POST-NEWSWEEK: OLD SCHOOL PLUS NEW MEDIA

Post-Newsweek Stations CEO Alan Frank is a broadcaster of the old school. He manages six TV stations as a public trust, accepting certain obligations and responsibilities in exchange for the use of the public airwaves.

So, he will not be alarmed if the Democrats wrest control of either one or both houses of Congress from the Republicans in today’s elections. In fact, he sees the return of John Dingell—his very own congressman—as chairman of the House Energy and Commerce Committee as a vast improvement over the current chairman, the cable friendly Joe Barton.

Frank believes he will be able to work with Dingell because he too understands the ancient pact between broadcasting and government.

Owned by the Washington Post Co., the Post-Newsweek group comprises six stations: KPRC Houston (NBC, DMA 10); WDIV Detroit (NBC, DMA 11); WPLG Miami (ABC, DMA 16); WKMG Orlando, Fla. (CBS, DMA 19); KSAT San Antonio, Texas (ABC, DMA 37) and WJXT Jacksonville, Fla. (Ind., DMA 50). Combined, they reach more than 7% of the nation’s TV homes.

In this interview with TVNewsCheck Editor Harry A. Jessell, Frank concedes that the core broadcasting business is under pressure as one revenue stream—national spot—weakens, but he is confident that new streams from the Web and other digital media will offset at least some of the losses in the years ahead.

In addition, he hints of a new multicasting channel, argues for closer cooperation between networks and affiliates on new media and expresses concern about the difficulties in making new network and syndicated programming stick.

An edited transcript follows:

This interview is going to run on Election Day. How’s the TV campaigning going on your stations?

Until this past week, we were going to have good political, but not great. But in the past week, a ton of candidates, particularly local candidates, who had held their money, came in. They bought everything at the last minute.

You have a good gubernatorial race going in Michigan, right?

And there is a strong Senate race here, too. There’s a strong Republican challenger to Debbie Stabenow and some hot state and local races. It’s just amazing. We have a number of newscasts coming up in which every commercial is a political commercial.

Based on what I find in the Washington Post Co. quarterly reports, Post-Newsweek Stations are performing like most other station groups. Revenue was flat in the second quarter and then, thanks to political, up 11% in the third quarter. What are the fourth quarter and 2007 looking like?

We do not give guidance to the Street. I will let the company do that at the appropriate time. The local TV business is strong and will remain strong

How about for the industry in general? Because of political and the Olympics, the stations seem locked in a two-year cycle—one up, one down.

Two thousand eight could be the mother lode of all election years, a presidential race with no incumbent. So for the short term, that saw-tooth cycle will continue. But growth in the future won’t be as dramatic as the promise of new media becomes more pronounced. However, it’s important to see that TV stations are poised to take advantage of new media as our strong Internet sites will enable us to provide both TV and Web advertising opportunities in political races.

Research shows that the most effective campaigns are ones that have a strong TV component at their heart, but also use other media. We are best positioned to integrate that type of buy across platforms in the future. There’s no doubt that convergence buys will play a bigger role in the future of political advertising—and all advertising—but we are positioned to be significant players as that occurs.

The problem many investors have with broadcasting is that they see one of its major revenue streams—national spot—on a steady decline. Can that be stopped or reversed?

We have been developing all of the other platforms and they are going to be increasing exponentially in the short-term future—Web sites, digital channels, cell phones, video on demand, PDAs. We are going to see quickly a real monetizing of some of these other efforts.

The basic station business is still the heart and soul of everything we do. It’s not one versus the other. They go together. I agree that advertising on the main channel will be under increasing pressure, but what we are going to see is the ability to monetize all these other platforms that we now have the ability to use and promote.

Research is very clear: the best media plans are cross-platform with TV at the center.

So with the contributions from these extra platforms, do you see significant revenue growth for your stations in the years ahead?

I see us remaining a healthy business. I don’t know about significant growth.

Are you reluctant to predict “significant growth” because you are still uncertain about the other platforms?

We have very successful Web sites. We are making money off of them, but we have not really monetized them as we might to reflect the real usage and power of them. The digital channels are just beginning to form and monetize. The cellphones, VOD and the PDAs are still in their infancy.

