Diginets to the rescue?

Since digital TV in the U.S. was authorized, the FCC has allowed local TV broadcasters to use part of their digital signal for other applications, as long as their primary channel remained a free TV channel.  Part of the reasoning at the time was that stations could explore using any excess bandwidth to generate additional revenues to offset the cost of the switch to digital.  The problem has been that there didn't seem to be much demand for that bandwidth, and thus not much revenue generated.
  Research from BIA/Kelsey suggests that that may be about to change.  They suggest that D2 & D3 channels - which can operate in that additional bandwidth - currently accounts for 3% of TV stations' ad revenues.  That may not sound like much; the study indicates that not all stations that multicast are generating significant revenues - while more than 1300 stations were using their digital channels to also multicast diginets (multicast-only networks like This TV, Me-TV, and Antenna TV), only 277 currently earn more than $50,000 annually from multicast operations.  BIA/Kelsey VP Mark Fratrik talked about what stations were most likely to be successful:

“If you look over the past three or four years, where they have been able to get cable carriage and they’ve been able to get good programming, whether it’s an established network or an up-and-coming network, they’re seeing an increase in revenue.”

In short, while the individual station numbers may not be significant yet, they are growing and look to be able to continue to grow in the future.  While individual station numbers aren't huge, the aggregate revenues are beginning to be respectable.  According to the report, broadcast network affiliated stations were generally most profitable

CW (affiliates were) most lucrative, pulling in $27 million for its multicast affiliates, followed by Fox at $19.2 million. The other multicast majors: MNT ($12 million), ABC ($4.5 million), CBS ($3.7 million), Telemundo ($3.4 million) and NBC ($3 million).

(The report also indicated revenues for) three multicast-only networks or diginets: MGM and Weigel Broadcasting's This TV ($18. 4 million), Weigel's Me-TV ($10.7 million) and ABC Owned Television Stations' Live Well ($4.8 million).

The future of diginets and multicasting is aided by the growing interest from advertisers.  Diginets offer highly targeted audiences and rates that a significantly lower than those for the primary channel, and often lower than what local cable systems charge for similarly targeted channels.

“They have better CPMs than local cable,” says Lindy Sieker, senior broadcast specialist at media buying agency Empower MediaMarketing. “I have told cable providers that they need to come down in their rates because I can get the same ratings or better ratings than cable. And these networks cover the entire DMA, as opposed to just appearing in cable zones.”

Multicasting with diginets may not be the full solution to local broadcast station revenue concerns, but they do seem to be a viable strategy that can bring in additional revenues.  And as the programming choices and quality offered by these networks improve, they should be able to continue to grow audiences and revenues.

Source:  Diginets Delivering Dollars For More Stations,  TV NewsCheck