TIME: Almanac 1993/TIME Almanac 1993.iso/time/112789/11278900.008

Text File | 1992-09-23 | 9.8 KB | 190 lines

                                                                                BUSINESS, Page 72

The Sky's the Limit


Using satellites and other technology, local television news
operations are boosting profits and bypassing the networks

By Janice Castro


    For Dan Casey, it was the story of a lifetime. A television
cameraman for WSB-TV, the Atlanta affiliate of ABC, Casey
narrowly escaped death last week as a Georgia tornado flattened
his mobile broadcasting van. Casey's tape of the tornado was
dynamite. Alerted that evening by WSB that the story was being
transmitted by satellite, ABC News decided to use the gripping
footage as its lead on Nightline. By the time it did, however,
thousands of viewers had already seen Casey's emotional report
on Cable News Network, an ABC rival.

    Much the same humiliation befell NBC's network news
operation after last month's California earthquake. KRON, the
NBC affiliate in San Francisco, tried to transmit its footage
of the disaster to NBC via satellite. But for more than an hour
after the tremor, a glitch-prone NBC network was unable to
broadcast any live reports. Meanwhile, CNN, which had access to
the same satellite signal, was airing KRON's vivid images of the
destruction.

    What's going on here? In almost any other industry, CNN's
coups would be viewed as nothing short of piracy. But television
is a business built on tenuous alliances. While the three major
broadcast networks -- ABC, CBS and NBC -- have long been the
dominant U.S. television programmers, they own only 20
stations. The other 620 that carry network programming are known
as affiliates. These stations have traditionally served as
supplementary news sources for the networks, but only loyalty
and a common stake in competing against the other networks have
prevented the affiliates from gathering and selling their
stories elsewhere. Until now.

    Affiliation with a network no longer offers the protection
from local competition it once did. To stand out amid
increasingly stiff competition, many local stations are turning
to expanded news programs. Journalism is local television's
biggest money spinner, typically accounting for at least a third
of a station's revenues and an even higher share of profits.

    At the same time, technology is breaking down the links
that join networks to their affiliates, and is blurring the
lines that distinguish big stations from small ones, and network
affiliates from the country's 400 independent stations. The main
culprit: satellites. By providing a relatively inexpensive
electronic highway over which video signals can be transmitted,
satellites have created a new industry of program suppliers that
can offer local stations a broad variety of material once
available only from the networks.

    The growth of cable has also undermined network influence
by dramatically expanding the number of channels available to
viewers. During the past ten years, as cable has extended its
reach to 56% of U.S. homes, the average network share of
television audiences has plummeted, from 90% to just 61%. At the
same time, the network share of television advertising revenues
has diminished, from 45% in 1979 to 36% last year. Cable
operators absorbed much of the ad spending that the networks
lost, according to Alan Gottesman, who follows the broadcasting
industry for Paine Webber.

    Cable's growth has made it harder for local stations to win
viewers as well. The affiliates are especially hard hit, since
they must take 21 hours a week of increasingly unwatched
prime-time network programming. They are reluctant to give up
that burden, since they receive at least $140 million a year
each from the networks for shouldering it. Independent stations
have somewhat more latitude, but both groups are hungry for
programming that sets them apart from cable and from each other.
Among their alternatives are better movies and syndicated reruns
of popular network sitcoms like Cosby, Cheers and, beginning
next year, Golden Girls. But those do not come cheap. Cosby
reruns can cost a station as much as $350,000 an episode.

    Yet news coverage is just about the most profitable thing
a station can do, in part because production costs typically are
less than half those of entertainment shows. And since news
stories can be used repeatedly on broadcasts throughout the day,
stations can sell more advertising time a minute of material,
further increasing their profit margins. Moreover, many
advertisers will pay premium rates to run their commercials
during news shows because such programs generally attract
consumers with higher average incomes.

    At ABC affiliate WCVB in Boston, news shows accounted for
39.5% of the station's revenues last year. WCVB boasts that it
has the largest news staff of any U.S. station -- 350 reporters,
producers, anchors and technicians -- as well as two trucks
equipped with satellite uplinks to beam stories back to the
station from remote locations. News departments at dozens of
U.S. stations today own their own satellite-transmitting trucks,
up from only a handful five years ago.

