Why Digital is So Important to TV Broadcasters

A lot of people ask me why local broadcast TV stations are investing so heavily in digital.  In a recent article on BusinessWeek.com - Aereo's Day in Court Won't End TV as We Know It - I found the following two charts. 

Note that the number of hours that the Average User watches broadcast TV continues to decline - from close to 700 hours per user per year in 2004 to a little more than 600 hours in 2012.

While the revenue from retransmission fees continues to increase - from next to nothing in 2006 to 10% of revenue in 2012.  Almost $4 billion dollars.

In 2013, time spent with digital media among US adults surpassed time spent with TV for the first time—with mobile driving the shift.

So what we see...

• Consumers are watching less TV.
• Broadcast stations are compensating for this loss in ratings (revenue) by raising retransmission fees. 
• Consumers are spending more time with digital today than they do watching TV.

As some point, the rising price of retransmission fees will level off as the dwindling audience becomes less valuable to cable systems and other retransmission subscribers.  Broadcasters are looking for new revenue opportunities. 

Consider that Broadcast TV is actually in the content business.  We produce content and hopefully the viewing public watches it.  And consumers are telling us through their behavior that they prefer to consume content online.  (The very best marketing comes from observing consumer behavior and inserting your message into their behavior.) 

So we invest in digital because we are simply following consumer behavior .  Our job is to develop great content and let the consumer watch it any way they prefer!