Reruns of “Boston Legal” and “NCIS” can only do so much to raise the profile of Ion Media Networks.
Ion, built on the back of the extensive chain of UHF stations formerly owned by Paxson Communications, re-launches this week with a new, upbeat slogan—“Positively Entertaining”—and new off-net series.
Ion Media CEO Brandon Burgess said he knows this is just a baby step toward gathering enough viewers to build a business and attract advertisers.
As soon as possible, Mr. Burgess wants some original programming on his network, a hybrid of broadcast in markets where Ion owns stations and cable in those where it doesn’t. It reaches 94 million households but has scant viewership. On one night last week, Ion’s top-rated show was a rerun of “ER,” which did a 0.2 rating in the 25-54 demographic it is targeting.
The company is searching for a top programming executive who can get a nonscripted show on the air by next summer, and a scripted show up and running in the fourth quarter of 2009.
With the TV business entering the digital era, Mr. Burgess wants Ion to be more than a single-network company. Ion already broadcasts two digital networks from its stations: Qubo, aimed at kids, and Ion Life, a Planet Green-like offering focused on healthy living.
Mobile video also is important to Ion, which is working with broadcasters including NBC and Fox, representing 900 local stations, to use their digital spectrum to deliver video to wireless devices.
“We are much further along than people would have expected,” Mr. Burgess said.
Ion, which emerged out of a troubled business deal between NBC Universal and debt-burdened family and religious broadcaster Paxson Communications, took on its current name in 2006. Last year, Citadel Investment Group acquired control of Ion, putting $130 million in new capital into the company.
“The last couple of years have been about digging out. A lot of that has been corporate work dealing with the balance sheet, and that’s sort of behind us now,” said Mr. Burgess, a former NBC executive who has been CEO since 2005.
Mr. Burgess said over the previous two years, when Ion aired low-cost older programming that attracted viewers in the 60-plus age bracket, the company generated $100 million in operating cash flow.
But milking a business that way “is not a way to really build an asset,” so Ion has begun an investment phase.
“We still have to get a rating on the air, we still have to put marketing money against it, and so it is a costly undertaking,” Mr. Burgess said. Ion’s investors “do understand what they got themselves into was sort of a longer-term build process, and I think so far they’ve been very supportive.”
During the most recent quarter, broadcast cash flow was $4.1 million, down from $15.4 million. Free cash flow after capital expenditures and interest expenses was a negative $22.5 million, compared to a negative $9.9 million the prior year.
Ion’s first step is to build an executive team. Most of that group will be based in New York, where the company is expanding. But the company is committed to maintaining staff at its old base in West Palm Beach, Fla., and a network operations center in Clearwater, Fla.
The new programming chief could be based in either New York or Los Angeles, he said. A search firm was hired about a month ago, and Mr. Burgess hopes to have someone in place within a few months.
Ion’s more recent programming deals were designed to create a base of viewership for the new executive to build on.
Because Ion is somewhere between a broadcaster and a cable network, and non-threatening to both, “It gives us a nice little position to be able to carve out our own window, which is a way we’ve been able to secure these off-network shows on a pretty attractive basis,” Mr. Burgess said.
Ion is trying to model itself after one of the big general-entertainment cable networks, with reruns, movies and, eventually, original shows.
“If we could find two original things for next year, I think we would be doing extremely well if could pull that together,” Mr. Burgess said.
While much of the talk in the television business is about serving niches, he sees niche networks such as Court TV and Animal Planet broadening their programming to attract larger audiences.
“If we define ourselves too narrowly, we’re going to get ourselves in trouble by maxing out on the viewership potential. So if you ask me who would you like to be, would you like to be Bravo or would you like to be A&E or TNT, we’d like to be relatively broad,” he said.
Drawing the ratings those channels attract will take a while, he acknowledged.
“We’re going into this eyes wide open,” Mr. Burgess said. “We think this season is going to be largely spent on repositioning ourselves. We don’t have any major ratings-gain objective. If we end up seeing a 0.4-0.5 rating over the course of the season, I think we’ll be fine with that.”
Ion spelled out some of its plans to advertisers during the upfront and attracted a number of new sponsors outside of the pharmaceutical category, which often aims at older consumers. Among the new advertisers is Ion’s first automaker, Honda. Walgreens, Western Union, Expedia.com, Hotels.com and Red Lobster also signed on.
Ad buyer Christine Olson, VP and cable activation director at Starcom USA, said Ion had been “flying under the radar,” but has been working on being more visible.
“I think what Ion’s trying to do is reinvent this network that’s kind of been chugging along and by acquiring some show that might get them some buzz and some sampling from some consumers,” Ms. Olson said.
Advertisers will support another general-entertainment network, if it can “do something that helps them stand out and reach consumers we’re looking for,” she said.
Ion’s ad team also is getting serious.
“I would say they’re user-friendly and trying to get in front of clients,” Ms. Olson said. “They’ve got some catch-up to do, but they’re absolutely getting out there.”
For the first time, Ion is spending money on a marketing campaign, according to Eleo Hensleigh, chief marketing officer at the company. The multimillion-dollar effort highlights the network’s new shows.
“It’s going to be a contemporary network, a smart network and confident network,” said Ms. Hensleigh, noting Ion’s median age has already declined 15% to about 50 in the past year.
“Boston Legal” star William Shatner is helping with the rebrand by appearing in channel identification spots, she said.
The television network won’t be Ion’s only business under Mr. Burgess.
“We spend a lot of time thinking of ourselves not just as a one-channel company, but to use our broadcast infrastructure to originate additional networks, and we’ve done that,” he said. “The other networks that we’re launching can in fact be more niche-oriented because they’re much lower-cost to program.”
Ion also is figuring out how to extend its reach by using its spectrum to deliver mobile video.
“That would be a completely new business for us and it would be a completely nonlinear business.” Mr. Burgess said.
Right now, he’s spending time with device manufacturers to see how to make Ion’s broadcast spectrum part of the reception and transmission system for mobile video. A technology agreement could be reached in the next 60 days, he said, and a beta test could be in market next year.
After that, a business model needs to be built, and that’s a three- to five-year project. He thinks cable networks with no spectrum would be interested in working with Ion to get their programming to mobile devices.
“It’s a game-changing issue,” Mr. Burgess said. “We’re the largest owner of broadcast spectrum in the country, so if we can really pull something together and get the industry to agree that this is an attractive space, we will ultimately be able to help programmers who want their material carried on our spectrum.”