Las Vegas Valley TV stations focus on local content, new delivery

For more than 60 years, local television stations have made a fortune by broadcasting news, sports and entertainment provided by national networks, supplemented by a limited array of local programs.

The arrangement, fueled by the bounty of local and national advertising and protected by restrictions on the number of local stations, has been a can't-miss moneymaker since the dawn of the TV age.

But that business model is fading in the face of new technology.

First, cable television spawned a seemingly endless stream of channels offering alternatives to network fare, and bleeding off viewers and the advertising dollars they bring.

Now local television stations may soon be left out in the cold as networks increasingly stream their programs directly to the viewer, using their own websites to bypass their once-crucial local affiliates.

About 26 percent of viewers now use online streaming as their primary access to television, 12 percent specifically to watch video programs, according to a study of 10 TV networks and media brands conducted for The Coalition for Innovative Media Measurement.

Although about 72 percent of consumers still see network programming on their televisions, the number of "digital only" viewers and "multiscreen" viewers who use a combination of TV, Web and mobile device is expected to rapidly grow as Net-ready TVs become increasing common.

SURVIVAL STRATEGIES

Should ABC, NBC, CBS and Fox decide to abandon their local affiliates, Las Vegas stations would be wounded, but likely able to survive by replacing lost network shows with local news and syndicated entertainment, say those who would be hurt most by the new business model.

"I'm going to focus on news because that's my only future," said Jim Rogers, owner of NBC affiliates in Las Vegas, Reno and Elko. "I can't program entertainment and compete against 200 cable channels."

Rogers said his stations will focus on local, state, and federal news that affects Nevada. A combination he expects to be profitable whether delivered over-the-air, online or through apps for smartphones and tablets.

Rogers said he will drop the syndicated "Wheel of Fortune" and "Jeopardy!" shows in September, replacing them with a new hourlong 7 p.m. newscast. Dr. Phil is also headed for the dustbin. When its run ends in September 2014, that talk show will be replaced with another hour of news, starting at 3 p.m., making for five solid hours of midday newscast.

Is there that much news in Las Vegas? It doesn't really matter. Local news is the station's best franchise - one that isn't dependent on the network.

If abandoned entirely by its network, KSNV-TV, Channel 3 would simply expand its locally produced programming, Rogers said.

Local broadcasters will have years to prepare for the coming major shift in revenue, however. Network affiliation involves multiyear contracts. Channel 3's affiliation with the National Broadcasting Corp. runs through 2018.

The trick, industry leaders say, is to be ready to go it alone.

"The challenge for local stations is too build their brand," said David Sandford, vice president of marketing and product management at TiVo Inc., a digital video recorder and streaming company in Alviso, Calif. "Many affiliates have a library of great local content."

Sandford said he expects a continuing rise in popularity of iPads and other tablet computers as preferred devices for a wide range of content.

"People want wireless devices in the home," Sandford said. "Once you discover how easy it is to watch TV on an iPad, it becomes a second television."

That means online revenues will increase, helping counter an expected fall in revenue from traditional broadcast.

Online revenues were $900 million in 2012 and should hit $1.1 billion this year and $1.2 billion in 2014, Virginia-based research company BIA/Kelsey forecasts.

Industry experts predict that over-the-air ad revenues will fall over time, though BIA/Kelsey says all local stations will take in $18 billion this year, down from $18.6 billion in 2012. However, broadcast revenues are expected to increase to $19.2 billion in 2014 as the national economy rebounds.

MULTIPLE VIEWING OPTIONS

VegasPBS, aka KLVX-TV, Channel 10, the local Public Broadcasting System station, is facing similar challenges of keeping up with new technology, but the national system doesn't have he same financial drive to skirt local affiliates.

Still, VegasPBS is testing new ways to raise revenues and distribute content.

"We call it program-hopping content (or) CORE (Create Once, Run Everywhere)," VegasPBS general manager Tom Axtell said. "Programs viewed over multiple channels. That is a major strategy for us. We also do a lot of productions for other nonprofits."

Those productions are a revenue source as well as a source of programming for webcast.

Axtell said he believes allowing viewers to access public television through multiple channels will let his station reach more viewers rather than fade away.

"What the evidence has shown us is that the expectation of viewership declining was wrong," Axtell said. "They are watching us more. It turns out that the availability of shows over more channels has increased (viewership)."

Axtell said VegasPBS doesn't offer viewers smartphone or tablet apps - the national PBS does.

The public station distributes its programming over-the-air, through its own website and through partnerships with sites such as YouTube.

VegasPBS's YouTube channel features PBS network programming from "Masterpiece Classic" to "Antiques Roadshow," as well as locally produced shows, including "Nevada Week in Review."

Changing viewer habits are also forcing PBS to develop different pledge drive and sponsorship strategies, building on the traditional way public stations are financed. Axtell recently posted an appeal for pledges on the station's YouTube channel during its winter fundraising drive.

As of Thursday, Axtell's YouTube appeal for funds had 65 views. It's too early to know how these new ways of distributing content will affect fundraising.

"We know that people will go through many doors to get the content, it's our job to make it easy for them," Axtell said.

Contact reporter Chris Sieroty at csieroty@reviewjournal.com or 702-477-3893. Follow @sierotyfeatures on twitter.