December 6th, 2005

Local TV Morning Shows for Sale

By Abbey Klassen
Advertising Age

Want a chatty local talk show host to dish about your product? More and more local stations are offering it up—at $2,500 a pop.

The trend is cropping up across a half-dozen Gannett stations in markets such as Atlanta, Denver, Cleveland, Phoenix, Sacramento and, most recently, Minneapolis. The midmorning shows, which replace local news, talk programs or syndicated fare, are a way for stations—squeezed by network compensation, the costly and unpredictable nature of syndication and a soft local TV ad market—to underwrite local programming while milking a little more moolah from their daytime schedule.

According to one station executive, these shows could increase the time period’s revenue take between 50% and 100%.

Broadcast’s ‘slotting fees’

“This is the broadcast equivalent of the slotting allowances that package goods at times need to pay retailers to get shelf space,” said John Rash, senior VP-director of broadcast negotiations at Campbell Mithun, Minneapolis.

A Gannett spokeswoman said each station makes its own decision whether to launch the shows, but executives at the station level believe the introduction of the pay-to-appear shows is corporate driven.

National buyers?

The mostly local advertisers have included local cosmetic dentists, home builders and remodelers and auto dealer groups. But more regional and national advertisers are beginning to take advantage of the shows through local unwired buys—buys made at the corporate ownership level. In an unwired buy with Gannett, The Richard Group, Dallas, coordinated holiday appearances on two shows, “Colorado & Co.” and “Atlanta & Co.,” for its client Honey Baked Ham.

While it hasn’t been long enough for the client to judge whether the appearances made an impact on sales, the marketer was happy with it. Mary Price, director-media planning at the agency, said that this kind of format helps advertisers integrate product into more of an editorial-style environment on a local level. Richards has done a similar deal with several Texas markets for client Red Lobster.

“You don’t have to spend $5 million on ’The Apprentice,’” Ms. Price said.

The shows have titles such as “Showcase Minnesota” and make no bones about the five- to eight-minute segments being sponsored. The shows are the property of the sales and marketing department rather than the newsroom and, at the end of each segment and again at the end of the show, a host mentions the segment was paid for by the advertiser.

But what if a viewer misses the last five minutes of the segment and turns off the show early?

Influence over news content

Al Tompkins, broadcast and online group leader at the Poynter Institute, recalls a pair of studies conducted by The News Directors Foundation in 1998 and one in 2001, in which eight out of 10 viewers polled said they believe advertisers have an undue influence over news content.

“Anything we do that helps to confirm that in their mind is detrimental to journalism,” he said. “I understand they’re not calling this journalism, but it looks and smells a lot like journalism.”

The trend is neither new nor isolated to Gannett. Such tactics have been tried, often in small markets, only to be overturned in favor of a 30-minute paid program that has no overhead for the station. And national syndication is no stranger to product placement, although the marketers are often woven more seamlessly into storylines—think: Oprah’s Pontiac giveaway or American Express’ sponsorship of Ellen’s New York tour.

The viewer jury appears to be out. Ratings for such shows are tepid, with shares in the mid-single-digit range. (By contrast, a syndicated show is generally considered successful if it approaches double-digit shares.)

Some ratings success

Denver’s KUSA was the first Gannett-owned station to introduce the current format and arguably the most successful. Its “Colorado & Co.” drew a 1.6 rating in the July sweeps period, down from 1.8 in May. In May 2004, just before the show was introduced, the network was averaging a 2.4 rating in the 10 a.m. hour. General manager Mark Cornetta says it’s No. 2 in the time period.

Mr. Rash said he suspects the experiment will be closely watched by local, regional and national advertisers and, if successful, could be replicated on a network or national syndication level.

Added Bill Carroll, programming consultant at Katz Television Group: “Ultimately there’d have to be a mix of national, regional and local advertisers for this to be a long-term viable option. The question is, can Gannett lay the foundation for that?”

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