Does Erie TV Want To Charge More Just To Offer HD?

Last week I received an anonymous post pointing to a Canadian story that said that Canadian broadcasters are slow to go digital and HD because advertisers won’t pay a premium for being in HD programs.

“Take a look at this great discussion on Slashdot regarding the HDTV
"business case" ----- http://tinyurl.com/y8eue5. Verrrrrrrry interesting :-) We
now return you to our regularly scheduled discussion of fashions worn by female
on-air personalities in the Erie market.”

The story is right on two counts.

Canada has been much slower than the United States in converting to digital and, until last year, had only two stations (not networks) in all of Canada that offered an HD choice to consumers.

It is also true the advertisers feel they should not have to pay a premium to be in an HD program. Let’s examine both points very carefully as the poster may have been trying to allude to a point in favor of NEXSTAR and SJL/Lilly's position of no HD in Erie.

First Canada has been dreadfully behind the digital curve and has a lot of catching up to do. (NEXSTAR and SJL/Lilly must think that Erie is a suburb of Toronto)

The second issue of advertisers not wanting to pay an HD premium is really a no brainer. The advertising philosophy between television stations and advertisers is fundamentally different. Broadcasters (and I use the term very loosely in Erie these days) think they are just selling 30 second spots.

Advertisers don’t look at it that way. They are looking to buy viewers. It is the amount of viewers that determines what an advertiser will pay; the more viewers the higher the price. Schindler's List when it first aired was a black and white movie, but it fetched a very high premium from Ford who sponsored it because of the anticipated audience.

And what happens when a program doesn’t make the goal the network guarantees the advertiser? The network has to either rebate the difference in cost- per- point (rarely happens) or provide make-goods to make up the difference.

The Canadian story also makes this comment “The transition to HD has been likened to the shift from black and white to colour, (Canadians don’t like American spelling of color) or the
move to stereo in the 80s.”

Television history also tells us what happens when new technology is introduced. When NBC first aired Bonanza in color, the Chevy division of General Motors didn’t pay a “color premium.” CBS didn't charge a premium when it aired Red Skelton in color or ABC when it started colorcasting in the 60’s.

In fact, WICU, WSEE and WJET didn’t add a “color premium” charge to local advertisers in network programs or local programs they broadcast in color. They still don’t. Advertisers would never allow that because that breaks with the tradition of buying and paying for an audience. In all my 40 years, I never saw a color charge from any of the local stations or the networks. That was the cost of doing business and to meet the growing consumer demand.

If the local stations were going to use that as an excuse, it is a sloppy and a very poor one. As an example, KDKA-TV in Pittsburgh current rate card does not indicate an HD surcharge for advertisers. Neither does WKYC in Cleveland (An NBC O&O), or WABC, WCBS, WNBC In New York. Take any TV station that begins with W or K in the country and I challenge our current owners to prove that they are getting a premium surcharge from advertisers for being in a High Definition program, local or national.

The excuses will keep coming, but the the race is on. The fact is that with the record speed of sales of HD sets, the demand by viewers will be for more HD programming.

To paraphrase Moses or Heston in the Ten Commandments, “Surely they’ll be such a cry that you will have to let the people see the networks in HD.”

It is just like the advent of color. With that demand, the first station in Erie to go HD will be able to get a higher premium in the short term because the audience levels will grow in their favor. With everyone having HD, it will balance out just like after the color blitz of the 60’s.

That is how advertisers buy. The cost of going HD is the regular cost of doing business in broadcasting in the 21st century. If you don’t like those numbers….than get out of TV.

"Congress passed a law on February 1, 2006, setting a final deadline for the DTV transition of February 17, 2009. Most television stations will continue broadcasting both analog and digital programming until February 17, 2009, when all analog broadcasting will stop.." FCC

http://www.dtv.gov/

“Surely they’ll be such a cry... that you will have to let the people see the networks HD.”