Local TV: Changes and Constants

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Local TV Changes and Constants

• Television Bureau of Advertising
• Bear Stearns
• Jan. 28, 2005

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The Advertising Marketplace According to Coen
2004 (prelim) - Millions of Dollars
BROADCAST TV Four TV Networks 16,458 Syndicatio
n 3,949 Spot 25,613 Total Broadcast 46,020 CABLE
TV Cable Networks 15,628 Spot
(local) 5,441 Total Cable 21,069 Total
TV 67,089 DIRECT MAIL 52,240 NEWSPAPER 46,935 RADI
O 19,779 YELLOW PAGES 14,035 MAGAZINES 12,121 INTE
RNET 7,062 OUT OF HOME 5,790 BUSINESS
PAPERS 4,094 MISCELLANEOUS 34,554 GRAND
TOTAL 263,699
Source Prepared for Universal McCann by Robert
J. Coen Universal McCann
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Local TV is Changing

• Digital/High Def/VOD
• Broadcast... 1,344 stations digital websites
  EDI
• Cable... ownership consolidation interconnects
  insertable nets EDI
• DBS growing... 19/23158 markets with local
  Station Carriage
• Measurement... TVS FUSION LPM PPM
• Fragmentation

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Radio is Changing

• Internet Radio
• Satellite Radio
• Formatting experiments
• PPM?
• IPod

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Newspaper is Changing

• Internet search and websites threaten classified
• Declining readership
• Section readership... fragmentation
• Free dailies
• Subscription-count issues

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The Internet is Changing

• Search grows... and grows
• Rich media
• Convergence
• IMing
• Wireless access

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Change Agents
Technology

• Digital... HD
• Internet, Games, Search, Messaging
• IPod
• DVR
• Hand-held wireless devices

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More Change Agents
Process/Regulation

• Media Audit
• Sarbanes-Oxley
• Communication Planning
• Branded Entertainment (product placement)

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Is Local TV Still Relevant?
Some key questions...

• Is targeting still important?
• Do todays advertisers need to be agile and
  flexible?
• Is Accountability a priority?
• What about Reach and Impact... important?
• Is Value a key driver?

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Yes, Yes, Yes...

• Local TV, it seems, still fits Advertisers
  needs.

• Targeted
• Flexible
• Effective
• Affordable
• Accountable
• But What About the Consumer?

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Still a TV-Centric World

• The American consumer faces a dizzying range of
  media choices each day, most voluntarily, some
  not. The personal media package we each
  assemble is increasingly complex and changeable.
• Even so, Television remains the foundation of
  consumer media usage.

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Media Usage/New York DMAAdults 25-54
Reached Time Spent Total Yesterday
Reached Yesterday Hours of () Yesterday
(Hours) Yesterday Hours
Television 90.5 8,317,024 3.99
33,184,927 54.44 Newspapers 65.9
6,056,264 0.45 2,745,506 4.50 Radio 80.2
7,370,446 2.21 16,288,685
26.72 Magazines 47.7 4,383,669 0.24
1,037,468 1.70 Internet 58.9 5,412,958
1.42 7,695,422 12.63
...Communication Power!
(Note Reach and Time Spent data is national.)
Source TVB Media Comparisons Study, 2003
Demographics USA, 2004
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Think About the Politicians...

• Rich (2 Billion )
• Smart (Specialists/Consultants)
• Desperate (No 2nd Place)
• Accountable (Overnight Polling)
• Whatever It Takes (Air Guard/Swift Boats)
• Ruthless Master Marketers

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Political Spending Jan. Through Oct. 2004
Presidential/Federal/State, Local/Issue (000)
Network Local Spot TV Cable
TV Radio Newspaper Internet
1,276,300 24,500 89,000 51,000 7,100 88.2
1.7 6.2 3.5 0.5

• Almost 90 of political dollars went to Spot TV.

Source TNS Medial Intelligence/CMR
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Spot TV Provides Politicians with Power
Precision
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Geo-Targeting Leverages Communication Power
Toyota Camry
The best 1/3 of the US indexes at 151 The best
age demo only indexes at 101
Source RL Polk Co./MRI
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ROI and Local Market Television
Why Local TV improves ROI
The formula...

• High-potential markets... Geo-Targeting.
• Demo-Targeting.
• Efficient program mix.
• More weeks of activity... continuity.
• Localism and convergence.
• Sight, Sound, Motion, Emotion.
• ...ROI Home-Run!

