News departments boost bottom line

Jan 7, 2002  •  Post A Comment

Many local station executives prospecting for dollars in a soft advertising market clearly expect-and get-cooperation from their stations’ news departments when they have “sales requests” that could benefit nontraditional, or nonspot, revenue development.
Those same executives are looking increasingly at nontraditional sources of revenue, including the moneymaking possibilities of their stations’ Web sites and of sponsorships to themed events the stations organize.
These are among the findings of a recently completed online and e-mail survey conducted by Electronic Media and Wolfe Media, a San Diego-based company that specializes in developing new forms of revenue for TV stations.
Some 79 general managers, general sales managers and local sales managers participated in the survey. In that group, 34 respondents reported that their station’s news department is “regularly cooperative” or “always cooperative” with sales requests that could benefit nonspot revenue development. An additional 17 respondents reported that their news department is “occasionally cooperative” with such requests.
That cooperation might take many forms, such as an “Ask the Experts” or “Ask the Pros” program on a station’s Web site. Many stations contract with various pros or experts in its local area who are then linked to the station’s Web site and agree to be available to answer viewer questions by e-mail or phone. For example, a local law firm might be the station’s exclusive legal pro, or a heating/air-conditioning company might be available to answer questions in its field.
The law firm might agree to sign for a year to be the station’s exclusive legal pro, but the firm might ask for a proviso, said David Wolfe, president of Wolfe Media, which also owns AskThePros.com and developed the nonspot-revenue survey in cooperation with NetReflector.com.
The firm might ask the sales manager, “When a major news event happens and there are legal ramifications, is it OK if your news department calls us first for a quote?” Mr. Wolfe said.
That’s one “small example of where the sales manager may like to be able to walk down the hall and either consult the news director or talk with him about ideas,” Mr. Wolfe said.
Mr. Wolfe was not unmindful of the traditional “wall” between news and sales, and he readily noted that many sales managers will tell the potential client asking for special consideration in news coverage, “We don’t get involved with what news does, and vice versa.”
Still, the incentive to offer this kind of “added value” is there because this kind of ask-the-experts program can generate from $250,000 to as much as $750,000 for a participating station, Mr. Wolfe said.
Other forms of nontraditional revenue generation for stations range from paid programming to organizing such events as annual health fairs, powerboat races and fashion shows. One station can bring in as much as $1 million from an annual health fair, said Mr. Wolfe, who also noted that a local hospital might pay around $150,000 to participate in a station’s “health program.”
“We sold station-branded high school football programs and lineups combined with a local pizza station,” one survey respondent said. That “brought in $100,000 that was earmarked for newspaper and direct mail.”
“We’re taking some of our weaker daytime periods and trying to convert them to half-hour revenue sources,” said a second respondent. “We did a cross-promotion with the [local] newspaper, and we run a daily half-hour employment show.” That show is bringing an additional $65,000 annually to the station’s bottom line, the respondent said.
Another respondent said, “We co-sponsored a `non-typical’ fashion show for the 12-to-24 demo that involved a local beauty school. The side promotion and third-party involvement with several other clients generated the largest order the station had to date.”
Thirty-three of the executives who participated in the survey said their stations intend to spend more than $500,000 on their 2002 nonspot revenue budget. Fifteen of the respondents said their 2002 nonspot budgets are unchanged from 2001; one said the nonspot budget will be down 10 percent in the new year; all the rest reported increases, ranging up 5 percent to 657 percent in their 2002 budgets.