The broadcasting head and chief revenue officer says the plan to move Tribune out of bankruptcy hinges on increasing each station’s local identity and sharing that task with co-owned newspapers where possible. And in markets where it doesn’t own papers, to partner with those that do.
Chicago investor Sam Zell said two weeks ago that if he had to do it over again, he wouldn’t have taken the financially troubled Tribune Co. private in a highly leveraged deal in 2007. With newspaper and TV station revenue in freefall, he said, the numbers just don’t add up anymore.
But Zell did it. Now, under protection of Chapter 11 bankruptcy, Zell’s management team is working hard to align revenues, costs and debt and demonstrate upside in a way that will appease the unhappy debt holders.
A key player on that team is Ed Wilson, president of Tribune Broadcasting (23 TV stations, WGN-AM Chicago and cable’s WGN America) and chief revenue officer at all the company’s properties, which include the Chicago Tribune, Los Angeles Times and Baltimore Sun. He reports to Randy Michaels, the former radio executive who sits at Zell’s right hand as COO.
Wilson is well known to the top ranks of broadcasters, mostly as a purveyor of syndicated programming — at his own company (MaXam Entertainment) and later CBS Enterprises and then NBC Enterprises. For the four years prior to joining Tribune in February 2008, he was president of the Fox Television Network.
At Tribune, Wilson has taken drastic moves to contain costs, most notably merging the Tribune CW affiliates in St. Louis (KPLR) and Denver (KWGN) with Fox affiliates there belonging to Local TV. (Under a unique setup, Michaels and Wilson not only manage the Tribune properties, but also the nine Local TV stations.)
On his watch, Tribune has also merged the operations of its newspaper (Sun-Sentinel) and TV station (WSFL) in South Florida and is in the process of doing the same with its paper (Hartford Courant) and stations (WTIC and WTXX) in Hartford, Conn.
But, as Wilson discusses in this interview with TVNewsCheck Editor Harry A. Jessell, at the same time Tribune is squeezing dollars out of its operations though whatever efficiencies it can find, it is expanding news and other local programming at TV stations where it makes sense in hopes of putting them — and the company — on a path to long-term growth.
An edited transcript:
How does the bankruptcy affect your ability to do business in Hollywood and among the tech vendors?
There’s the fear of doing business with someone who’s in bankruptcy. Ironically, our credit is really very good now. If you talk to the distributors, if you talk to others, we’re paying our bills. The challenge for us — and the challenge for anyone in bankruptcy — is how do you create a business model going forward that can last for years to come. That’s what bankruptcy is allowing us to do.
So what’s your strategy on the broadcasting side for helping dig Tribune out of the financial mess that it’s in today?
On the broadcast side it’s all about being local and it’s about being relevant to your local community whether it’s through news, sports, local programming.
How is that being manifested?
We can focus on individual local markets. Look what we’re trying to do in Los Angeles with KTLA. We’re trying to make it the television station it used to be — a local news station that mattered. We added a 4:30 morning news so we go from 4:30 until 10. We added a 1 p.m. news, we added a 6:30 news, we added a weekend 6:30 news. We’re trying to do more news and trying to do it better.
What about local non-news programming there?
Sure. If you look at Los Angeles, you have to say it’s the entertainment capital of the world. Shouldn’t we be doing some entertainment programming? You’ll hear us announce a few things in the next few months that will relate directly to that.
I know that you have just launched a morning news service in Miami where you combined your station [WSFL, CW] and your newspaper [The Sun-Sentinel].
Miami’s a tough market. You’ve got a very successful Fox affiliate, you’ve got a great ABC station, you’ve got a good CBS and a good NBC. How do you become relevant there? We felt we would be more relevant and more local by combining our newspaper and our television station. So when is a newspaper the most relevant? When you wake up in the morning. We dropped the 10 o’clock news that we were buying from NBC and instead chose to go with four hours in the morning that we would produce ourselves from a set that is built there inside the building where we house our station and our newspaper.
And what’s the plan for Hartford where you are also combining your TV [Fox affiliate WTIC and CW affiliate WTXX] and newspaper operations [The Hartford Courier]?
More news, better news, more content. And the ability to have the editors of the newspapers contribute on a daily basis to the television station’s news I think is just a positive.
And then the other big move was San Diego where you picked up the Fox affiliation and launched a news operation. Is there anything else you would like to mention in terms of local programming initiatives?
