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Chancy Indie Road Ahead

Jan 30, 2006  •  Post A Comment

Are things about to go from bad to worse for many of the country’s small-market TV stations?

Amid the cheers for the planned shutdowns of The WB and UPN to form The CW Television Network is a growing concern that some television stations, especially those in smaller markets, are about to see an already rough road get a lot rougher.

Though many of these soon-to-be-former WB and UPN affiliates will get a crack at securing a CW affiliation agreement, many stations are going to find themselves orphaned once The WB and UPN cease operations in September. The result will be a bumper crop of independent stations coming on the scene at a time when being a small-market television station, let alone an independent one, is far from easy.

This is especially true if Fox or another programmer doesn’t start a sixth network or if some other sort of unwired network doesn’t develop.

“It is more challenging to compete in the marketplace without some sort of brand,” said Mark Fratrik, VP and researcher with BIA Financial Network, a Chantilly, Va.-based TV station consulting firm, who asked: “How do you distinguish yourself from USA and FX?” (cable channels that are carrying similar syndicated programming in many cases).

The exact number of WB- and UPN-affiliated stations that could find themselves without a network link remains an open question, partly because officials of the new network have yet to begin naming affiliates. Some estimates have as many as 50 or 60 local stations becoming independent following the launch of The CW this fall. BIA Financial has calculated that there are 61 markets in the United States where both full-power WB and UPN stations operate.

The criteria to be used in selecting CW affiliates is said to include ratings strength, what’s in the best interest of the network, signal strength, the ability to pay reverse compensation and the station’s ability to promote CW programming. What’s more, CW officials could entertain pitches from stations other than the existing WB and UPN affiliates, including affiliates of other networks that might offer up a digital signal, for example.

For a lot of small-market television stations, things were already difficult before news of The CW broke. Due to the dwindling amount of network compensation, declining audiences, an uneven advertising market, the digital signal conversion and a raft of other issues, many stations have been barely getting by. Sources said the situation was particularly challenging for stations tied to The WB and UPN, since many lack news operations and have been further hampered by the networks’ weak prime-time ratings.

Asked what will become of many of the stations that lose their network affiliation, one station group executive put it succinctly: “Toast.”

The situation for many of these stations is particularly dire because these soon-to-be-former UPN and WB affiliates relied heavily on the networks to carve out their stations’ brands, many sources said. And because only a few have news operations, many owners will find themselves trying to create an image for their station-a tall order for a station already at a competitive disadvantage.

Then there’s the issue of programming. With many small-market stations already finding it challenging to make ends meet, owners have liked the idea of UPN and The WB taking care of at least a portion of their programming needs. Once those networks go dark, however, those stations will find themselves having to pay for content.

One former station owner said that many operators of these newly independent stations will be in for a serious education: “Programming an independent is totally different,” he said.

To be sure, the challenge facing newly orphaned stations won’t be as daunting as it has been for some stations. Indeed, WB and UPN stations have fewer hours to program than an independent that was once an ABC, CBS or NBC affiliate.

In many cases, the task ahead involves finding content for a two-hour block in prime time-a far easier task than having to come up with replacements for morning news shows, three-hour prime-time blocks and daytime programming.

However, in the case of stations that once had ties to the Big 3 networks, there was usually a news operation upon which to build-something many of these WB and UPN affiliates don’t have.

The impact of the shuttering of The WB and UPN on station values is another question mark.

While many believe the stations with CW affiliation might get a boost, the fate of the independents remains up in the air. Some say their values will drop in general, while others see it on a more case-by-case basis.

A major factor affecting the values will be how these new indies react. Many station executives say that it is simply too early to predict these stations’ next moves. Some station officials said there could be opportunities for them to snag rights to carry local sporting events. Many syndicators seem to be expecting a windfall, as shows that were marginal may now look attractive against the new landscape.

And despite the bleak outlook, there are those who believe this sudden shift represents an opportunity for orphaned stations.

“There is a potential for them to build a new business, to build a true independent television station business, which went away with the creation of the UPN network and The WB network,” said Bruce Rosenblum, president of Warner Bros. Television Group. “That independent station business hasn’t been around for a while. Somebody will come up with an idea that will allow these independent stations to have a viable business model. It just won’t be part of The CW.”

Then there’s Rupert Murdoch’s News Corp., which now finds itself having to program several stations that were carrying UPN content. While the media giant hasn’t signaled what it might do, there is speculation the company might have some ideas for programming that could be picked up by some of the newly independent stations.

Yet even though the outlook is cloudy for the indies, several sources warned that stations that get The CW affiliation might not have it much easier.

Several industry players, including executives of a number of station groups, are predicting that many markets could experience bidding wars among stations trying to land The CW affiliation, with some stations agreeing to make lofty reverse compensation deals to avoid the headaches of being independent.

“In many cases it could be a game of jump ball, and bidding wars could come in [some owners’] desperation,” one station group executive said.

Michele Greppi and Christopher Lisotta contributed to this report.