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said Sagan, just as broadcast channels receive commercial revenue. However, Paulus,Smythe and others who run microlocal news channels said they do not receive their fairshare of advertising sales, both because of the audience ratings services’ failure tomeasure small audiences correctly and because advertising agencies have not realizedthe true value of either the size of the microlocal news audience or the value of havingcommercial messages surrounded by community-oriented news and informationservices. Smythe said her channel reached more viewers than any broadcast station inOrlando—and more people than read the daily Orlando Sentinel— but advertiserswere still slow to accept the local news channel’s audience.But in addition to commercial revenue, noted Sagan, the local news channels canalso benefit from per-household fees charged by cable companies. Just as your localcable company pays CNN, ESPN, Nickelodeon and other popular national cablenetworks a monthly fee to televise them locally, microlocal 24-hour channels cangenerate carriage revenue from local cable operators. New York 1 reached 2.2 millionsubscribers by early 2003, according to Paulus, with 170,000 more scheduled to comeon line in the Hudson Valley north of New York City. The channel was also scheduledto expand to Albany, New York—that is in addition to the separate all-Albany localnews channel Time Warner will start. New York 1 has been available on the Internetfor years, at http://www.ny1.com/, along with a video archive that now totals over15,000 clips. And Paulus said he would be delighted if New York 1 went national oncable and satellite to offer expatriate New Yorkers news from home. Expanding thechannel’s reach can add new per-subscriber revenue at minimal cost, he noted.And when a local cable company launched a microlocal news channel, Sagan said themotivation was often at least in part a desire to avoid paying someone else those perhouseholdfees. Sagan pointed to Time Warner’s New York 1, which covers New YorkCity and is ringed by Cablevision’s News 12 channels covering New Jersey, LongIsland, Westchester and Connecticut. Time Warner not only charges Cablevision tocarry the New York 1 channel—and some Cablevision systems feel it is essentialprogramming—but also could have faced making payments to Cablevision ifCablevision had moved its local news channel into New York City.They are also an effective defense against “overbuilds”—new cable companies that arecompeting for viewers in some cities, such as RCN, that compete with Time Warnerfor cable subscribers in New York City.“If you have Time Warner Cable you will have New York 1. If you have RCN youwill not have New York 1,” is how Paulus summarized Time Warner’s pitch to waveringsubscribers:Sagan said 24-hour local news channels are “differentiated programming” that candefend the entire cable television industry because no one else can provide theseservices, at least not yet. In particular, according to Sagan, the microlocal news channelsrepresented effective defensive programming against DirecTV and other satelliteoperators, that do not have channel capacity to distribute local news channels.Two news channels recently ceased operation in Los Angeles and San Francisco:Klein and Sagan also noted the recent failure of the 24-hour local news channel servingOrange County, California, could be traced at least in part to its unique lack ofpartners. The channel was started by a local newspaper, the Orange County Register,with neither a cable nor broadcast news partner. In the end, the stand-alone channel64Feedback April 2003 (Vol. 44, No. 2)