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Comparative Values in New York Television
Local TV maximizes the targeting potential of
the medium But not all Local TV is the same!
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New York DMATotal Adult 25-54 Ratings
LocalCommercialBroadcast 11.5
Cable 10.5
PBS 0.4
Source Nielsen Nov04 New York Su-Sa 6A-2A Total
DMA
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Hard-Wired Cable
1.4
Hard-Wired Cable 9.1
LocalCommercialBroadcast 11.5
PBS 0.4
Source Nielsen Nov04 New York Su-Sa 6A-2A Total
DMA / Hard-Wired Cable
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Cable lessnon-New York Interconnect homes
3.5
LocalCommercialBroadcast 11.5
Hard-Wired Cable 5.6
PBS 0.4
Source Nielsen Nov04 New York Su-Sa 6A-2A Total
DMA / Hard-Wired Cable
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Cable lessPay Cable Networks
Encore, HBO, Cinemax, Showtime, Starz The
Movie Channel
0.7
LocalCommercialBroadcast 11.5
Ad-Supported Hard-Wired Cable 4.9
PBS 0.4
Source Nielsen Nov04 New York Su-Sa 6A-2A Total
DMA / Hard-Wired Cable
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Cable lessNon-Insertable Interconnect Networks
LocalCommercialBroadcast 11.5
1.3
New York Interconnect 3.6
PBS 0.4
Source Nielsen Nov04 New York Su-Sa 6A-2A Total
DMA / Hard-Wired Cable
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Fragmentation Run Wild
3.6 41 Networks 0.09 Avg. A25-54 Rtg.
7,932 Adults 25-54 out of 8,813,000!
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Top 200 Programs in New YorkAll Dayparts by Rank
Program Broadcast Cable Pay Rank Stations Networ
ks Cable Total

• 1-25 25 0 0 25
• 26-50 25 0 0 25
• 51-75 25 0 0 25
• 76-100 26 0 0 26
• 101-125 25 0 0 25
• 126-150 26 1 0 27
• 151-175 22 1 0 23
• 176-200 28 0 0 28
• Total 202 2 0 204
• 99 1 0 100

Source Nielsen Media Research, Galaxy Report
11/4-12/1/04, Ranked by total TV DMA HH Rating
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Comparative Values

• Network Cables value proposition Targeting and
  low CPM
• Exact opposite is true in Local TV... Cable CPMs
  are much higher than Broadcast. Why pay more to
  get less??
• Value equation rests on the right s and the
  right pricing, for the right product.

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Comparative Valuation Tool

• TVB has created analytical tools for advertisers
  to measure the comparative value delivery of
  Broadcast and Cable in Local markets.
• For local market advertisers, Broadcast TV is a
  demonstrably better value than cable.

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Cable Rate Estimator
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Broadcast Issues Going Forward

• Managing the digital transition.
• Electronic connectivity with customers... the
  Business process.
• Preserving the rating advantage.

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Cable TV IssuesStorm Clouds Gathering...

• Satellite Grabs Subs.
• Price Wars... video and modem.
• Cable Modems Challenged... DSL, wireless.
• Phone Company Packaging... Local, LD, Video, DSL,
  Yahoo.

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Cable TV IssuesStorm Clouds Gathering...

• Capital Spending/Depreciation... DVR box.
• Network CPM Gap.
• Fragmentation.
• Sarbanes-Oxley/Accountability.
• A la carte... The Nightmare Scenario.

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Killer App?
The case for Local TV...

• Targeting
• Flexibility
• Effectiveness
• Accountability
• Value

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And Now TVBs Forecast for 2005 2006
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TVB Forecast 2005
( Change)
Local Spot 2 to 4 Natl Spot - 4 to - 2
Total Spot - 1 to 1 Network 2 to 3 Syndic
ation 5 to 6 Network Cable 8 to 9 Local
Cable 7 to 9
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TVB Forecast 2006
( Change)
Local Spot 4 to 6 Natl Spot 10 to 14
Total Spot 7 to 9 Network 4 to 5 Syndic
ation 5 to 6 Network Cable 9 to 10 Local
Cable 6 to 8
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Total Spot TV
Change
Over Last 12 Mos.
1997 3.3 1998 6.5 1999 1.5 2000 11.3 2001
-16.8 2002 11.9 2003 -2.4 2004 11.0 2005
Flat 2006 8.0
TVB Estimate.
TVB Estimate. Source Universal McCann/TVB
Station Time Sales Surveys
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In 24 Month Cycles(93-94 100)
Index of the Growth of Spot TV