The Digital Divide: Can Local Media Finally Move Beyond Linear?

Everyone in local media knows the future is digital. So, why does the industry still behave like it isn’t?

Despite years of investment in streaming, CTV and digital ad platforms, many broadcasters remain structurally tied to the economics—and mindset—of linear television. That tension is creating a growing gap between where audiences are going and how local media companies still operate.

In this episode of In The Vicinity, local media veterans Tim Hanlon and Jim Wilson explore why the digital transition has proven so difficult—and what it will take for broadcasters to evolve from traditional stations into true multi-platform local media companies. Along the way, they discuss the role of CTV platforms like Premion, the importance of building digital-native content, and whether the shifting economics of local sports could give broadcasters a new opening.

Because in today’s media landscape, if local companies don’t fill the digital space, someone else will.

Listen to the full podcast above or get it on Apple Podcasts and Spotify.

Tim Hanlon: Hello there. And you are In the Vicinity. Yes. How are you? My name is Tim Hanlon. I'm the founder and the CEO of the Vertere Group here in Chicago. A consultative entity focused on all kinds of changes going on in the media landscape. Happy to have you along for this week's episode. It's my weekly conversation with local media expert Jim Wilson, who you probably know is the CEO of local streaming platform technology firm Madhive, former founder of Premion over at Tegna. Also on the board of a couple of very interesting local media companies, GSTV, the former gas station tv, as well as Audacy, one of the biggest radio slash audio companies in these here United States as well. And this week we get into it.

A couple of different interesting notes to highlight here. One, we get into some of the issues around how local media and particular broadcast TV stations have had historically slow and fitful time becoming more digitally transformed, shall we say, or digitally centric.

How that is evolving and fast changing after years of pushing with some great green shoots of activity and success. But still a way to go collectively, I would argue. We'll talk about that and we'll also get into what's going on in the space, formerly known it seems as RSNs, Regional Sports Networks, once the bastion of local teams in pro hockey and basketball and major league baseball for generating significant revenues to, to cover their costs and hire the highest quality players and pay their salaries.

But like a lot of other things in television breaking down and imploding depending on what market or regional network is in your vicinity. And we get into a little bit of a discussion of that. It's a jump off of a column I did for TVRev about how the various leagues are looking at.

Situation and perhaps maybe how local broadcasters can benefit in the short term and quote unquote in the long term with a question mark. We'll get into all that kind of stuff coming right up. Here's our conversation and as always, please enjoy.

I think one of the issues we want to tackle today is something that's bedevilled I think folks in the local media space and the evolution, given all the changes that have happened over the last number of years. And this is I guess seemingly firewall or separation still in many cases of what is, if you will, the traditional linear business and the digital parts of the business, which are.

Not insignificant anymore. You've had some commentary on this and I've had some too, but maybe we can just distill this into kind of a, in essence, it's like an elephant in the room that most people either don't wanna admit or whatever. But is it fair to say that for legacy local media, in particular for television, but maybe for radio too for that matter, digital is still looked upon as the secondary or additional conversation, not the main business. 

Jim Wilson: Largely. Yeah I agree with that.

Tim Hanlon: Yeah, it's not I'm not looking for agreement, I guess I'm just saying.

Jim Wilson: No, I would say still, look I joined a broadcaster 10 years ago to start paving the way for the future of digital and the transformation to digital and starting a company called Premion, which was designed to do, really do two things.

One is to bring CTV, a new platform, to local advertisers to give them access, which was really important to me. And then in a way it was training the local sellers to move from being linear sellers to digital sellers. And I would say that was fairly successful under our leadership. We had a head of local who really understood it and got it.

And I would say great success with the Premion platform at that time. And then great success on teaching sellers how to sell digital. And that really should have paved the way for what you would hope to have seen, which was a transition of content from, or expansion of content from linear to digital.

But I think the conundrum for broadcasters is that many of them are public, many of them are managing earnings, many of them are really focused on their local market share and are they monetizing that local market share? And all their resources are focused. Their top line is declining. Therefore they're in cost optimization mode.

And when you're in cost optimization mode and you're a public company. How much are you putting toward this thing called digital? And so some have, I think, have done, have made more strides than others. 

Tim Hanlon: Yeah, but it's also, I think, at least in the early going, I think the fact that Premion and other intermediaries or third parties, if you will, I know is owned or founded by Tegna and all that but still it was a separate entity. You work with other broadcast groups. The fact that you needed a third party to coalesce and or force the issue is pretty interesting in and of itself. This is not something that organically occurred at a rapid pace across the local broadcast television space.

It needed some entity or entities to simplify and make it straightforward and frankly make it worth the time and effort because there's actually money attached to it. Versus their own efforts. 

