Software professionals who write the code that runs the nation's TV business are busier than ever these days.
Station groups are demanding more and different information from traffic and billing software systems originally designed to schedule commercial insertions and pump out invoices.
“What we're doing is taking software systems that have been deemed as traffic systems and taking that to a new level,” says Ed Adams, VP/general manager in charge of North American broadband sales for Optimal Solutions Inc. The Harris Corp. unit supplies traffic and billing software to more than 350 TV stations.
After operating for years as workmanlike tools of the trade, traffic and billing systems are transcending their scheduling-and-invoicing origins to emerge as cornerstones of new “business-intelligence” platforms designed to help stations squeeze more profit from their operations.
“The reason we've gone from providing software to eight stations to 580 in four years is, people need access to complex information,” says Eric Mathewson, founder/CEO of San Francisco-based TV-software provider WideOrbit Inc.
Basic information about stations' sales patterns, clients, inventory and sellout rates has always been tucked into traffic and billing systems. Now, though, software providers are adding sophisticated features.
For example, Marketron, of Burlingame, Calif., reports that more than 40 broadcast groups now use a hosting application that allows “anywhere access” to inventory-management applications and data and is accessible from any computer with an Internet connection.
Software executives believe enhancements are likely to gain market traction because local-TV advertising revenues are growing more slowly than in the past. Stations are getting more serious about finding efficiencies with the help of software.
“If I can be smarter about how I manage inventory, maybe I get an extra 2% yield,” says Lowell Putnam, CEO of Massachusetts-based TV-software provider VCI Solutions.
The nation's roughly 1,100 U.S. TV stations spend about $30 million a year—or an average of about $27,000 per station—on software that manages traffic, billing and related business functions, according to WideOrbit's estimates. The firm also says that new software for secondary, digital stations could add another $10 million to the category this year.
Three major trends are influencing how next-generation systems evolve:
- Changes to TV broadcasting's ownership structure are rippling across the back-office–software sector. Providers of traffic and billing systems see station groups' growing interest in managing billing and accounting functions for multiple stations from a central database.
- Software suppliers are devising plans to accommodate a new range of advertising inventory for new-media extensions, such as the broadband-enabled Websites, digital multicast stations, and mobile-video offerings that their station clients are pursuing.
- Concerns about compliance with the 2002 Sarbanes-Oxley Act governing corporate accounting have led some station owners to demand more consistency across their operations, producing new demands on traffic and billing systems.
GROUP STANDARDS
One factor influencing the way software providers work is group owners' interest in unifying the way their stations handle pricing, manage spot schedules, and deal with invoicing and make-good issues.
For example, Belo Corp., Allbritton Communications Co. and others manage billing and accounting for multiple stations they own, all from a central database. That approach lets the groups apply consistent procedures tied to revenue recognition, pricing and invoicing, and it helps support decisions about credit and collections involving advertisers and agencies that buy across multiple markets.
“Now I can sit at my desk in Albuquerque and help a sales manager make pricing and planning decisions in Raleigh,” says VCI's Putnam.
That sort of intelligence distribution, as software executives call it, is common in other industries but relatively new to television. “It's not so much a Big Brother approach as it is offering guidance,” says OSi's Adams. “Fortune 500 companies have been doing this for a long time. We introduced it in 1998 but are now getting traction on it going into 2007.”
The move toward shared, omnibus databases—rather than isolated billing systems that are landlocked in a single TV-station market—creates some interesting geographical transactions. Adams notes that it's possible for a Belo account executive in Seattle, for instance, to enter an order into a database residing in Dallas, which then communicates back to a master-control center at the Seattle location.
Other group owners have adopted similar approaches, although the practice isn't universal. Some groups, including Clear Channel Communications and LIN Broadcasting, employ a mix of centralized and decentralized traffic operations.
EFFICIENCY AND THE LAW
Some station groups believe that it makes sense to leverage the skills of their top accountants beyond just one or two stations, particularly in light of the new audit-control demands tied to Sarbanes-Oxley.
“If you're a group owner and have compliance audit issues, and you're trying to be more efficient and get your best talent able to work across as much of the group as possible to improve your yield,” VCI's Putnam says, “then centralization of the data makes a huge difference.”
Centralizing traffic and billing oversight can improve control of inventory management, reduce make-goods and tighten credit policies to reflect uniform company policies. “Those things create extra administrative costs,” says Putnam, “and they consume inventory that I'd otherwise be able to sell to somebody else.”
Even beyond operational improvements, the move toward centralized traffic and billing reflects a basic reality of the broadcasting business: There are fewer companies, and they own more stations.
“The entities themselves are much larger than they used to be,” says Arthur Drevnig, director of sales and marketing for Toronto-based BroadView Software Inc. “Because of that, they're looking for solutions that can handle multiple network affiliations.”
INVENTORY EXPLOSION
New generations of traffic and billing systems need to accommodate a fresh wrinkle in the business: Instead of simply scheduling and managing TV commercials on one station, software systems will have to keep tabs on a surge of ads from digital multicast stations and station Websites.
The CBS stations group, for example, has integrated its online traffic and advertising operations with its national sales operation so that billing and invoicing flow from a single platform, according to Jonathan Leess, president/general manager for the CBS Television Stations Digital Media Group, who discussed the integration effort at a recent Broadcast Cable Financial Management Association conference.
A similar goal influenced Media General Broadcast Group, which installed a centralized business-management system from Pilat Media Global in 2006, partly because of its ability to accommodate multiple media platforms, including TV, newspaper and online orders. “We will be able to provide our customers with one order and one bill,” said Media General VP of Sales and Marketing Tom Conway in announcing the Pilat deal.
The move from single-channel to multichannel operations is prompting stations to replace “legacy” traffic platforms in favor of more-capable ones that can cope with the increased inventory, says VCI's Putnam.
The proliferation of multicast channels is one reason WideOrbit's tally of station customers soared beyond 500 by late last year. With the addition of digital channels like NBC Weather Plus and The Tube music network, “the station counts are going through the roof,” Mathewson says.
That gives software providers an avenue for growth, although stations generally pay only modest increases to integrate new channels and their associated advertising inventory into existing software platforms.
“If you're telling me I've now got five extra channels, the first thing I'm going to say is, 'I don't want to put in five different traffic teams or sales staffs,'” says Adams. “But I do want them to have all the information available to do that.”
