In a recent interview on Video Nuze, Bob Pittman, former President and COO of America Online and a co-founder of MTV, explained why he likes (and why his Pilot Group is buying) broadcast TV stations.
We have focused on small market television, where local advertising is the predominant revenue stream. We have done that because we believe national advertisers will slow down spending in economic downturns, whereas in local market when you’re dealing with a local retailer he still has to sell everything that’s on the shelf, come good times or bad. And we believe that in small markets, newspapers and yellow pages are getting wildly disproportionate share of the revenue, so we think there’s a great growth opportunity as well. In smaller markets the station’s coverage area nicely matches the advertiser’s reach goals. It’s also a fantastic free cash flow business.
He also says they are setting up “what are in essence ‘newspapers online.'”
Interesting that Pittman would see newspapers as vulnerable to attack by local broadcasters, while I think the situation is just the opposite. An explanation comes when he explains why he doesn’t believe online video will have a great effect on broadcast TV:
Well, you may occasionally watch a program online if you can’t get to your TV, or it wasn’t available, or you’re a little geeky, but as a replacement offering, I don’t think so. TVs are big screen, public viewing devices, computers are not. They’re 18 inches away and are private experiences, you don’t want people looking over your shoulder at it. They’re completely separate uses and devices, so to try to put the wrong kind of programming on either one limits your audience severely.
While he accepts that things may change if online video can be brought to the TV screen, he believes that the process to do that will be too difficult for the average consumer, severely limiting its impact.
The problem is that Pittman is thinking two years out when he should be thinking 5 or 10 years out. He’s right – the ability to watch tiny videos on a computer screen won’t hurt TV, but that’s simply a short-term development phase we’re going through. We will be able to watch good quality video on TV screens in the not too distant future, and that’s when the world changes for broadcast stations.
It’s good to know that Pittman has so much faith in what newspapers are currently doing online that he wants his stations to emulate them, but that too, is a phase. A large dose of video must be a part of any successful media company’s future, in preparation for the day when large capital investment in equipment and licenses is no longer necessary to bring consumers their “TV” news. TV broadcast stations can certainly participate, but in this battle I like the chances of newspapers.
One final quote, that should make anyone in the newspaper industry cringe:
People keep talking about Internet as if it’s competing with TV. But what the Internet has really done is replace print – things like yellow pages, newspapers and traditional research books. It’s also replaced communications – phone calls, voice mail. So when you hear these stories about the Internet replacing TV, I think they’ve got it all wrong.
Yes, people do keep talking…