The head of the Scripps TV group is not handing out pink slips to cut costs in the wake of plunging ad revenue. Rather, his company has re-evaluated its mission to its audience and advertisers. It’s decided to focus on providing the most local news and services 24/7 on all its various platforms. To do that, it’s putting more people on the street gathering news and is retraining its traditional sales people to sell the Web.
After some 20 years working his way up in sales and station management, Brian Lawlor reached the top at the Scripps TV group, succeeding the retiring Bill Peterson on Jan. 1 — just as the economy was plunging deeper into recession and revenue across the entire TV broadcasting industry was experiencing historic shortfalls.
But Lawlor’s not complaining. He’s coping with the recession and preparing for the big opportunities that he feels are just beyond the hard times.
In this interview with TVNewsCheck Editor Harry A. Jessell, Lawlor talks about how Scripps is bucking the trend. Instead of reducing head count, it’s transforming the way it operates, putting more people on the street, either selling ads or gathering news around the clock so that Scripps-branded news is available to everybody via broadcast, Web or mobile wherever they are anytime of the day.
An edited transcript:
Your core advertising [excluding political] was down 27 percent in the fourth quarter and total advertising was down another 20 percent in the first quarter. How are you responding to those significant drops?
Even before we got into the fourth quarter, we could see some changes to the economy, especially in states like Arizona, Florida and Michigan. We saw the home prices and the impact the foreclosures were having. So, we started changing the focus of our sales teams. We started talking a lot more about the importance of developing local. We’ve always had a good new-business strategy, but knowing that we couldn’t just sit around waiting for the core business to call, we really started building a culture and an infrastructure for getting deeper into our local communities, getting more feet on the street and getting to customers that we’ve never seen before.
It doesn’t make up the millions of dollars that General Motors represents or the quarter of million dollars that some of the other automotive clients do, but those $30,000 and $40,000 hits we get from new advertisers add up pretty quickly. [Editor’s note: In its first-quarter earnings report yesterday, Scripps noted a 5 percent increase in advertisers who had either never used television or not used it in the past 12 months. In addition, it said, advertising on station Web sites increased nearly 17 percent.]
Do you actually have more sales people on the street now than you did a year ago?
Yes. We literally do. It varies from station to station. If we had a station that had, say, a dozen, we might have stepped it up one or two. If we had a station that had eight or nine, we’ve kind of tried to get them up to a dozen or more. We’ve also started moving forward with some sales people who just sell digital.
I’m hearing from other broadcasters that falling demand is causing rates to slide too. That’s not good, but it does open the door to smaller businesses, right?
Absolutely. We just had that conversation a couple days ago. We have become a more affordable medium and so we are very competitive in our markets. We have always been able to offer great reach, but now we’ve been able to really increase the frequency. You take the power of this medium and put it together with some good frequency and suddenly you’re getting a pretty good return on your investment.
We’re seeing clients that honestly have tinkered around with other stuff the last couple of years who are now coming back and reengaging at a much higher level in television.
What are you doing to boost the revenue of your Web sites?
One of the things we realized was that we as a company and probably we as an industry have not done a very good job of teaching our traditional sellers how to sell the Web. It’s developed into its own industry with its own metrics, with its own lingo, with its own accountability. We haven’t taught our sales people how to speak that language and negotiate that business and integrate it well into what they normally did. So we went out and hired a firm to implement a disciplined training program across our group to every single seller. We had a graduation process and I felt really good at the end. We’re clearly seeing a return on that investment.
What about the cost side? What are you doing to manage costs?
We’ve evaluated every cost within the organization and pulled back on some initiatives. We ran an ROI on basically everything that we spend money on. We didn’t back off on any of our programming commitments, but we did tighten our belts and cut our expenses. We have not done layoffs. We have not laid off anybody because of the economic climate. Now, granted, we haven’t filled some open positions, but we have not laid off anybody, which probably makes us unique in this environment.
That is amazing. Virtually every day we report that this group or that station is cutting jobs to cut expenses.