We still have a very strong position. If we are smart about it and use it in the right ways, we will be able to move that strength across platforms.

Is Post-Newsweek a station buyer?

We would love to buy stations. We think they are still overpriced.

What about duopoly plays?

We are all for them.

Hearst-Argyle just bought the Emmis station in Orlando to form a duopoly. You could have done the same thing. Did you consider it?

We looked at it. We thought it was overpriced.

Does a competitor forming a duopoly in a market adversely affect the stations without duopolies?

We found that it has not. Take our Jacksonville [Fla.] station, for instance. We are against Clear Channel, which has two network-affiliated TV stations [Fox and CBS], a number of radio stations, billboards and this and that. And Gannett has the ABC and NBC stations. Yet, we are still the No. 1 station in the market.

So the real advantage of duopolies is on the cost side—operating two stations out of one facility.

Yeah, but that is typically a one-time-only savings. Once you’ve made the savings, you’ve made it. The next year you’re not increasing your cost savings.

You famously dropped the CBS affiliation in Jacksonville to make a go of it as a news-centric independent. In retrospect, was that a good move or bad move?

I think that it’s been quite good, and I think CBS has been happy as well. They came away with a deal that made them happy. Its ratings are fine—not as strong as they were, but quite fine. And our outcome is very strong. We are No. 1 in revenue in the market. We are spending more money, but we are doing very well.

What do you have in primetime?

Sitcoms at 8 o’clock—Becker and King of the Hill—and Dr. Phil at 9 and then a big newscast. It’s been remarkably successful. The station doesn’t win all of the time periods, but, if you’re an NBC affiliate, you’re not winning all the time periods either. It is quite a station. The people are pumped up. They love what they do. They love how they do it

Did you try to go for either the CW or the MNT affiliation in Jacksonville.

We looked at them for our digital channel, but we couldn’t make the numbers work.

What are your plans for rolling out HD news? I noticed that Cox has just switched to HD news in Orlando. Is that going to force your hand there?

We do what we want to do. We are 16 X 9 everywhere. Different stations are on different timetables, but, as we replace equipment, we will replace it with HD equipment and probably go to an HD studio first before we go total HD.

So, you’re suggesting that your transition will be driven more by your budgets and depreciation of your gear rather than by what the competition is doing.

Yes. Our competitor in Detroit has done the same thing. That’s fine. We still beat them in most newscasts.

I understand that John Dingell is your congressman. What do you think his return as chairman of the House Energy and Commerce Committee would mean for the broadcasting industry?

I think it would be great. I am a big John Dingell fan, and I have been for years. I think he is a great public servant, and I think he has it right about a lot of things.

But will he be good for broadcasting?

Yes, what’s not good about him for the business?

Well, he’s a Democrat, and Democrats tend to be…

That is a very false impression. I think the Republicans over the past 10 years have not been good for broadcasting.

How’s that?

Look at Joe Barton [the current Republican chairman of the House Energy and Commerce Committee]. Has Joe Barton been good for broadcasting?

No. He’s kind of a pro-cable guy.

You’ve got that right. The Republicans have controlled both Houses and everything else and we haven’t received any favors.

It is clear that if you are a good broadcaster, if you understand and take seriously your special responsibilities and obligations, which we do, then operating under John Dingell and Ed Markey [as chairman of the House Telecommunications Subcommittee] is a very positive experience.

Dingell is a straight shooter. There are certain things that he doesn’t approve of that I wish he did, and other things he approves of where I agree with him. I think all you can ask from your representatives is that they are straight and they tell you what they think and that they listen and try to do good public policy.

As you know, I think that consolidation has not been great for our industry. I don’t think it has been great for most industries. It was important to cap network station ownership. I still believe that. I think it is bad public policy to have someone controlling a significant portion of our country’s communications system. I think it is insane.

Well, hasn’t the NAB just submitted comments to the FCC encouraging them to relax the remaining ownership rules, which would lead to more consolidation?

First of all, we didn’t say that you could own anything you want. That wasn’t the point of it. And, second, to relax the rules in small markets [to allow duopolies] is a different question than to open it up for unlimited national ownership.

