The president of the 14-station group says content from the company’s magazines could fuel digi-nets or other spin-offs, and expects affiliates and the networks to work together in selling programming online.
After 20 years at LIN Television, Paul Karpowicz became the top broadcaster at Meredith Corp. in February 2005, charged with guiding the fortunes of its 14 TV stations and tapping the video potential of its franchise magazines—the likes of Better Homes and Gardens, Family Circle and Ladies’ Home Journal.
As president of the Meredith Broadcasting Group, Karpowicz oversees 12 full-power stations and two low-power stations that rely mostly on cable carriage. Six are affiliated with CBS, four with Fox, two with The WB, one with NBC and one with UPN.
The group now reaches 9% of the nation’s TV households and generated $312 million in revenue in fiscal 2005.
In this edited interview with TVNewsCheck, Karpowicz says that affiliates can be helpful partners in the networks’ effort to sell programming over the Internet and that Meredith is eager to expand its station portfolio—if it can find the right station at the right price.
One of the big stories in TV broadcasting over the past several months has been the networks’ plans to offer their programming over Web sites, either as downloads or advertiser-supported streams. And networks have been working to get the cooperation of their affiliates. How’s that going?
The fact that Fox was willing, really from the very beginning, to partner up with affiliates and offer them a share of revenue off of streaming is a very positive sign. The CBS affiliate board is currently working with CBS, trying to develop a model that makes sense for both parties that would incorporate some sort of a share. We have the affiliate meeting coming up shortly [in Las Vegas, May 30-31] and hopefully we would have something ready at that time.
Do you think the CBS deal will be more like the joint venture approach that NBC and its affiliates have worked out or the revenue-sharing approach of Fox?
It will probably be more in line with what Fox is doing—with the revenue share. I would hope that it is more in line with that. That’s probably where CBS is going to end up, nothing as extensive or as big as the NBC joint venture. There is nothing on the table with CBS that is that substantive. It’s really just trying to share in the value proposition of streaming video and using the affiliate as a promotional platform. The idea is that the affiliate would take viewers through the affiliate Web site to the network’s destination site where they can download the material.
CBS has been very cooperative and we are having very productive conversations. So I am optimistic that we pull together something that is good for the network and good for the affiliates.
So, you are not interested in offering downloads of network programming on your local Web sites?
No, not really simply because we don’t have the technology and the wherewithal to pull that off. At an individual station, I don’t have the server capacity to maintain that much content and deliver it on demand. So, basically you have to take that viewer that comes to your Web site to cbs.com or whatever.
You had a good first quarter. Overall, net revenue was up 8.8%. Local was up 10%.
National was a little soft, but local made up for it.
And in your quarterly report last month you said the second quarter was pacing in the high single digits. That’s higher than some of the other groups. Why?
Some of it is the markets we are in. Phoenix is a market that is very hot right now. Las Vegas is a market that is very hot right now. The scale of the markets is important, too. We’ve got Atlanta, we’ve got Phoenix, we have Portland, we have Vegas, Nashville, Kansas City, Hartford. These are all good sized markets and right now there is a benefit to being in larger markets. And we have seen some significant growth in terms of ratings, which is now being translated into revenue.
What’s the core business growth—without the benefit of political or Olympic or other cyclical factors?
Well, we only have one Olympics station and no Super Bowl stations this year. So our core business is close to what we have said. Just take a point or two off of high single digits for political.
Are any of your markets a drag on your revenue?
No, everybody is doing OK. The northeast corridor, which would include Hartford and Springfield, is a little bit soft on the national side, but locally I think we are performing very well.
What about categories?
Auto is always one we have to watch very carefully. When General Motors sneezes everybody else gets a cold. And then there’s telecom. Sometimes you are doing great with telecom money; other times you are not.
You consider that one of the more volatile categories?
I think it is because it depends on what initiative they are rolling out in given markets. Generally, when they come into a market, they come in very strong and then when they are gone, they are gone. Telecom, for us, has been a category that has been very difficult to track.
What about buying stations? Do you want to add markets? Create some more duopolies?
We completed the duopoly in Kansas City this past year with KSMO, but really don’t have any other opportunities for duopolies. But I think we would love to expand the portfolio overall. By the same token, I think we will be very disciplined buyers. I think we have been a little bit surprised—in fact, I think many people have been—by the multiples.
Yes, a little bit. But that’s from our perspective. Different buyers may have strategic reasons why particular deals work for them. And it may be that we will come across a deal that strategically makes sense for us and we will get engaged. We participated in a number of these auctions recently, but have not gotten particularly far in the process.
Did you chase those NBC stations that Media General eventually bought?
We were interested in the NBC stations, but the multiples were higher than we were willing to go.
How about stations outside the top 100 markets?
I am a little bit spoiled by the size of the markets we are in. I can’t see us dropping down to get into small markets.
Tell me about Meredith Video Solutions, of which you are the head.
We have these tremendous brands on the magazine side. This is the first time the company has stepped up and said, “OK, we are going to figure out how we can take all this tremendous content that’s produced by the magazines and find platforms for it in the video world—whether it’s video on demand, whether it’s syndication, whether it’s vignettes, whether it’s digital channels, whether it’s cable channels. There are all these different places that content can live.
When should we expect to see something from Meredith Video?
I would say certainly before the end of the year. In fact, I would hope something in the fall.
Have you figured out what you are going to do with your digital channels?
No, not yet. But this could be another area we could develop programming for. Obviously, we are very interested in monetizing that asset. We are doing a weather channel in Las Vegas.
Are you going to carry NBC Weather Plus on your NBC affiliate in Nashville?
We are still taking a look at it. But we are also looking at the Las Vegas experience and seeing that for a relatively modest cost you can get the equipment and software and produce your own.
Right now, you have WB affiliates in Kansas City and Chattanooga and a UPN affiliate in Portland. What’s going to become of them this fall?
With Portland and Kansas we went with My Network TV and then in Chattanooga we went with CW. And the reason we did that is because we feel My Network TV works very well in those two markets. Those stations are really our second stations in those markets. We have other strong stations in those markets that can feed a lot of programming, can feed news and tons of local sports. We really like the idea that My Network TV is really just a two-hour primetime commitment because we have plenty of material to fill out the rest of the day. In Chattanooga, as a stand alone, we are better off being a CW, which provides a much broader network and more programming.
What’s the outlook for the local Web sites?
We are going to be doing a heck of a lot more. As a company, we are probably behind the curve a little bit. We basically doubled our online revenue year to year, but we still have a long way to go. We are associated with both Internet Broadcasting and WorldNow and we are making a much larger commitment this year in terms of manpower for content development and on the sales side. We are going to be out there very aggressively with packaging and selling and content.