Jim Wilson: Yeah, it was funny, there was the appropriate level of pressure to grow digital revenue.

Reporting digital revenue as a broadcaster is really important. And so Premion was. Part of that digital revenue growth that was being reported in dig in digital numbers. And there was this, hey, team Premion, grow and we grew rapidly. And then there would be these moments where there would be a panic of, wait a minute, is it taking away our linear dollars?

Don't cannibalize our linear dollars. And we were very careful not to do that. But like I said, there was this, there's a lot of pressure on the broadcasters. They're public companies and, and how they manage the decline of linear or trust to a radio is really important.

And like I said at the company that I run now, we work with a number of broadcasters and I look across them and we not only bring third party content for them to monetize, but we also help them monetize their owned and operated inventory.

And some have made great strides in owned and operated inventory while others are not there yet. And there's somewhat of a correlation to, in some ways we've talked about this before, the health of the broadcast industry.

Tim Hanlon: That's part of the intrigue. So my little hot take on this has always been that it's pretty much obvious that there's a bias, a revenue bias towards.

The linear television economics. Which it stands to reason because historically these are TV stations TV station groups. It's a, this is a decades long perfection of a business model. In terms of selling, in terms of margins, in terms of how to deal with various forms of inventory, the dynamism of that inventory, et cetera.

The measurement, which is this sort of seemingly archaic ratings structure, which has been historically full of opportunistic things to take advantage of, so to speak. It's not necessarily the most accurate, it's representative and frankly, even the systems behind sales.

The notion of trafficking systems and sales systems and stuff that historically I jokingly remember. Some of the old systems where they, when digital and banner ads came onto the platform. You had Donovan Data Systems.

Which took their magazine sales platform and created a little carve out for it, and that, that became a bespoke kind of digital add-on and stuff. It does seem to me though, and never a month goes by where I don't see these traditional trafficking systems talking about how digital is becoming more integrated and, the and the revenue is growing exponentially on the digital side, yet still doesn't replicate the margins and the ease of sale on local, on linear television.

Jim Wilson: Because they too, are they too those platforms that are common platforms for. The linear TV business who are also looking, there's a chicken or the egg there now that I think about it Sure. Is that they are not moving as quickly into digital themselves. So is it them? Or is it their clients?

And there's I think there's frustration on both sides and that is they're not doing enough to help us. And then I guess I would wonder if they would say there's not enough digital content coming out. From the local media companies for it to make this investment worth our while.

And so we run a company that works with a number of broadcasters on the digital side. And it started out as bringing them, again, the whole idea of Premion, and an investment into Mat Hive was that we needed to, that there needed to be. A CTV product to take to market because CTV and Linear, there was gonna be this trade off and there has been this trade off.

And initially it was bringing streaming platforms as a product to local markets to make it available. But again, now the idea, again, my, I think all of our hopes is that the linear broadcasters of today are the digital publishers slash local walled gardens, whatever they're going to be of the future, and that they make that delicate and important transition to becoming digital companies.

And I think there's, there's gonna be a lot to that. That's just not gonna be, let's do it. In order to do things like that, you need to have the DNA to do that. 

Tim Hanlon: Yeah, and I think that's part of the rub that goes back to your original premise about like, where is the digital content or the ex, the exponentially, either tangential to the original, the linear content or new bespoke stuff.

And you're right, it is chicken and egg because of the resources to create a TikTok video or streaming only programming or things other than news or extended news programming that doesn't fit the linear, newscast, those kinds of things. It is monetization of that.

It's still pretty much held back, if you will, by the linear model in quote unquote digital extensions. Part of the rub, with Premion and with Gamut and with Madhive and all these other entities that have been trying to push these broadcasters into more modern kinds of environments, is again, most of the programming resources, especially in the local news front, have been focused on the linear newscast and the linear presentation. And I think the easy days are pretty much over where you simply just either simulcast, which is not a bad thing in streaming or repeat what was originally created as a linear piece of programming.

The harder part, I think, and maybe this is kind of where we are now in terms of strategic fortitude, is how entities like TV stations and newscasts emanate or create content that may be digital first that maybe hits on linear air as well or maybe never does at all.

That's an existentially very different kind of proposition, but it hearkens back to what you said at the beginning, can stations evolve, and you said this previous to previously too. Can stations evolve to become more like just content hubs and creators across multiple touch points with multiple forms of revenue, not just linear television.

Jim Wilson: Yes, one wonders if there even needs to be a physical station in the future, but the, but while they're there, think about all those studios that exist there for, creating content and whether it's distributed over the air, whether it's distributed digitally. But you need a digital sensibility.

