BUSINESS, Page 72The Sky's the LimitUsing satellites and other technology, local television newsoperations are boosting profits and bypassing the networksBy 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
