Last summer DirecTV cut a deal with National Cable Communications whereby NCC will sell local avails on DirecTV’s regional sports inventory. The entities said the partnership would be a win-win for both sides even though the satellite provider and the MSOs that own and contract with NCC directly compete for customers. NCC president Greg Schaefer spoke with Local Ad Sales contributor K.C. Neel late last month about the deal. Schaefer joined NCC in 2002 as chief operating officer and took the reins of the organization on Jan. 1, 2004. Before that he spent the last 25 years honing his expertise in broadcast ad sales on the station and representation sides of the business. He started his career at Ted Bates & Co. and has held positions at Telerep, Group W Television Sales and CBS Television Sales. An edited transcript follows:
Q: NCC was to beta test the national spot sales for DirecTV in Chicago and add other markets. What did you learn from the best test in Chicago and have you added other markets yet?
A: We had to work out connectivity issues which took longer than expected. Subsequently, we delayed the testing process to November and our projected sales start to December 1st in Chicago. Due to this, we have delayed the roll out of the other markets until 2009.
Q: Do you look for new and different advertisers or are the existing spot advertisers clamoring for the DirecTV spots?
A: Our existing sports advertisers see the value as they will benefit from larger audiences which they can take advantage of. In addition, advertisers that have shied away from wired cable in low penetration markets will now be attracted to our combined offering.
Q: How have operators reacted to the idea of working with their competitors?
A: The operators in markets involved have embraced the business relationship because the DirecTV audiences are purely additive to our interconnect offerings. As a result, cable can compete for a larger share of the local dollars versus broadcast. Obviously, NCC couldn’t have constructed this deal without the support of Comcast, Time Warner, and Cox who manage these markets.
Q: Has this deal paved the way for other partnerships with competitors such as the phone companies and are they interested in having you sell national spot ads for them?
A: We already represent Verizon and my hope is that we can eventually put all platforms delivering cable programming into our interconnects and submit a single offering to advertisers. Making cable easier for the buyer to purchase remains our mission at NCC.
Q: What are the hurdles for such a program?
A: Nothing that is insurmountable. Once we establish connectivity between the different traffic systems, there is a need to sync up the local breaks of DirecTV with those of the interconnects.
Q: What’s the upside?
A: There is tremendous upside. We are setting this up so it is scaleable once DirecTV can do local ad insertion on national cable networks. NCC has now surpassed the billion dollar revenue threshold. We’ll eventually be adding over 17 million DirecTV subscribers to our 69 million wired cable homes … you can do the math yourself.