The new CEO is restructuring the Seattle-based broadcasting company, casting off small-market radio stations in favor of Spanish-language TV duopolies.
Colleen Brown arrived in Seattle a year ago to take over as CEO of Fisher Communications and revive the sagging fortunes of the mostly broadcasting company. So far, it looks like a good move for Brown and for the shareholders.
In year one, she has reshaped the broadcasting division with a flurry of deal-making, casting off small-market radio stations in favor of Spanish-language TV stations and clustering the stations in the Northwest to take advantage of operational efficiencies.
Among Brown’s plays:
- Sold 18 small-market radio stations to Cherry Creek Radio for $26.1 million. Six more will go.
- Purchased KWOG Seattle for $16 million. Now KUNS, the station will operate as a Univision affiliate in tandem with ABC affiliate KOMO.
- Purchased KPOU and a companion low-power station in Portland, Ore., for $19.3 million. The Univision affiliates are paired with KATU, another ABC affiliate.
- Agreed to manage four Class A low-power Univision affiliates in Yakima-Pasco-Richland-Kennewick, Wash. (DMA 125), where Fisher already owns the CBS affiliate, KIMA. Fisher holds an option to buy the stations.
Altogether, the TV portfolio now includes 19 stations, including those four Class A outlets in Yakima. The stations are affiliates of ABC, CBS, Univision and Telefutura.
Brown, one of the most prominent women in the TV station business, has impressive broadcasting credentials. She joined Fisher from Belo Corp. in Dallas, where she was senior VP in charge of Belo Interactive, Spanish-language initiatives, business development and the Texas broadcast and cable properties.
She began her career with Gannett in 1980, eventually holding GM posts for the station group in Greensboro-Highpoint, N.C., Denver and Phoenix. She also was president of the Lee Broadcast Group, leaving after it was sold to Emmis Communications in 2000.
In this interview with TVNewsCheck Editor Harry A. Jessell, Brown makes clear that the new Fisher is about more than consolidation, clustering and Spanish. It’s also about being the dominant producer of TV programming in its markets and delivering video to consumers wherever they are. If Fisher can do that, she says, there won’t be enough columns on the P&L statement for all the revenue streams.
Why the big Spanish TV play?
There’s a great strength in that growing population. That community behaves more like when television first started. The families are bigger, they watch television together, they tend to watch one channel and that’s Univision and they’re multigenerational homes. So, I think they’re very comparable to something a lot of us in broadcasting know. Number two, they’re extremely loyal once they start using products. And, in the Northwest, the migration trend has just begun to be noticed. Yakima, for example, is 40% Hispanic, it’s heavily agricultural and it’s been growing over the years.
The growth is exponential every year and so I think it’s going to continue, regardless of the pressure on the border to tighten it down. There are jobs and there’s a great need for a work force up here. We see that population continuing to grow at greater growth rates than English language so it makes great sense to participate in that strong growth rate and leverage what we’ve got here.
We’ve met with so many advertisers and so many agencies that have clients lined up to book in Seattle. So that’s a very strong and practical play. We’re not reinventing the wheel. This has been proven out in many markets across the country. It’s just a little later happening in the Northwest and we get to take advantage of that.
What’s the outlook for TV broadcasting, in general, for all those ABC and CBS affiliates you own?
I think that many consider 2007 a bridge year leading to 2008 when everyone is expecting banner revenues, but I don’t think really, when push comes to shove, the industry can rest. And really smart people aren’t resting because we’re at a point where we’re having to permanently adjust our thoughts and our behaviors, certainly our expectations, and establish standards that we really have not had to establish before.
We just need to drive new thinking that’s been enabled by technology. I think it allows us to take these issues that everybody points out as change or points out as negatives and turn them into positives and find ways to build on those and use them as opportunities.
I feel strongly that there are two really great things about this country. One of them is volunteerism, which I feel strongly about. The second is local broadcasting because I think it really allows our country to be different than other countries. It allows us to knit together a community, have different points of views. I think that’s remarkably special and unique and important to democracy and to why this country is strong. So I feel pretty strongly about local broadcasting.
Like a lot of broadcasters, I guess you are sort of sad to see Nov. 7 come and go.
Yes, although the rest of the country was much more political this go-round than the Northwest.
Anything happening politically for you in 2007?
We don’t anticipate it. There’s certainly a chance of it, but we don’t anticipate any obvious races or governorships or anything like that.
I guess the good news is you’re not going have those tough comps to face next year.
Not the same tough comps that some of our peers have. Certainly, we’ve had some political, so we’ll have to replace that.
Are you increasing the hours of news that you’re doing at your stations?
