The initiative by the two station groups is designed to give the partners extra negotiating leverage with syndicators, as well as a chance to bid on their best shows by delivering 18% of U.S. TV households. It will also give both parties economies of scale when buying tech gear. "It gives us the benefits of an M&A without actually having to do an M&A," says Meredith’s Paul Karpowicz.
Cox, Meredith Create Buying Cooperative
Cox Media Group and Meredith have not merged their TV station groups as is all the rage in broadcasting these days, but they have done the next best thing — they have formed a “co-op” to buy programming and technology and share resources, according to the two groups.
“It gives us the benefits of an M&A without actually having to do an M&A,” says Meredith Local Media Group President Paul Karpowicz.
It was formed earlier this month at a meeting of executives from the two groups in Atlanta, he says. “We asked ourselves, what can we do together to give us scale and play bigger?”
The answer was the co-op. “It just seems to make too much sense not to do it.”
It will allow enable the two groups to “operate more efficiently and continue to super-serve our communities,” says Jane Williams, EVP of television at the Cox Media Group.“Our individual footprints complement each other geographically and are composed of leading stations in attractive television markets.”
Williams and Karpowicz introduced the co-op to the syndicators at the NATPE convention in Miami Beach this week.
The co-op comprises 21 Cox and Meredith stations — all but their rival stations in Atlanta, ABC affiliate WSB and CBS affiliate WGCL, respectively.
Not counting the Atlanta stations, the co-op can deliver 18% of the nation’s TV homes, about the same as Hearst Television and E.W. Scripps.
Meredith’s top 50 outlets are Phoenix, St. Louis, Portland, Nashville, Hartford, Kansas City, Greenville-Spartanburg and Las Vegas. Cox’s top 50 markets are Boston, Seattle, Orlando, Charlotte, Pittsburgh, Jacksonville and Memphis.
The co-op should not only give the partners extra negotiating leverage with syndicators, but also a chance to bid on their best shows, Karpowicz says.
It works for the syndicators, too, he says. They now have another viable option for clearing markets 10-50. (The network O&Os and Tribune remain the only plays for the top 10 markets.)
With the extra clout, he says, Meredith and Cox can also talk to syndicators about creating programs that meet their particulars needs or about partnering on shows. Cox and Meredith have both dabbled in creating original programming.
Meredith and Cox will also likely shop for technology together, Karpowicz says. “It’s the logical next step.”
Prior to the NAB Show, Cox and Meredith techs will get together to determine their common needs, he says. The same scale economics would come into play, he says. “We can buy 100 cameras rather than 50.”
The two groups may also share resources. Cox has a news bureau in Washington and Meredith has a TV studio in New York, he says.
There was some talk about jointly negotiating retransmission consent and affiliation agreements, but it raised too many legal questions, he says. “The lawyers got twitchy whenever we brought that up.”
Right now, Meredith has a merger pending with Media General, but it’s in jeopardy. Major Media General shareholders favor a merger with Nexstar Broadcasting Group instead.
Karpowicz cautioned against speculating that the co-op was the first step toward a merger of Meredith and Cox or that it was an indication that Meredith now believes its Media General deal is doomed.
“If the Media General deal happens, we would love to bring the much bigger group into the co-op.”
Read all of TVNewsCheck‘s NATPE 2016 coverage here.