Just a year after struggling to gain awareness for a new multicast channel, Lisa Guill saw an opportunity. Guill, the general manager of Gray Television's CBS affiliate KOLN Lincoln, Neb., had overseen the launch of a multicast outlet that is now a MyNetworkTV affiliate. Not much captivates people in Lincoln more than University of Nebraska athletics. Football is the cornerstone, but women's volleyball also has a surprisingly rabid following.
In December 2006, the Huskers had an NCAA volleyball tournament road game in Gainesville, Fla., that wasn't slated to air back home. Guill was determined to carry it on the multicast channel, but ran into obstacles. Without the resources to send a crew, she'd hoped to pick up a feed out of Gainesville, but apparently no one there was televising the match either.
Undeterred, she eventually was able to persuade the group running the in-house broadcast on the big screens in the arena to stream it on the channel. The station then used the Huskers radio broadcast for audio, matching it up with the video feed. Total cost: less than $3,000.
“It was the first thing that got our digital channel on the map,” Guill says.
That success is often cited by Gray president/COO Bob Prather as an example of the possibilities of multicast. Back in August 2004, Gray launched one of the country's first multicast channels, then a UPN affiliate, in Knoxville, Tenn. That was followed closely by an outlet in Lexington, Ky.
“They tend to be very aggressive at trying to come up with new things,” says James Goss, an analyst at Barrington Research who follows Gray.
Prather has been bullish on multicast since the Knoxville launch, as Gray—even with a portfolio in small-to-midsize markets—has served as a microcosm for the possibilities digital subchannels offer. He's nudged general mangers to exploit the real estate and not treat it as a weak stepsister.
The station group now has 40 digital channels. Most now carry CW, MyNetworkTV or Fox in markets where those networks aren't available. Outside primetime, the channels offer hundreds of hours a week of programming to fill a largely a blank slate.
And a la Nebraska volleyball, Prather has urged using as much local fare as possible; it tends to get overlooked and production costs are low. “At the end of the day, the only thing we control in our business is our local content,” he says. “We can't control what the networks do. And that's why we've got to stay on top of what's going on in these markets and what people want to see.”
Local sports are crucial. And Gray's station lineup, which includes some 17 markets with big-time college sports, is tailor-made for that. One aim is to air events that are ignored by the networks, while offering high school games live in smaller markets where they draw attention.
Eight stations carry dedicated multicast local weather or news channels; Gray has 10 NBC affiliates but has opted not to pick up NBC's Weather Plus network. Other subchannels repurpose newscasts from the so-called mother ship, or air live ones when a network sports overrun takes place on the primary channel.
“The local affiliates need to provide content to their viewers that they can't get anyplace else and that is local,” says Roger Sheppard, the general manager of WTAP Parkersburg, W.Va., who also oversees Fox and MyNetworkTV multicast outlets for a triopoly.
Only two Gray stations have turned to the burgeoning number of national networks offered for multicast. KOLO Reno and WOWT Omaha offer Universal Sports on multicast channels, though in both cases there is a local aim. The Reno DMA includes skiing hotbed Lake Tahoe, and Omaha has an active community in “Olympic sports.”
Looking more nationally, Gray has a deal in which 18 multicast stations re-air The Oprah Winfrey Show in primetime, while stations use barter arrangements for syndicated programming. Knoxville's multicast outlet landed The Office for next season. During the NCAA basketball tournament, CBS stations can air different games simultaneously on their two channels.
“We embrace opportunity,” says Wayne Martin, the general manager of WKYT, the CBS station in Lexington, Ky., and its CW multicast feed (a duopoly that breaks ground with both carried in HD). “In the television business today, if you're trying to do everything like you've always done, you're not going to exist too long.”
On the advertising front, Gray stations are taking dead aim at peeling dollars away from spot cable. The lower pricing (a multicast spot costs about a quarter as much as on a primary channel) has helped bring in some first-time TV advertisers, though revenues have been modest. Many deals include a package with a presence on the primary station, the multicast channel and Website.
“I wanted an opportunity to go to a client and say, if you're spending money on cable, you need to look at this,” says Chris Baker, the general manger at CBS affiliate WVLT Knoxville, which now has a MyNetworkTV multicast channel. “It does audience numbers comparable or higher than any cable channel that you may buy, and it's certainly more appealing locally.”
One advantage multicast channels bring is a relatively low cost to operate, with stations already having the infrastructure in place. In 2007, Gray said it lost some $900,000 with its multicast portfolio, with $7.4 million in revenue and $8.3 million in expenses. But executives have said—before the ad market cratered—that they expect to be profitable this year.
Prather told analysts that the multicast business was hurt when UPN folded, and 11 stations took on either The CW or MyNetworkTV. But in the process in some markets, MSOs used the opportunity to shift channel placement to the lesser-distributed digital cable.
Some 90% of Gray's retransmission consent deals expire over the next two years, however, and while Prather says he wants cash, he's hoping to also secure more favorable channel placement.
Over time, Prather believes technology will allow Gray to occupy four spots on the dial in DMAs—a primary station and three multicast outlets. And he's hoping to use some of the real estate to experiment with interactive TV, local VOD and digital downloads.
He reminds himself daily that the world is changing: He has a plaque on his desk that reads, “Even the most efficient dinosaur is still extinct.”
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