What about broadcast-newspaper ownership?

Let me be clear. As Post-Newsweek, we don’t have a fight on either [small-market duopolies or broadcast-newspaper crossownership.] We don’t have a position on either one. And, frankly, I’m not sure that [crossownership] is as big an issue as it used to be. But NAB has had a long-held position that it is an antiquated rule and that it is no longer applicable. There is no reason that rule should still be in effect.

Where I differ from a lot of the Democratic congressmen is in demanding public interest obligations without multicast must carry. You can’t have one without the other. It doesn’t make any sense. If there is no must carry, there can be no obligations. It’s all individual negotiations.

Neither Congress nor the FCC looks like it is going to give broadcasters multicast must carry. Do you think you can turn that around?

I don’t know. What we need to do now is to make sure that the digital transition goes as smoothly as possible between now and February 2009 [when stations are required to turn off their analog signals]. We do believe that anti-stripping or multicast must carry is in the future. Big stations and big station groups are going to be able to negotiate for carriage, but other stations can’t and they may be hurt by the lack of must carry.

What is your multicasting strategy?

At our NBC affiliates, we have NBC Weather Plus. Our Orlando station has local weather, traffic and news. We are soon to announce—we are in the last phase of signing documents—a major initiative for almost all of our stations, which we think is very exciting.

Can you say more?

Not now. It is still probably three or four weeks away. It’s really exciting. We’re really pumped about it.

As an NBC affiliate, do you have any thoughts on NBC’s plan to look for less expensive programming to fill the 8 o’clock hour?

NBC has tried to suggest that that isn’t their plan. Viewers don’t look at shows as being expensive or not. They look to see if shows catch their imagination and are relevant to their lives. Great networks over the years have always been a mix of genres—something for everyone. I think that is still the key for a successful primetime schedule.

However, if any of the networks would like to give us an hour back in prime, most affiliates would be delighted to take it. At Post-Newsweek, we would also be delighted to get back the morning news hours. In Jacksonville, our morning news ties with Today. We kill Good Morning America. We kill the The Early Show on CBS. One of the great benefits that Fox affiliates have is the morning news time—it’s local from 5 to 9 a.m.—and the 10 p.m. news.

Are you satisfied with the way the networks are treating you with regard to downloads and streaming of primetime shows on the Web?

We are working on it. We are trying to figure ways to do things. It’s difficult. The guiding principle should an alignment of interests. That’s all. So when they do something, we should be in the same boat.

The Fox affiliates have made a deal with the network to be a part of everything the network does. We have a deal with NBC on the weather channel and on the NBBC, the National Broadband Company. We are working on the downloading and streaming. We are working on a deal with ABC for a video player, which is terrific. At CBS, they have one deal and they are working on others. There is no clear one size fits all.

The goal has to be that we all contribute things to keep us aligned. It’s not to anybody’s benefit to have us operating with separate interests. Then, all they become to us is a program source. If that’s the case, we can talk to Roger King or to Paramount.

Looking ahead to 2007 and beyond, what causes you concern?

It’s harder to launch shows these days and that is a problem. I’ve got Rachel Ray on the air right now. She is a great talent and they are working at how to move this show from what it was on cable to what it has to be in syndication. Hopefully, she will have a long future. But the other new shows in syndication are dying.

I thought a lot of the pilots for the network shows were terrific, but it’s difficult to make them all successful week after week. So where you have a great show like Ugly Betty and a terrific show like Heroes, the rest of them are having trouble sticking. That’s a problem.

The networks have to figure out how to stop introducing everything at once in September. If they had introduced a couple shows in September, a couple in November, a couple in January, a couple in March and a couple in May, you could come up with more shows that stick.

I guess the networks continue to make the big push in the fall because they do not want to disrupt their upfront selling in the spring.

I understand, but the down side of that is that they are going to disrupt their ability to deliver audiences. At some point, that is going to kill you. The networks have to do something that give them a chance to get shows on and sampled. They are eating their young now. The great shows on ABC go against those on NBC and they go against those on CBS. Then, all those niche cable networks with point-ones, point-twos and point-threes get life.