Oh absolutely, but it isn’t just news. We’re increasing our content commitment and I think all local broadcasters are increasing the coverage that they provide the folks who use them whether or not it’s people watching them over the air or people listening to them in their cars while we sit in longer and longer commutes, or whether or not you’re getting it off the Internet.
Are we going to see more non-news local programming at TV stations?
I hope so, for the industry’s sake and for Fisher’s. We have put additional resources into our non-news programs and we have seen immediate benefit in the ratings. So I hope so. It’s a great avenue for localism.
Where do you go for Web support?
We have built it out with Broadcast Interactive. They have become our partners. They’re a small player, but we like them a lot.
How’s your relationship with ABC and CBS on the new media front?
I think our relationship is terrific with both CBS and ABC and Univision. We’re doing some testing for ABC and for others. This is an extremely tech-savvy marketplace, as you can imagine, the Northwest, but particularly Seattle. So, we’re doing a lot of interesting things, seeing what works. I believe strongly that we’ve got to get our content and our product out to as many people who want it, wherever they want it, however they want it, whenever they want it.
At the same time, I do think it’s very important, as content providers, that we focus on controlling the copyright, controlling the rights to the actual product itself and the length of the contract. We should do all these things, but we have to protect what we produce and create.
You are digital-ready I take it? Your stations are ready to go?
Totally ready to go.
OK, so that’s not an expense that you still face between now and 2009.
No. It’s totally behind us.
Where are you on HDTV?
We broadcast network programming in high def and are one of the few actually doing news in high def.
At what station?
KOMO here in Seattle. Oh it’s amazing. I didn’t think I would care, but I do now that I’ve seen the difference and I’ve flipped to the other channels. You’re seeing these floods and you’re seeing water cascading over rocks and you just see the detail and it’s very moving. It’s awesome.
Do you have the cash, the capital budget, to introduce HD news in your other stations?
Not yet. It doesn’t economically make sense in the smaller markets right now, but we’ll do what needs to be done as we feel it needs to be done. It takes time. First of all, you’ve got training. Second, you got new assets on the books. You have to put your asset plan into place. It’s just going take some time. You don’t retire a piece of equipment that’s only two years old unnecessarily.
Unless you get competitive pressure to do it.
Well, I said “unnecessarily.”
What about retransmission consent? Is that something you can start figuring into your financials?
It is figured into our financials and we’re doing quite well.
I mean beyond satellite. What about cable?
We have a very solid financial benefit from our relationships in retransmission. They’re all over the board, whether it’s cash, whether it’s cash and promotion, whether it’s just promotion or whether it’s other things. I’m seeing a very strong possibility of it replacing network comp. I mean that trend is happening.
So, whatever this benefit is, whether it’s in promotion or cash, we can expect to see that increasing over the years?
I think in the industry you’re going see it increasing, yes. I absolutely am convinced that that is a direction you’ll see.
Could you be more specific in talking about how you plan to exploit platforms, what you’ll be doing in 2007?
No I haven’t talked about that publicly so I can’t other than to say we’re exploring all options and we have a lot of good and interesting options.
What are you looking for from Washington?
Washington should want to continue the strength of local broadcasting. I believe if they truly look at the benefits that local broadcasting provides this country, set aside whatever they may personally feel, but truly look at the benefits, you cannot overstate them. Think of what happened during Hurricane Katrina and what those stations in New Orleans did for those communities in staying on the air—radio and television alike. It’s just remarkable how they got back on the air and what they did for those folks who were displaced and how they continued to slug it out in that marketplace. When I think about what each local broadcaster does for a community, it’s just unquestioned that Washington should want it to continue and to flourish.
I also think that we need a well articulated duopoly policy because we’re not sure what the rules are anymore when it comes to the FCC’s wishes and wants and that’s said with no disrespect to [FCC Chairman] Kevin Martin.
Specifically, would you like to see relief in small markets?
Yes, we are on record of wanting relief in the small markets for duopoly.
So that’d be one thing. I guess the other big issue is multicast must carry.
That would be, to me, the most important thing we could do.
That looks like it is going to be an uphill fight.
You know, I think we need the cards to fall a little bit before we assess whether or not that’s an uphill fight, but I do think must carry is something that would benefit hugely the local communities for a lot of different reasons.
I also think indecency is another very confusing issue right now and you’ve got these situations that are popping up that make you question whether or not the government’s going to intervene or cause you to go out of business just because you air a program.
Because of the stiff fines?
Exactly, I mean one fine in a small market like that wipes out any chance of profitability for the year and just every incident, every utterance is one fine so if you repeat it three times in a show, you could end up with a million dollars in fines for one show.
