Wednesday, August 13, 2008

TribCo.'s 'Core Asset': Local TV Stations

What is the incredible, shrinking Tribune Co.'s "core asset"? For most of its history, it was the media concern's far-flung empire of major daily newspapers. These days, under new CEO Sam Zell, it's TribCo.'s merry band of local TV stations, including Chicago's Very Own WGN-TV. (Home of Garfield Goose aka "King of the United States.")
As a result, the TV stations--which were viewed as cash cows but also a necessary evil under previous TribCo regimes--are poised to drive the company's business, including its Internet expansion.
As TribCo.'s newspapers are chopping away at staff, undergoing crash courses in redesign and scrambling to keep nervous advertisers, the TV stations are starting to add hours of fresh programming to their newscasts and make the cash register ring.
Recently, TribCo. announced that half of its 23 station are adding hours to their local newscasts and many of its other stations are expected to follow suit. Locally, WGN-TV is expanding its local newscast hours this September. It's already added anchorman Mark Suppelsa to its on-air roster and intends to give weather guru Tom Skilling even more time to discuss the Alberta Clipperand other meteorological wonders.
Why this sudden love of more local news? Let's say it's not just to better inform the public. Rather, this is a fast--and relatively painless way--for TribCo to generate revenue and make more money.
One media buying pro, a veteran of major commercial advertising buys, sees it this way: TribCo. is already paying for the sets, anchors, electricity and everything else needed to put on its current newscasts. Expanding the number of on-air news hours gives each station a bigger bang for that buck (and you get to work current staff harder). In return, viewers get more content while a greater amount of commercial inventory is created and sold to sponsors.
TribCo especially likes that it owns all of the added advertising time generated by these extended broadcasts. That's a better deal than buying less-popular syndicated programs, like a Montel Williams, to fill the day. (I'm not talking about ratings winners like Oprah, Wheel of Fortune, or Judge Judy!)
This way, TribCo doesn't buy any programming and it retains all the advertising dollars from its own local newscasts (this also aces out owners of syndicated programs, which own and sell a portion of the ad time linked to the airing of their shows).
What's more, because the costs are contained, the newscasts' ratings don't even have to be very good to turn a healthy profit.
But wait, there's more.
The additional newscast content can be reconstituted for each station's local web portal. And you guessed it: That video can be leveraged to accompany more paid advertising.
TribCo isn't alone, Fox is also adding hours to its newscasts and the network stations have also bulked up morning news shows.
What's all this got to do with the fate of the Tribune Co.?
Well, it's no secret that Zell & Co. don't have a great deal of faith in the current newspaper business model. They're hoping that impending redesigns and cost cuts (which are underway at the Chicago Tribune even as we speak) will pump new life into that business segment.
In the meantime, Zell is looking to generate some fast revenue to help pay down that estimated $13 billion in debt. The company just posted a second quarter loss.
If there is such a thing as a "core asset" to this company it's not the newspapers, the newspaper-linked web sites, the Chicago Cubs (which are being sold), or even the Tribune Co.'s real estate holdings (which are also heading for the sale block).
Nope, it's the local TV stations.

Hello, Huffington The Chicago version of the Huffington Post comes to town this week.
My friends at MidwestBusiness.com have a nice take on this turn of events. Click here to read its post
Periodically, this blog will be picked up by the Huffington Post. Hey, the more the merrier.
Welcome, Arianna & Co.!

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