Advertisers value lower local rates

All of a sudden, large broadcast groups are getting aggressive in developing their digital subchannels as a new revenue source.

NBC’s Nonstop Network and ABC’s Live Well Network are the first two initiatives out of the gate to feed original content to the digital channels of local stations, which have the capacity to broadcast multiple digital channels in addition to their primary signal.

Because of limited resources, many stations use their digital channels for weather updates or reruns, or simply don’t use them at all. But for stations in larger markets, inexpensive lifestyle and news shows produced inhouse have proven to be magnets for local ad dollars. Frequently, advertisers are happy to see an alternative to both prohibitively expensive traditional TV advertising and print ads, whose effectiveness has fallen off.

“In terms of cost, they usually use local people, and they’re basically simple setups with a studio and a camera and a desk with a simple background,” said showbiz analyst Hal Vogel of Vogel Capital. “Local advertising would accrue directly to the station or the stations group.”

The digital channels are used more often in larger markets, because they rep more valuable real estate. That’s how the Peacock’s Nonstop Network started. WNBC New York launched a subchannel dubbed New York Nonstop, which began showing a mix of station-produced content, content purchased from NBC sister stations and rebroadcast NBC shows. According to Michael Jack, WNBC prexy and g.m., Nonstop was supposed to provide content to other outlets that WNBC feeds in Gotham — taxicabs, monitors on the PATH train. Now, NBC’s local media team is overseeing the creation of similar digital channels (in Washington, D.C., Los Angeles, Chicago and Philadelphia, to start) that will generate and share content among all of NBC’s 10 O&Os.

ABC has ambitious plans for national syndication of its digital Live Well Network. As of the fall the channel will comprise a block of 18 half-hour series, most of them home- and lifestyle-oriented. The Alphabet said Wednesday that five ABC affiliate stations owned by Belo Corp. would carry Live Well channel as of the fall. ABC has tapped a dedicated programming exec for Live Well: Former Lifetime and WCVB-TV Boston exec Peggy Allen will serve as veep of production.

The big question after broadcasters completed the federally mandated transition to all-digital telecasting in June 2009 was whether digital channels would amount to a business for local stations. Jack said he felt confident that a market as large as New York would be receptive to a hyper-local channel.

“With an audience of 21 million people, the right content will find the right audience,” he said.

CBS said at present it is not pursuing any local digital network initiatives. Fox did not immediately respond to a request for comment.

For Live Well, the impetus to create the digital net “really came as an outgrowth of a discussion we were having on the local side,” said WLS-TV prexy and g.m. Emily Barr. “The ABC-owned group kept talking about what to do with all this real estate we owned.” Barr says that rather than rerun ABC programming or go with a third-party option (MGM, for one, offers a 24/7 channel stocked with older movies to local stations to run on digital subchannels), the net looked to the programs its own local stations were creating for content in order to create the Live Well package.

“We thought, Couldn’t we create a channel where we create programming and share it amongst ourselves?” she said. “Our backbone was that we have all these local television stations that know how to produce programming.”

Local advertisers seem to welcome the proposition, as do some national brands. Live Well’s charter sponsors include General Mills and AT&T. NBC’s New York Nonstop inked a sizable deal with the Cosi sandwich chain.

Digital channel ad space is good for advertisers “who are looking for a kind of turnkey solution (and) looking to use the elements of guerilla marketing,” said Jack.

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