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TV Stations Weigh Risk to Economy

Oct 5, 2008  •  Post A Comment

While the federal government on Friday passed a financial rescue package, the television station business is warily watching the economic storm clouds.
TelevisionWeek National Editor Michele Greppi talked to leaders in local TV to gauge their mood and assess their tactical plan. What she found was guarded optimism, tempered by concerns about specific parts of their operations.
An edited transcript of her conversations with Post-Newsweek Stations boss Alan Frank, Gray Television leader Bob Prather, WMDT-TV owner Berl Brechner and NBC Local Media chief John Wallace follows.
Alan Frank
President and CEO, Post-Newsweek Stations (6 stations)
“All business is tough today. … I don’t know anybody else who is having a good quarter, a good year. We’re all in the same boat. I think there’s a delay on when it’s hitting certain markets, but it’s like a wave coming in to shore. The only question is how far up and how far in it goes.
“We are all in short-term pain. This is just more short-term pain, I’m hoping. If it’s not more short-term pain, it’s catastrophic. That’s a different question.
“I think stations will cut back on everything they can cut back on. … We’re not going to cut back on how we cover news. We’re not going to cut back on how we cover politics. Will we cut back on discretionary contributions to charities? Sure. Will we cut back on expense accounts? Sure. Will we cut back on, you know, tickets to ball games? Sure.
“People will cut back on [memberships in] organizations. Which ones they choose to stay in and which ones they don’t choose to stay in will be interesting.
“Will anchors be worth what they were worth? No. Will people start poaching other anchors? Probably not. You cut back on salaries. The people who had the ability to get higher pay won’t have it. It doesn’t mean they won’t be valuable. It doesn’t mean they’ll lose their jobs. They might, but what it probably means is they probably won’t make as much money.…”
Bob Prather
President and chief operating officer, Gray Television (36 stations)
“The car dealers out there were really, really nervous about credit lines and buying inventory. So from the standpoint that our industry traditionally has been around 25% auto advertising, this [bailout] is a big plus. I’m not a big believer in government getting involved too much, but by the same token, we have an unprecedented situation that requires something the government could do at this point: Give financial institutions a little confidence to start loaning to each other again and to other people.
“We are taking a very close look at all our budgets. We’re looking to cut expenses going into the next year for two reasons. One, we don’t see the economy turning around right away. And No. 2, I think it’s just prudent. No political next year, no Olympics. All those things send a signal to me that 2009 could be tough—and the digital transition I think could have a little bit of a temporary blip a week or two before and after the transition. …
“There are no sacred cows other than our news product. And even there, I think there’s some things we can do smarter and more efficiently. We’re looking at doing more automation in those areas.
“One of the areas toughest to cut is syndicated programming because it’s usually several-years-long contracts, although our syndicated programming is pretty well the lowest cost in the industry because we’ve got so many No. 1 stations. …
“I’m cautious in the short term and very optimistic in the long term.”
Berl Brechner
Owner of WMDT-TV, ABC affiliate and CW 100-plus digital affiliate, in Salisbury, Md.
“We’re in the final stages of digital changeover right now, we’re about half way on this final round of spending, with another several hundred thousand [dollars] to go. The revenues are not paying for that right now. The revenues are barely paying normal operating expenses, so we’re dipping into our reserves to pay for this stuff. But hopefully we’ll be able to pay it out of cash on hand, because you just can’t get financing for businesses that aren’t performing as they have in the past.
“Our local [advertising] is up compared to last year. Our national is down, but our business overall is up a little bit. I haven’t calculated how long we can continue at this level of spending. Whether more dramatic actions would be needed … it’s just not my way of thinking.
“I’m, to coin a phrase, cautiously optimistic. I think there is still business to be had. Our local is growing. We know we have to grow, because national spot is not going to ever come back. We are able to find new niches, new categories of advertising.”
John Wallace
President, NBC Local Media (10 stations)
“I would say that for us, from a business perspective, especially in a down cycle like this, it’s challenging us to reassess our business, our structure. … But are we applying the appropriate resources to [Web, mobile and out-of-home] platforms to be successful or are we still very much managing toward a traditional model that’s clearly under pressure right now?
“In the local markets where we’re playing, we are [under pressure]. The local economies are all feeling equivalent pressure. But my point is more about that reassessment of your structure to insure that you’re putting value on these [new-media] platforms, so that when there is the recovery you’re well-positioned for growth. But certainly, right now, we are feeling in the local markets pressure on all these platforms.
“Right now we’re in our budget season and there are really two things that we’re looking at. If you are looking at our multiplatform business, are we applying the appropriate value to each of the platforms? It forces us to take a hard look at that. Secondarily, you have to look at your costs. You have to look at where those costs are and are those costs aligned to those things that can grow.
“I’m optimistic about localism and all the things that these multiplatforms can deliver, including broadcasting, but cautious about the economy, certainly.”

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