    To bolster the reputation of their profitable newscasts,
local stations send their anchors scurrying all over the world
to report major international news stories that were once the
domain of network reporters. California anchors fly off to
Central America, Beijing and Tokyo. When East Germany began to
break down the Berlin Wall two weeks ago, dozens of local U.S.
news teams headed to Berlin from markets as big as Seattle and
as small as Manchester, N.H. Says John Spinola, general manager
of Westinghouse-owned station WBZ in Boston: "Every time I look
around, we've got someone out of the country."

    Like newspapers that subscribe to the Associated Press and
other wire services, hundreds of stations are also expanding
their reach, and often cutting costs, by subscribing to video
news services, swapping coverage with other broadcasters, or
making deals to get their stories on cable stations. WWL, the
CBS affiliate in New Orleans, has its own all-news cable
channel. Half a dozen video news services offer prepackaged
stories to fill out local newscasts. One of the largest services
is Conus, a news cooperative with 100 U.S. member stations.
Other leading entries include Group W Newsfeed, a division of
Westinghouse, and Visnews, an international video news wire.
Recognizing the potential of these nonnetwork sources, NBC last
year bought 38% of Visnews.

    For 220 broadcast stations, though, perhaps the most
important new partnership is the one they have formed with CNN.
Both KRON and WSB are among the 121 network affiliates that are
CNN partners. The Atlanta-based cable network airs stories
provided by its partners via satellite, and distributes the
stories to other station partners for their use. Broadcasters
believe local viewers who catch their news teams on cable may
be more likely to tune in the station if they like what they
see. Says Peter Herford, a former CBS News executive who directs
the Benton Broadcast Fellowships at the University of Chicago:
"All of these factors are pulling apart the traditional
relationship between the networks and their affiliates."

    Until now, the broadcast networks had not viewed the CNN
partnerships as much of a threat, since most of the stories
involved never ran on the networks anyway. Those days are gone.
When NBC News delayed switching to live coverage the night of
the California earthquake, for example, CNN effectively replaced
the network for CNN's 45 NBC affiliates by feeding them the
live coverage from KRON in San Francisco and KNBC in Los
Angeles.

    A frustrated Michael Gartner, president of NBC News, later
told the New York Times that the arrangements his affiliates had
made with CNN "must be explored sooner or later." But the NBC
affiliates rebuffed Gartner's suggestion. "It's too late for the
networks to go back to the old way, when they were the only ones
we associated with," said Bob Jordan, news director of NBC
affiliate KCRA in Sacramento. "Too many affiliates have other
partnerships now and are unwilling to give them up."

    As local stations become increasingly aggressive, the
networks are trying to reshape their own news products to offer
affiliates something more than the day's headlines. All three
networks, for example, run long special features during the
regular evening newscasts and are experimenting with new
concepts, such as 48 Hours on CBS and ABC's Primetime Live. Some
news thinkers go so far as to wonder whether the network evening
newscasts have a future. Says Andrew Stern, who teaches
broadcast journalism at the University of California, Berkeley:
"At some point you have to ask, What do the local stations need
the networks for? The answer does not seem to be news."

    Other analysts are less pessimistic. After all, the quality
of network newscasts is still higher than the
crime-and-accident-heavy fare on most local stations. Instead
of trying to make the day's headlines interesting to viewers who
may already have seen them twice, some critics suggest that the
networks offer more in-depth analysis. Says Herford: "Maybe
Nightline is the model for the future evening newscast. Maybe
the networks should tackle the one or two most important issues
every day during that half hour."

    Considering the respect that Nightline and 48 Hours have
won within the TV industry, and the millions of people who
regularly watch the shows, it may be that network executives are
ready to admit something that viewers know instinctively.
Audiences who see satellite-fed video headlines round the clock
on every channel may be ready for something more substantial at
the dinner hour.


-- Robert Ajemian/Boston and Tara Weingarten/Los Angeles