And, to this point, we also haven’t done furloughs or anything like that. We have really attacked this period very differently than anyone else. We’ve really attacked it as a time of opportunity.
So how do you get costs out of the business if you’re not reducing head count?
Within the infrastructure of each one of our television stations, we have evaluated all of our expenses from the cost of having photographers take home vehicles to satellite expense to overtime. We’ve looked at travel, things like covering a sports team on away games. So I think those are the kinds of expense controls we’ve put into place. The company did suspend its pension and its 401(k).
If you are not cutting people, I assume you are redeploying them.
Our customers are starting to consume media in a whole bunch of ways and places. Clearly, wherever they get information on a local level we want it to be with our brand. So we started evaluating our own infrastructure and how we were staffed and whether we were able to support our operation on a 24/7 basis and, clearly, our own analysis said no.
We were staffed to do two hours of news in the morning, an hour at noon, an hour and a half at five to 6:30 and a half hour in late night. For 30 years that had been our culture. We collected content 24/7, but we were only distributing it at certain points during the day.
So we said, you know, if we’re going to be serious about serving our customers across all of these platforms all the time we’ve got to have as much content being published at 2 in the afternoon as 6 p.m. when our news hits. So then we really started doing a true evaluation of our infrastructure and we looked at every role in our news organization — what they do and what they touch and how they do it. Then we built this model of what we thought we needed to look like to serve our customers in this new world of 24/7 distribution across all platforms. And as part of that we decided that we needed to get more people on the street.
In any newsroom in the country, our morning meeting starts with a whiteboard on which they list every single thing that’s going on in the community that day. There may be 70 things going on, but the producers only have enough reporters to cover 45 of them. That doesn’t mean that all the stuff between 45 and 70 wasn’t important. It might have been very important. We just didn’t have the resources to be able to cover them.
So, we said, in this new digital world, what we’ve got to do is get to 70 stories today. We needed to get more feet on the street. So we started looking at every single body within our news infrastructure and asking, are you helping to create or distribute content, and, if you’re not, we’ve got to revise your role to be able to make sure we have significantly increased the number of feet on the street on the news side. So, we haven’t laid anyone off, but that person now has either gone into another role to support content or the person has left us and we’ve filled that position with somebody who can help create more content, which will get distributed across all of our platforms.
You asked me about costs. We had one of those heart-to-heart meetings with ourselves where we say we can do what everyone else is doing right now and dramatically cut back on our staff and furlough everybody and do all those kinds of things, or we can figure out a way to weather that storm and change the way we do news. While everyone else is cutting back, we will now have a lot more bodies on the street. We’ve got better infrastructure and better technology that’s going to allow us to better serve our community. We’re betting on audience growth on the backside of this thing.
Another cost is syndicated programming. You may have seen Dunia Shive’s comments. She said Belo wasn’t going to pay big license fees for Oprah and other syndicated shows anymore.
I would tell you that, in this environment, our numbers would look a heck of a lot better if I didn’t have the massive increase in syndicated programming that we have. While we have some contracts now that go out over two or three years, we will be evaluating every syndicated program for ROI. I’m not afraid of a healthy price for a show if I’m going to get a significant return on it. The one thing I’m not going to do is continue to invest in shows for a minimal return to set up the next show.
No more loss leaders.
Yeah. I don’t think we can afford those anymore and I expect that we will start building a lot more of our own programming on a local level and become less reliant on syndicated programming.
Does that simply mean more news?
Not necessarily. We’re probably doing enough news. I think there’s an opportunity to do more information and entertainment programming on a local level that would be more than relevant and create a good ROI for us.
Where are you in terms of rolling out HD news in your markets? Which is in?
We’ve done it in every one of our markets except Baltimore.
So what about Baltimore?
We’re still reviewing the economics. Because of the economy, it’s kind of been put on hold, but we are probably the most aggressive group in terms of rolling out HD. Every one of our other stations is not just HD from the studio, but it’s HD from the field too.
