No matter how elaborate or how simple a telco’s local content business, they all have one thing in common: They are not profitable — at least not in a way that’s quantifiable.
“Local content does add value, but it’s not a game-changer or a way to make money,” said Bernie Arnason, managing partner for Pivot Media. “It’s a way to build stickiness, but it’s not a profit-center at all — at least not yet.”

While ETC won’t say how much it has spent during the past eight years, the company is only breaking even on its content business and perhaps is even losing a little money, said Will Beattie, director of customer relations for the telco.

The ad-insertion business helps offset programming costs, though. And because the company has enough material to operate several of its own channels, it reduces what the company must pay to fill its channel lineup.

“You have to look at the impact [local content] has on your company as a whole when you get a well-respected on-air personality to join your company,” Beattie said. “That has a true value. Seeing your grandchild playing in a football game on TV has value. We’re adding to our bottom line and adding stickiness to our cable and telephone services and to our brand.”

Dean Mohs, chief operating officer for diversiCOM, agreed. The telco operates a local TV channel called School and Community Television, which broadcasts programs that are filmed on location and in the company’s studio.

“We’re losing money, but we still do it as a community service and for the stickiness,” Mohs said. “As competition gets tougher, you need something that makes people see value in what you provide, so it’s important that we have local content.”

Valley Telecom Group, a telco operating in rural Arizona, began its local programming eight months ago as a community service program. The company is creating local channels for each of the 10 school districts in its serving area that teachers and students can use to broadcast content filmed in the schools.

“Our intention was never to make money at it,” said Jeremy Graves, chief operating officer of marketing and competitive services for Valley Telecom. “We wanted it to be something unique for our communities. In fact, if there is any advertising on the school channel, such as a scoreboard sponsorship, we let the school keep 100% of the ad dollars for themselves.”

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