It’s very confusing. If you had a complainant from your market, that would be one thing, but a complainant who’s never seen the show, who lives halfway across the country and is part of some answer to a call for letters to be sent to your congressman, I don’t know if that’s really serving the public in a way that was initially intended by these rules.
A lot of people think it’s going to take a while for broadcasting to find its way among all the new media. Do you?
I think it’s a transitional period and we’re not alone in this. That’s what we tend to forget in broadcasting and in the media world. Everybody in the world is going through a transition that will interest the historians for centuries. I think about the business sectors, many of them are customers of ours, whether it’s retailing, insurance, automotive, health care. I mean these are just a few of our customers and they’re going through the exact same things we are. They’re adjusting to the new technology and the impact on their business models and we’re all having to reinvent ourselves.
Those other industries do seem just as volatile as broadcasting.
Absolutely. We’re all becoming digitally driven, technology savvy. It’s a transparent world so the information is more perfect or imperfect, depending on the source, and the trend seems to be accelerating. The digital revolution has become the central topic to all these companies. We’re all finding ways to thrive in the environment, but it means we have to loosen some of our controls, that we have to guide the company in innovative and different ways which aren’t always comfortable.
Let me return to an earlier question. It doesn’t bother you when you see all ABC and CBS programming up on the Internet? You know, we just did a story about all the outlets the networks have on the Web. You can watch just about anything.
I know. It’s pretty great, isn’t it? It’s great for a consumer. It’s terrific, the freedom it gives you.
Yeah it’s great for me, but I’m not sure it’s great for the broadcasting biz.
Well, you have to ask how those shows became popular. We advertise them on our television stations—we have agreements in place so we get to share in what you’re watching there on the ABC network so that doesn’t bother me so much. It’s another revenue source. We get one out of the four commercials and I think that’s pretty cool. That’s not all that different than the split on the air.
I mean if the networks were doing nothing I would, for sure, know we’re facing a dismal future, but the fact that they’re exploring and we’re exploring is good. We have to adapt to the way consumers use our products and I don’t have a problem with that.
But, you know, maybe I’m selfish. I mean as a consumer I love the fact that if I missed Desperate Housewives on Sunday and forgot to record it, I can go get it. I can watch a whole lot more television now that I have a DVR and now that I can click on the computer, I can watch even more television.
Well, I’ll tell you the DVR has driven my viewing a lot.
Technology is going to allow us to monetize that whether it’s you not being able to skip the commercials or maybe you’re going to get charged for it if you do skip them. I don’t know. I mean technology should be able to control that or what happens depending on where it resides, on your server or our server. What if we put fresh commercials in there so you’re not watching a commercial for the Labor Day Sale that happened two weeks ago. We could download fresh commercials on a regular basis. So I don’t think we should lock ourselves in on the way we do things or on the way we think. We have to keep moving forward and that’s part of what’s fun about this business. If it were easy, I’m not sure half of us would want to be in this business.
It seems to me that Wall Street may be hurting broadcasting, which, as you say, needs to reinvent itself. When I get on the earnings calls, all I hear is analysts asking about expenses, expenses. I’ve never heard one of them say, “Well, how much are you setting aside for R&D, for trying new things.” Any comment?
What you’re hearing on the conference calls is absolutely right in line with roll up and consolidation concepts and you see that in mature industries that throw off cash flow. When I first started the strategic plan for our company, I wrote the first line and absolutely gave myself pause. I said we are in a maturing industry that’s exploding and I had to stop and think. That’s not a maturing industry. This is technology interruption. What I just described was technology interruption and we have to adapt.
How are you going to have a chance to reinvent yourself with Wall Street breathing down your neck?
We just have to be smart about it. Any business faces two basic demands, executing current activities to survive today’s challenges and adapting to those activities to survive our future. I mean we have to do what’s good in the short run, but we have to go do what’s good in the long run and I think that’s the challenge all of us CEOs have.
You seem to be part of industry consolidation. Instead of putting money into new businesses, you’re putting it into more stations that you can operate more efficiently than the other guy.
But the duopoly is one very, very small part of our strategy. The new content and revenue streams are important, too. I was going over our income P&L statement and it occurred to me that we cannot have just four or five revenue headers anymore. We’re getting revenue from so many different sources and I can see us getting it from so many other sources that we need to reexamine how we even put our P&L together. We’re finding ways to make money that I never thought of five years ago. So I don’t think I’m being bullish. I think I’m being practical. We just have to keep moving. We have to keep reinventing ourselves so we have to monetize where we can and that’s what we’re going.