Earlier this month, you announced you would enter into a news sharing arrangement with the Fox O &Os in Detroit, Phoenix and Tampa. How will that work?
For us, it was a little bit about cost, but this really gets back more to our philosophy on building that newsroom of the future. Remember, I talked to you about getting more people on the streets? That is really what motivated us to look at this. There will be some cost savings on choppers and things like that and so that was clearly a large part of the equation, but the driving factor for me is really super-serving our communities — getting to all 70 of those stories every day. If we can enter a local news sharing business that will get us another 10 stories a day, then it’s a good deal for us.
Are you seeking similar deals with other broadcasters in other markets?
Yes we are. I would tell you that we are in discussions or willing to enter into discussions in every market with any of our competitors who would see a mutual benefit to that kind of joint news gathering.
What about with newspapers?
We haven’t done that yet. It doesn’t mean we wouldn’t. It’s just that the opportunity hasn’t presented itself.
Let’s talk about digital multicasting. You launched Retro Television Network in Detroit. How is that going? Do you think that’s a business?
It’s OK. Quite frankly, we’re not getting rich off of it. It’s decent counterprogramming. It’s got a small, but monetizable audience. It’s a nice complement to our television station.
We’re spending a lot of time right now evaluating our spectrum allocation in each one of our markets and trying to figure out what’s going to be the best return. I personally am gung ho on the future of mobile. I’m on the [Open Mobile Video Coalition] so I’ve been advocating that we don’t go and air a bunch of new digital channels. I would prefer saving some of that space and launching mobile.
And by mobile, do you mean a mobile simulcast service?
Simulcast is probably what’s going to get you into the game, but there will also be some premium, subscription-based services and there can be a nice two-way interactive experience. We’ll be able to get nice CPMs and really some pretty good increased niche value for our advertisers.
Mobile’s the perfect complement to our business. Back in the old days — two years ago — we would have a morning newscast from 5 to 7 a.m. and at the end of that newscast we told everyone, goodbye, have a great day, we’ll see you at 6 when you get home. People had no opportunity to interact with our brand for the next eight or nine hours.
Now, people go to work and they’ve got a mobile phone with Internet access or they’re sitting at a computer. Our brand is always seven keystrokes away. Now, quite frankly, we have an opportunity to interact with people 24/7. So, I’m real excited about this opportunity to stay in front of our customers and give our advertisers the opportunity to be in front of them 24/7, too.
What’s your revenue outlook for the remainder of 2009?
February was better than January, March was better than February. So each month is getting progressively better. The second quarter is going to be better than the first quarter. I’m watching the market and I’m watching some of the sales returns by many of our national and local customers. I think the year’s going to continue to get progressively better. I can’t say that it’ll be down X in the third quarter and X in fourth because I’m still waiting to find the guy who’s got it right so far, but I do see the business continuing to get better.
Really, automotive is the key. Our [auto] business was off 47 percent in the first quarter and I don’t see the second quarter improving a ton. That was our No. 1 category three years ago. It’s now our No. 3 category.
So, at some point, I do think that there’s a big booming year just ahead of us on the automotive side. You go back two or three years and we were selling 16 million units per year across the country. Well, last year it was 11-point something. This year it’s probably going to be 10-point something.
I personally am driving a car that’s got 147,000 miles on it and my wife is driving a car that’s got 103,000 miles on it. We probably would have turned over both of those cars a year ago, but we thought, with the economy and things being the way they are, better off just driving these things a little bit longer. But there’ll come a point where we’re going to go say it’s now time, we need two new cars. I think a lot of families are in the same place.
So at the point where the automotive industry kind of settles itself down and the credit industry gets more comfortable again, there’ll be a pretty good run of 16 million or 17 million units being sold and the automakers will start to reinvest in advertising and things will start to take off again.
So we’ll all watch you as our prime economic indicator. As soon as you buy a car, we’ll know that we’re out of this.
There you go.