A front-page article in the February 10 issue of the Wall Street Journal detailed the disintegrating business model of local television stations. The story titled "Local TV Stations Face a Fuzzy Future" by Sam Schechner and Rebecca Dana was insightful, thoroughly researched, and well written. But there was one item that I found interesting, ironic, and indicative of a problem that television stations and networks have – the elephant in the TV room that no one talks about.
Until that disruptive wooly worm, the Internet, popped up, local TV stations effortlessly made money, but now they are struggling to figure out how to survive in the age of the Web. Audiences seem to be abandoning local TV stations' most profitable franchises – local news. And even their networks might abandon them. Here's what Schechner and Dana wrote:
The weakness in the local-TV market could hammer the big broadcast networks, says Randy Falco, former president and chief operating officer of the NBC Universal Television Group and now CEO of Time Warner Inc.'s AOL. Cable operators, he says, may lure networks away from some ailing stations with the promise of steady subscriber fees: "Ultimately one of [the networks] will make a break. One of them will try to make a go as a cable network."
The article's authors interviewed people in network TV and at local stations. They quoted the pronouncements of TV network heads from their speeches at conferences. But Falco was the only source they quoted who is no longer in the TV industry; he's CEO of AOL. Why would Schechner and Dana go to someone no longer in the business? Perhaps to get a point of view that was objective from an executive who's no longer in a the-future-is-rosy mode all the time.
But why go to Falco? They probably interviewed Randy because he's still viewed as a TV guy, even after two-and-a-half years at AOL. The TV business has changed dramatically in that time, but the two reporters probably figured that Falco must be keeping current on the TV business because he certainly hasn’t been paying attention to AOL.
I find it fascinating and ironic that Time Warner CEO Jeff Bewkes hired Falco because he was a successful TV sales guy (he ran NBC TV Network sales for years before he was upped to CEO of NBC's Television Group) and that Falco has screwed up AOL precisely because he's a TV sales guy and has no clue about the Internet or how to sell it, as AOL's recent earning record proves.
I had lunch recently with the head of a PE company that owns a group of television stations, and we talked about how his group has an iron-clad rule about hiring salespeople: Never hire anyone with TV selling experience. He knew TV salespeople can't sell their way out of a paper bag. I talked to the head of sales of a highly-trafficked, successful Web business recently, and he said he never even interviews people with TV sales experience. He knew that TV salespeople aren't salespeople; that they are responders to RFPs and calls for avails – what we used to call package monkeys. This week I talked to the managing partner of a highly-respected media executive recruiting firm, and she said her firm had not had success placing TV salespeople in Web businesses. She knew TV salespeople were lazy and had no clue how to sell conceptually or create value; they're commodity salespeople.
The notion that the vast majority of TV salespeople have no idea how to sell – you know, prospecting, qualifying, presenting and overcoming objections, creating value, closing, and, heaven forbid, servicing – is the elephant in the room. No one talks about it openly. Executives outside of the TV business know it, but those in the business make the fundamental attribution error so marvelously described by Nassim Nicholas Taleb in Fooled By Randomness. TV salespeople think they're really smart because of all the billings they had. Now that the revenue is disappearing, they believe it's all because of bad luck.
I don't believe that TV salespeople caused the problem that's occurring in local and network TV. The Web and the recession weren't their fault. But TV executives and salespeople were thumping their chests for so long and touting their Titanic as unsinkable, that now I think they deserve to go down with the ship. Most smart Internet businesses do too – except for Jeff Bewkes at Time Warner who hired Randy Falco to run AOL.
Until he retired in 2002, Charlie Warner was Vice President of AOL's Interactive Marketing division. Before joining AOL, he was the Goldenson Endowed Professor at the Missouri Journalism School where he taught media management and sales, and he created and ran the annual Management Seminar for News Executives. Charlie can be contacted at email@example.com.