station group.

Although newspapers’ text and still photographs are easy to convert to Internet content, newspapers have acted largely out of desperation: Print advertising rates are falling, and circulation is thinning. From 1992 to 2002, the number of Americans who regularly read a daily newspaper fell from 75% to 63%, according to Pew.

Making matters worse, the classified business, a newspaper’s economic lifeblood, is being challenged by Internet companies. But newspapers’ online efforts have paid off: In October, their combined Web-site ratings were up 11% over last year, to 39.3 million unique visitors in October, says Nielsen/Net Ratings.

Best Weapon: Video

Now TV stations are jockeying for a better position and innovating. The biggest threat of all may come from Google, whose gross online revenue is expected to climb to $6.1 billion this year, according to Wall Street estimates. Meanwhile, Media General, which counts 26 TV stations among its assets, attracted $13.9 million in online revenue last year, and newspaper and TV-station owner Belo Corp. recorded $31.11 million.

To compete, TV stations are playing up their best weapon: video. When former Iraqi President Saddam Hussein makes a court appearance, news junkies want to watch the clips and see his outbursts. Locally, when traffic snarls in Los Angeles or Atlanta, anxious commuters check to see how bad the tie-ups are before leaving work.

Broadcasters are also experimenting with interactive features, such as podcasts and custom online newscasts. When severe weather hits, meteorologists keep blogs to disseminate reams of information that don’t make it on-air. NBC affiliate WHO Des Moines, Iowa, created an animated character, dubbed a “newsbot,” to host its hourly Webcasts. “Stations are trying anything to capture users when they are at work and away from their TV sets,” notes Cory Bergman, co-founder of local-TV blog

Stations are using video to tempt advertisers as well. A local eye surgeon, for instance, can sponsor the health section of a Web site and display video testimonials from pleased patients. Stations can also produce and stream online commercials. “There are opportunities for local advertisers who don’t buy television to buy online,” says Jonathan Leess, president of the Viacom Television Stations Digital Media Group.

Nationally, broadcast and cable networks also are ramping up online efforts. Since November, NBC has streamed Nightly News online at 10 p.m. ET and is adding Meet the Press and segments of Today. MSNBC and CNN have increased online video. ABC plans an afternoon online version of World News Tonight.

On Election Day last month, WCBS New York streamed live news on its Web site for two hours during prime time. Reporters filed dispatches from across the region and interviewed officials. A writer from alternative paper New York Press blogged from the station’s newsroom. Star anchors Roz Abrams and Jim Rosenfield directed the online coverage.

“This is a time to experiment,” says WCBS Senior VP of News Diane Doctor. “We have great content and production capabilities, and we are looking for opportunities online.” The station recently added a Web-only sports wrap-up show, Sports Monday.

“In an on-demand world, [the Internet] could turn out to be the main revenue stream,” says Viacom’s Leess.

Two major platforms, Internet Broadcasting and World Now, dominate the business for local news on the Web. Internet Broadcasting, a privately held company founded in 1997, operates 73 local sites for major station groups including NBC, Post-Newsweek and Hearst-Argyle. It provides content and national advertising in return for a cut of the profits. Internet Broadcasting producers are on-site at nearly every station, attending all news meetings and working closely with reporters and producers.

Its main competitor, World Now, powers 200 broadcaster Web sites, including Meredith Broadcasting’s and Raycom Media’s, and provides Internet technology, streaming video and some advertising, such as local auto classified. Stations on World Now employ their own Web producers and editors. The company’s newest product, dubbed The Video Producer, enables a station to record and stream its video within seconds.

Local Content Wins

When news breaks, online traffic soars. In September, for example, when Hurricanes Katrina and Rita attracted national attention, Internet Broadcasting sites averaged 12 million unique users, surpassing and Google News, according to Nielsen Net ratings. World Now Web sites notched 6.9 million. Using such platforms allows station groups to standardize content and advertising.

“This is not just a TV station anymore,” says KSDK St. Louis News Director Mike Shipley. “Everyone recognizes this is the future business for us. It is not just on the sidelines.”

As cable operators push video-on-demand, about two dozen stations are making their newscasts available for playback on cable. Others—including ABC- owned WLS Chicago, NBC’s WMAQ Chicago and Gannett’s WUSA Washington—are experimenting with podcasts.

“People today want their news and information when they want it, and they don’t want to wait,” says WLS President/General Manager Emily Barr, who owns two iPods herself. “It is important for us to recognize there is a shift going on and experiment.”

Still, news directors concede that getting a newsroom to suddenly feed a new electronic beast can be a challenge. Some reporters are reluctant to break news online, and producers fret that posting video online discourages people from watching the newscast. And, with crimped budgets, some staffers resist taking on even more duties.

Ten years ago, says station consultant Gumbert, a reporter might shoot a daily story, appear on the 6 p.m. news and freshen the package for the late news. Today, he says, “they still do all that, plus cut a piece for the station’s news partner, make sure the network gets what it needs and write a Web article, too. As managers, we have misjudged the amount of time repurposing material takes.”

One solution is to focus on the station’s core mission and forget about fancy new toys like podcasts, says Ron Loewen, VP of strategic development for TV-station owner Liberty Corp., where he researches Internet usage and habits.

What users want, he says, is the very local content they can’t get from national sites, such as breaking news, traffic and weather.

“Local content is the only currency you have,” he says. “It has to be posted and updated religiously.”