You need digital DNA in order to create digital content. Look, they're very, there's so much talent in the broadcasting industry and there's great leadership. And so they've gotta really make the concerted effort to build out more content for digital consumption. If they don't build out the content for digital consumption, somebody else is going to build out the content for digital consumption.

And as I think we talked on. One of the previous episodes about consolidation. What is consolidation going to do? Is that going to hurt the market? And my, my, my answer at that point was, no. What's most important is a healthy local media market. Maybe there are fewer players, but a healthy local media market is important.

And the way our society works. Our commercial capitalist society is if an, if a hole exists in a market, someone's going to fill it. And when you see new local content startups or TikTok local happening, that means that someone is seeing an opportunity in the market. And as a person who wants to see, who has a vested interest in seeing the local media companies thrive.

And try to find a, and provide a platform for them to thrive upon, to monetize, owned and operated, to get access to the digital inventory and to see local advertising thrive. We really wanna see this happen. And so one of the things that I would say is, and I've said this before, is that local media companies exist to bring news, information, entertainment to local markets and promote local communities.

And I feel like that's where the investment needs to happen and not for broadcasters to become tech companies. And I think there have been some tech acquisitions, and I'm not naming names, but there have been tech acquisitions made by broadcasters to get into the digital space that just haven't worked out because I don't know if it was the DNA, if it was the platform that they bought but, the acqui, the a, the acquisition streak hasn't been successful. 

Tim Hanlon: Do you think broadcasters can shed that title of broadcasting? I brought, there is something to be said for being able to have content that appeals to a wide swath or even, targeted swaths of people in local markets. But the idea of broadcasting is anathematic to the way certainly younger consumers get their news and information and entertainment. So I guess embedded in that question is, can broadcasters ever feel comfortable?

Being on quote unquote other entities, platforms for the distribution of their stuff. That may not be, by the way, a 30 minute newscast for linear television broadcast on YouTube. That's an easy thing to do, but where's the original show from YouTube? That kinda stuff. It feels like a mindset issue that maybe if you went station group by station group, there would be varying degrees of openness to that kind of flexibility. 

Jim Wilson: Yeah. First of all, I call 'em local media companies. Now I try not to use the word broadcaster because I do believe that they're becoming more than a broadcaster. And it's really interesting when I was running Atari years ago we had to make a shift from retail. In 2008 we made the transition from retail to digital. And it was a big shift for us. And we made it because one, the market was shifting toward digital mobile games. Online games were becoming more prevalent and frankly Atari's games and library lent themselves very well to mobile.

And some of the properties that we managed, like Dungeons and Dragons and things like that were obviously great online games, and we needed to make this big transition away from retail. And at that time, Walmart went from 10 rows of games to three rows of games. And there was this big digital shift.

The reason why I say this is at that point in time, someone said to me, why don't you build an atari.com walled garden in a way. And I said, no, Atari is prevalent. That's a big investment. Why don't I just distribute Atari everywhere? I don't want a destination for Atari.

I want Atari to be everywhere. I want to be on every app store. I wanted to be on every streaming service. And that worked out for us. The reason why I bring that up is for these local media companies they're going to have to get used to distributing their content across all types of platforms the way we did at Atari. Or one could look at them and say they could become a walled garden. You know what prevents a large local media company from becoming a walled garden the way Netflix is a walled garden, or Paramount Plus is a walled garden. So some of them may have that in mind, and so that'll be really interesting to see how each local media company plays out their distribution strategy. 

Tim Hanlon: Look, and I've said this before too, the idea of having truly local programming that is not replicable or replicated by anybody else. That becomes unique in a sea of choice out there. Where there are only a handful, or not even a handful of choices to get one's local news, content, entertainment, that kind of stuff.

So a commitment to less syndication, less network, maybe even less sports and other things, or maybe more sports and other things, which frankly is maybe a segue here.

Jim Wilson: I was gonna say, but as part of your segue, there are different types of content, short form, long form. So that when you think about this shift, it's not just news.

It's not, oh, we need to make news snackable because it's gonna be online and needs to be shorter. Yes, that probably needs to happen, but these local media companies have large footprints that give them the opportunity. Some of them have bought networks, Scripps bought Ion, and Nexstar has The CW and so they have full TV shows.

And I think you're probably gonna head into sports, but I think why not? Why wouldn't they have access to sports? Especially in local markets because the opportunity for creating communities and fostering communities that you're in around sports is a really interesting idea.

Tim Hanlon: Yeah. And I think broadcasters in particular are having a moment on with local sports. As the regional sports network model seems to be imploding with some exceptions. I think the ones in some of the major markets like LA and New York, maybe even Chicago are probably still relatively stable for the near term.

