Broadcast Nets Should Program Digital Risks

A case can be made just a month into the new TV season that the Big 4 networks are not taking enough strategic risk to ameliorate the continuing erosion of ad revenues, audiences and content economics. Indeed, all four broadcast networks are missing a major economic opportunity to experiment more online and in wireless mobile with creative and financial models that will define their future. The $2 billion less in upfront advertiser spending (nearly one-quarter of the broadcast networks' prior year's take) was not only a byproduct of the recession. It also signals the steady shift of dollars to digital and advertisers' reluctance to automatically invest it all in broadcast TV. Broadcast network revenues and the ratings estimates have become so anemic that the risk of trying something different can only bring improvement. Here are strategic risks the broadcast networks should take: 1) Create interactive connections between select advertisers and their target consumers. Broadcasters can charge a facilitation fee, rather than slapping TV commercials online. 2) Selectively charge consumers to download popular TV episodes from Hulu. 3) Build social-networking elements into Hulu using Twitter and Facebook. 4) Launch other new low-cost, innovative content in prime time. "American Idol" works thanks to real intrigue around real people. 5) Use prime-time TV as a creative platform to introduce and develop new content that can morph into paid shows online. 6) Work with major cable operators to minimize the damage their TV Everywhere experiment in usage-based pricing is likely to have on broadcasters' free lunch video economics and consumer expectations.