We can talk about sports in Philadelphia where we picked up the Phillies and that is obviously something that makes us more of a local television station.
How many games are you picking up?
Well, that’s really bucking a trend. Baseball on local stations has been rapidly disappearing.
Hopefully, a lot of these guys will come back to broadcast.
So you’ve merged your newspaper and broadcast facilities in South Florida and Hartford. What about L.A. and Chicago?
Not at this time. Both have particular issues, either the space limitations in Chicago or just some other issues in L.A.
You also have papers in Norfolk, Orlando, Baltimore. Why not do deals with one of the broadcasters in those markets?
You’re a bit ahead of me. We’re in the middle of discussions right now.
So that could happen in all three markets?
Yes it could.
In addition to the local initiatives in Miami and Los Angeles, you picked up the Fox affiliation in San Diego and are starting a full-blown news operation there. Overall, has the group netted more or fewer employees over the past several months.
Actually we’ve probably netting more employees. Certainly, we’re netting more employees at stations where we’re producing news and we’ve added sales people because, like I said, the future is going to be much dependent on us being a local television station. The future revenue of our television station is more and more coming from the local market instead of the national market.
Because you have CW and Fox affiliates, you are heavily reliant on syndication. Are you happy with the syndication mix you have now?
Obviously we’re very pleased with Two and a Half Men and The Family Guy, and our other sitcoms and our daytime programs continue to perform. One of my greatest concerns is the available product in the future. It’s a scary business right now, isn’t it?
The difficulty of syndication right now is in Los Angeles. When you have a market that’s a $1.2 billion going to, let’s say, $700 million or slightly below, you lose $500 million in revenue. That cost has got to come out from somewhere and probably one of those areas is going to be syndication.
That’s exactly what I’m hearing from the syndicators. They’re getting squeezed hard.
They’re getting squeezed hard and if they can’t make money with new first-run programming, then why would they do it?
You tell me. How can broadcasters expect first-class programming with strong promotion behind it if they’re not willing to pay for it?
Yes. I agree with you that it can be a self-fulfilling prophecy, but we’ve got to survive today.
Do you expect first-run product as we’ve known it becoming available this year for 2010?
Yes. I hope so. And I think that you can expect Tribune to be a player in that marketplace.
Have the syndicators pitched anything to you yet?
For 2010? Yeah. There are some developing projects out there.
What happened with to T.D. Jakes? Everybody expected you to sign on for that for this fall.
I think that CBS felt that there wasn’t enough money in the marketplace to justify it at this time and were probably a little late. So it’s one of those shows that they’ve got in development.
So that’s a possibility for 2010 now?
I think you could say so. Yes.
You’ve had a pretty good run with Two and a Half Men. Have we seen the end of deals in which TV stations get the first window on the best sitcoms? Or is everything going to go to cable first?
Yes. I think we have. But one of the reasons that Two and A Half Men has performed as well as it has, besides the fact that it’s a great sitcom and very well written, is that we have it first. That exclusive window has helped our ratings.
But you think that will be the last such deal?
It’s all going to be dependent on how aggressive the cable networks are and dependent on the show and whether it’s a show that we feel strongly enough about to try to keep. Quite honestly, it’s all about dollars and cents. Are we willing to pay enough to keep it exclusive to broadcast for a couple of years?
You know the numbers better than any man in America, so what do you think? Do you think Tribune or another good sized station group can afford to get first dibbs on some of these shows?
I do. Two and A Half Men is a show that works for us. The ratings are good and the revenue is good — not as good as it probably was a couple of years ago — but it’s still far better than shows that were competing with cable for an audience.
Like a lot of some other station groups, Tribune talks a lot about cross-selling, getting your AE out there selling print, broadcast, Web sites simultaneously. Is that really practical?
We’re doing it. We’re doing it in every market, selling interactive and television together. It’s about training; it’s about preparing your people. We feel it’s working.
The other talk is business development, trying to drill down deeper into the local markets. What are you doing to motivate your AEs to go after smaller accounts?
We have an ongoing sales contest and every Friday we update who the leaders are. At the end of every month, we have a cash bonus that’s awarded to the person who generates the most new local direct business in one of three categories. We share that information with every sales person and manager inside of the company so that the people that make the effort, make the cold calls on clients who aren’t advertising on television, are not only rewarded with a higher commission for those sales and a bonus, but also the recognition of their peers.
