Encoda Refocuses as Customers Stray

Oct 27, 2003  •  Post A Comment

Encoda, a prominent provider of sales, traffic, programming and financial systems for the broadcast industry, has had to redirect its energies due to heightened competition over the past three years from next-generation traffic providers such as WideOrbit, VCI, OSI and Marketron.
TV station executives say Encoda has blown a commanding lead in traffic. Competitors put the loss at about 150 TV station customers over the past 18 months, citing Encoda’s outdated and old-fashioned traffic systems.
In response, Encoda has implemented a new customer service program with new regional operations and has formed strategic alliances to provide a full suite of services. It also is planning the U.S. introduction early next year of Broadcast Master, a traffic system similar to the next-generation systems of its competitors that has been used in the United Kingdom.
Encoda said it is still the leading and dominant traffic provider. Bob Duncan, the company’s senior VP of sales and marketing, said about 80 percent of broadcast TV station revenues still flow through Encoda’s five traffic systems, down from about 85 percent a few years ago. Recent big losses include the 14 NBC-owned stations and Belo’s 19 stations.
Encoda could lose more. Prominent station groups that use Encoda and are coming up for renewal in the next two years include Hearst-Argyle, ABC, Gannett, Tribune, Fox, Media General and Sinclair.
Encoda was indeed caught napping following its formation in late 2000 when the two leading traffic players, Enterprise Systems Group and Columbine JDS, merged. “They were direct competitors and their focus was on each other,” Mr. Duncan said. “It just took a while to sort all that out and get the right management in place. We lost focus on our customers, and that’s a problem.”
That provided an opportunity for new players to seize Encoda’s business, said an industry source who has regular contact with broadcasters.
“They probably took their eye off the ball because they were so busy consolidating and that hurt the customer base, and I think that’s the condition they were in that gave birth to WideOrbit [and] OSI,” the source said.
But Encoda woke up and is now reasonably responsive to customers, the source said.
In fact, Mr. Duncan said Encoda is winning back some of the business it had lost.
“People like to talk about the decline of Encoda, but there are millions of dollars coming to our company,” Mr. Duncan said.
New deals for Encoda include one with Rainbow Media Holdings to use the Paradigm traffic system for its new high-definition satellite service that launched Oct. 15. Rainbow has used Paradigm’s programming, scheduling, sales and proposal components for more than five years for networks including Independent Film Channel, AMC and WE. In addition, Encoda is poised to expand its contract with Nexstar Broadcasting, which has used Encoda’s Columbine system for most of the 25 stations that it owns or manages. Nexstar also plans to implement Columbine at the 15 Quorum stations it’s acquiring next month. “We wanted to put our eggs in the Columbine basket because we felt [Encoda] was still the strongest player in the marketplace,” said Duane Lammers, executive VP and chief operating officer of Nexstar in Irving, Texas.
Encoda this year opened regional offices in New York, Los Angeles, Washington, Chicago, Tampa, Fla., and Miami as complements to its Denver headquarters. At least one media service manager in most of those locations visits existing clients-on Encoda’s dime-to make sure they are comfortable using the system.
Another change is the partnership Encoda formalized with sales and research software firm OneDomain last month to integrate OneDomain’s sales proposal system with Encoda’s products. Encoda competitor VCI also has a relationship with OneDomain.
Finally, Encoda plans to launch Broadcast Master for medium- and small-market stations. It is a low-cost, PC-based platform that will allow broadcasters to manage their operations, including proposals, research, sales, inventory, traffic logs and programming, Mr. Duncan said.
Meanwhile, Encoda’s competitors continue to grow. Marketron snagged the coveted NBC contract earlier this summer. OSI has doubled its client base from a year ago to 166 stations. The majority of those new wins are former Encoda contracts, said Ed Adams, OSI president and CEO.
WideOrbit has increased its number of clients to more than 100 stations under contract, up from about 60 a year ago, said Eric Mathewson, founder and CEO.