The NBC station group’s large size and markets don’t shield it from the same problems plaguing lesser broadcasters. And the group’s response is much the same.
NBC Universal Television Stations is one of the giants of TV broadcasting with 30 NBC and Telemundo stations, many in the largest markets, and annual revenue, according to BIA Financial Network, of $1.7 billion. (That number puts it third behind Fox and CBS, BIA says).
But the station group shares the same challenges as its smaller and humbler peers. It is scrambling to replace dwindling national advertising with local and trying to create profitable new business around Web sites and multicasting channels.
In this edited interview with TVNewsCheck, NBC Universal Television Stations President Jay Ireland talks about meeting those challenges, while juggling the station lineup, replacing outlying NBC stations with second Telemundo stations within its markets.
NBC just sold four stations, including WJAR Providence, to Media General for $600 million. Were you surprised by how much you got for them?
I wouldn’t say I was overly surprised. I think what you are seeing in the marketplace is something of a consolidation and a lot of private equity money. So we had plenty of bidders and the price was a fair price for four well-run stations.
Was it more or less than you thought?
I don’t know. It was around the range we thought.
Where were all these bidders coming from?
Stations in general are good cash-flow generators. They are high margin. There is not a lot of short-term risk with it. From that standpoint, they’re attractive to investors.
And then you have station groups that are looking to expand or consolidate around state capitals or other geographical factors rather than make purchases just to have numbers. That is part of the rationale for our selling the stations. We have four stations that were not as big as our other stations and were not within our clusters, which are really the Top 10 markets, California, the Northeast and, to a degree, Texas.
We want to put more station resources into duopoly markets and Telemundo markets where we needed a bigger presence. We just purchased stations in Phoenix and Denver so we could upgrade to full power signals. We bought Fresno and Las Vegas. So we have been in a buying mode, but it’s been wrapped around a growth business, which is Telemundo.
We are always on the lookout for anything that makes sense from a duopoly standpoint. We very much like the model of an English-language and Spanish-language station in a market.
So basically you are buying second stations in markets?
Or opportunistic things that come up.
How about Boston? The word is that Ed Ansin is trying to buy Tribune’s station in Boston, WLVI, at least partly to preempt you from buying the station and taking the NBC affiliation away from him.
We are pretty happy with the affiliation that we have had with him over the years and we are continuing to work with him.
Let’s talk about the basic broadcasting business. There doesn’t seem to be much growth in the spot business.
I see the TV station business as a tough one going forward from an ad sales perspective. We are getting a lot of competition from a lot of places—cable, the Web, networks, syndication. There are a lot of places you can put ad dollars today.
The auto guys, the retail guys, the entertainment guys—our bread and butter—they are all looking at their budgets, moving dollars around and doing different things. We see national core as flat to up very slightly going forward and that’s the way we want to manage it when thinking about resources.
So, why would anybody want to invest money into what is basically a slow-growth business?
There is a tremendous amount of potential out there for local. It’s a great business. We are the people who have the local connections, and we can build on that from the television side and the Web side. That’s the dynamic. That’s what we have to focus on. Touching people locally is still the best thing that we do.
We have to get into the new platforms, but we also have to go after the local advertising. We can’t continue to rely on auto and retail to be large percentages of our revenue. We have to go out and sell. The majority of the United States is growing. Most markets are growing, and we have got to take advantage of that by being more of a local influence.
Do you see a movement away from syndicated programming to local programming.
I do. We’re doing it. We have Jane’s New York, we have South Florida Today in Miami, we have Reel Talk. We are going to do more and more because I’ve got to connect with my viewers in ways that other people can’t.
Are you set in terms of syndication?
We feel good about the lineup we have. In general, we have Ellen, Martha and now Megan Mullally, give or take a market or two. And we feel good because those are personalities and shows that we feel have a cachet. And now we have iVilliage Live coming on in December. All of that fits our brand, the way we want our viewers to think of us.
I’ve noticed that you have two digital multicasting channels—NBC 4.4 and NBC WeatherPlus—with wide cable carriage in the New York market. How are they faring?
Good. We have gotten a lot of cable carriage, mostly in digital tiers. We’ve got a lot of interest from an advertising standpoint and we continue to promote them on the air. We are using WeatherPlus as a real brand across all of the NBC. You’ll see it on the Today show, on Nightly, especially when weather is the big story.
I know you can make a nice business out of NBC Weather Plus because of its low cost, but is it ever going to have a significant impact on the P&L of the stations and the group?
I think it will over time. We’ve got to grow it. We’ve got to get some scale. It’s going to be a combination of on-air as well as over-the-air.
I see NBC 4.4 as kind of an independent TV station with a little of this and a little of that.
Yeah, it doesn’t have network programming. It might have some news, but most of the show is local and more and more programming from institutions around the city—museums and the zoo. We are looking at doing similar things in other markets. It might not be quite the same format, but something close.
Is there any money in HDTV?
There’s a lot of cost in it [laughs]. I think what it does is simply make watching television that much better. Are we going to get any incremental money because we are in HD? It will be like color. It becomes expected as people upgrade their televisions.
Is what we see on the NBC Web sites what we are going to get?
No, I think you are going to see continued improvement. We are looking at content plays. Wrapped around the local framework, we launched a flag football contest in a bunch of markets. We’ve got some fantasy stuff coming out with the NFL. So you are going to continue to see some real building around the local communities.
I did an interview like this with Joe Uva [of OMD] and he was saying that he thought that broadcasters had failed to create compelling local services and failed to promote them over the air. Is that fair?
On the whole, when you look at the industry overall, probably so. You have pockets that do it very well. We just had a great experience in Los Angeles with a story that we aired and then promoted on the Web. It was a homerun with people viewing it on the Web. We are in the process of upgrading and focusing on our strength, much of which is video.
What about this NBC Broadband Co., which, like NBC Weather Plus, is a joint venture with the affiliates?
It’s going to be a video syndication service. We have been working on it. We are going to have something to say pretty soon. Stay tuned.
Let’s turn to Washington affairs. Do you think it is important for the FCC to relax its ownership rules to allow station groups to own more stations and more stations within markets?
Deregulation is good for industry. The idea that we are going to own all of our affiliates and all of the markets is ludicrous. We have constraints on our resources and also we want a strong affiliate network. That was always kind of silly.
Relaxing the duopoly rule also makes a lot of sense, although you have to have some rules to make sure one company doesn’t own all the broadcasting assets in a market. The danger in the smaller markets is that a lot of guys are walking away from local news because they can’t afford it. And so the ability to combine a couple of stations means you can keep localism going.
Is digital must carry important?
I think it is. It’s important not to have a gatekeeper. It’s important to give us the ability to distribute the programming that we have. We have all invested a lot of money in our digital facility. We get no real revenue out of the digital aspect of it. So it’s important for us to make economic sense of that digital signal.
What about retransmission consent? Is NBC going to squeeze fees out of the cable and satellite operators?
Our negotiations with the MSOs are pretty complicated because we have a lot of properties that need carriage. We’ve launched new networks like Universal HD and Sleuth. We feel pretty good about our partnerships and relationship with the satellite and cable operators. So it’s all factored in to how we think about it as a total company.
This is a different message from what I’m hearing from Les Moonves at CBS.
Yeah. His company is a different company now.