You have important My Network TV affiliates in Philly and Seattle. You’ve got to be disappointed with the performance of the network so far.
In Seattle, we have a strategy that would include more local programming, more news.
I’m talking about primetime. Are you sticking with MNT with its new off-network syndication lineup?
Yes, yes. Quite honestly, I think they’re probably going to do a pretty good range of ratings.
You also have some big Fox affiliates — Seattle, Sacramento, Indianapolis, Hartford, Harrisburg — and an ABC affiliate in New Orleans. Are you disturbed by seeing the best of Fox and ABC programming all over the Internet?
You know what, I think that it’s a difficult situation for those guys because they’ve got to monetize everything they have. It could almost be a chicken-or-egg kind of thing. If they put it on the Internet, does it mean the demise of our business? If they don’t put it on the Internet, does it mean that they can’t get any good programming? In a perfect world, you have product exclusives. We don’t live in a perfect world though.
But don’t you think the Internet plays will ultimately eat away at your viewership?
Yes, but who else is going to give me quality? Who else is going to give me American Idol? Who else can give me Dancing With the Stars, Desperate Housewives, Lost, Grey’s Anatomy, Ugly Betty, Samantha Who and Cupid. To get that, I’m going to have to understand that they’ve got to be able to make money. Those are big investments.
You are the chief revenue officer for Tribune. Looking ahead, what do you see as the big growth areas in terms of revenue?
You’re a big believer in that?
You can reach a lot of people and target the demographic. I can give you 12-24, I can give you 18-34, I can give you 18-49, I can give you 25-54 and I can give you 50-plus. I know exactly who they are. If we can work with the carriers and if we can work with the advertisers, it’s going to be a great opportunity.
The Internet is going to continue to be a great growth area, too.
Working with newspapers on those sites where you can.
Absolutely. I look at Vegas.com as being brilliant. Well, to me, they’re an aggregator of everything in Las Vegas, whether it’s a restaurant, whether it’s a hotel, whether it’s a show. Great awareness, great branding and how did they achieve it? They achieved it through advertising on television, advertising in print, advertising online.
Is there a Tribune site that you think is working particularly well?
I can’t talk to you about that just yet. In the next couple of months you will hear some things and you’ll say, yeah, I like that. I think right now South Florida is a great site for us where we have a newspaper, The Sun-Sentinel, and we have a television station, but that will be improved in the next couple of months as we roll out some new platforms.
So it’s a work in progress?
Exactly, but what I will say is this. Our newspaper Web sites are very strong. Our television Web sites are getting better by the day and we’ve got a real commitment to making it work. If you’re going to be a local television station providing local news or if you’re going to be a local newspaper providing local news, you’ve got to be able to play in this arena.
Other than mobile, what are you going to use that DTV capacity for?
We’re looking at it on a market-by-market basis. In some markets we’re talking to a Hispanic network, but it doesn’t make sense to put a Hispanic network in Grand Rapids. So what we want to try to do is focus on the networks that are available and then put those networks in the right market.
So let’s talk about the Big 3. What are you doing in New York, Los Angeles and Chicago?
Right now, New York and Chicago is LATV.
What about L.A?
In L.A., we’re with This TV, with which we’re very high on. We believe the quality of the programming will win out. It’s well branded with great movies. I think we’ve got that in seven markets.
You have some stations that would lend themselves to duopolies. Have you thought of selling those to help you’re your financial problems?
In this business environment, you have to look at every opportunity to run your business more efficiently and cost effectively. Do duopolies offer that? Yes. I’d like to hope that we’re more of a buyer than a seller, but I think that we have to be realistic and take each and every market as a stand-alone situation, as a stand-alone business unit.
Do you think you’re going to reinvent the newspaper business?
I’m not saying we’re going to reinvent it, but I think that newspapers play a very important role in each of our local communities. If you really sit down and talk to advertisers, the advertisers tell you that newspapers are very important to their survival. Recently, I was talking to a couple of owners of some sports teams and their fear is that, if the newspapers go away, their teams will not be as relevant as they are with newspapers covering them each and every day.
So what’s the fate of TV stations? Can they come out of this downturn and recover the same margins they had when they went in? Or are the good old days gone forever.
We have a very viable business that can operate on margins between 25 and 40 percent, depending on your affiliation. If we work off the revenue base that now exists while thinking about partnerships on news, thinking partnerships on programming, thinking about how we operate our business with some cost controls, we’re going to be an ongoing business for years to come.