But a majority of the rest of them, especially those that have been part of the diamond sports and FanDuel network, whatever the Appalachian is this week. And others are frankly just losing steam and to things like streaming direct to consumer apps and other kinds of dynamics.

And it's interesting because broadcasters, it's kinda like we've been here all along. How are you doing? We broadcast games 40, 50 years ago. Today, you come back. We're in the community. We've got signals here. You can use us 'cause we do reach local audiences and stuff.

It's interesting though, in my column for TVRev this week I just lay out how the leagues that are most dependent on this regional sports network business model that's pro hockey, basketball and major league baseball. They all seem to be going in different directions, which I think is interesting and maybe not surprising because nobody knows what's going on.

But it's interesting to see how broadcasters, at least in the short term, are at least absorbing some of the games to ensure that the games are available in local markets. Maybe long-term business models be darned. What do you think of this? I think it's a short term thing that ultimately cannot keep up with streaming and direct to consumer apps and that kind of stuff.

'Cause I don't think broadcasters can replicate the volume of money that these RSNs have historically generated for their local teams over the last 20, 30 years. But, what do you think? Is there an opportunity there? 

Jim Wilson: The sports leagues may not get the amount of money that they were getting off of these RSNs from that one distribution outlet.

But, I guess I'm not as much of an expert as you. I'm just gonna think about the local media companies if they are making a transition into digital platforms that are either walled gardens or have a significant footprint in digital where they have the advertising dollars.

They have to build digital footprints that bring the advertising dollars that are sustainable long-term businesses. And if they don't do that, they're not gonna be here. But if they do that, then there is a thought that they could have. Enough of a scale in order to pay for the rights that they need, et cetera.

I know that the radio companies have local broadcasting rights for teams, and so who knows? I would think that there is an opportunity, but it goes back to this transition. They're gonna need to make the transition to being a sizable, meaningful digital platform.

And if they do that, then they will have the scale in order to secure local sports rights. And if they're investing in local communities, local fandom is really important. They really have all the ingredients for success. It's really up to them to make that success happen. 

Tim Hanlon: I hear the sports fan barking in the background there.

And I couldn't agree more. I think the real dynamic is instant reach. So if you're somehow suddenly out of the RSN business and you can't get those games on air through that cable pipe or that satellite pipe, or, you can't get as many direct.

Consumer streamers just yet. It's instantly you don't go away. You can instantly stay credible with a local marketplace, albeit with lesser economics. It's an instant rich reach vehicle. I think it's interesting and maybe we'll put a pause on this for future conversation.

Yeah. But it may be interesting if consolidation of broadcast groups continues to happen and perhaps there is more unanimity with those groups around sports rights and stuff. Perhaps it could be a way by which retrans can be supersized, if you will to maybe get closer to some of those economics.

I don't know. I still think it's gonna be a harder task for TV stations aside from being just a reach vehicle where they're taking the feeds from the teams themselves. But again it's hard to discount the fact that there are local signals in markets that are just ready and ready made.

Jim Wilson: Yeah, I wouldn't give up those local signals while those signals last. Those signals are still gonna be around for a while. And why, if I'm a sports owner, I want to maximize the revenue from the sports leagues. I, they do. They're excellent at it. And certainly NFL is the hallmark of that but.

While this signal lasts there's an economic opportunity for sports leagues. It's really incumbent upon these local media companies to make this transition so that they can continue to have these rights. 

Tim Hanlon: And step up when these leagues decide to maybe centralize, which is in the air right now.

The NBA wants to centralize their local rights at Major League baseball, maybe the NHL is a little bit laggard. If local groups, local stations don't step up and say, we should be part of this centralization dynamic, don't forget us. I fear they're gonna get left out. 

Jim Wilson: Yeah. Whether it's sports or any other type of content, if they don't make this transition and have that scale, they will get left out.

Tim Hanlon: And the advertisers that love them too. But that's for another conversation. 

Jim Wilson: That is and local communities. So let's not forget them.

Tim Hanlon: Alright, that's all we've got for you this week. Plenty more things to talk about in the weeks ahead some of which have been hinted at and we'll get to, hopefully in a more granular manner in next week's show. My thanks not only to Jim, of course, but the team at Madhive in particular, Nicole Lewis and Stephanie Nerby and the good folks at TVRev again, under whose auspices that we put this show out each and every week.

Particular thanks this week to father-to-be, congratulations, Mike Gasbara. And Melissa Hourigan, Jason Damata and of course Jessika Walsten. We thank each and every one of them and you for listening. Tell your friends and have them tell two friends and so on. Spread the word.

Thank you for listening. We'll see you next week In the Vicinity.