TVN STATION GROUP OF THE YEAR

FTS Honored As Station Group Of The Year

Fox Television Stations is TVNewsCheck’s Station Group of the Year for 2018. On Wednesday, TVNewsCheck Publisher Kathy Haley presented the annual award to FTS CEO Jack Abernethy at a ceremony at TVNewsCheck’s TV2020 conference. Among the Big Four networks, Fox stands alone. It has a vision for its network and owned stations that goes beyond just doing more of the same. Increased live programming and more stations are central.

FTS CEO Jack Abernethy accepts the Station Group of the Year award from TVNewsCheck Publisher Kathy Haley. (Photo: Wendy Moger-Bross)

When 21st Century Fox closes on its sale of most of its Hollywood, cable entertainment and international assets to Disney early next year, it will be reduced basically to Fox News Channel and the Fox broadcast network.

Which is not to say its ambitions for the surviving businesses are reduced.

In fact, ambitions for the broadcast network may be nearly as great as they were when Rupert Murdoch and Barry Diller disrupted the broadcasting business by launching the network 32 years ago.

But instead of disrupting broadcasting, Fox is seeking to reinvent it, taking full advantage of the medium’s singular ability to reach every TV home simultaneously by dishing out  live high-profile sports and heavy doses of live local news.

The key word is live.

BRAND CONNECTIONS

Such programming has always been part of broadcasters’ offerings. For New Fox, as the company is being called during the pre-closing transition, it will be its raison d’etre.

The dominant trend in TV today is subscription-supported services offering niche programs, on-demand and commercial free.

By bucking that trend, New Fox believes it can provide a venue for advertisers seeking the largest possible audiences, and remain vital and growing for years to come.

“We are still going to have full distribution that none of the other guys can match,” says Jack Abernethy, president and CEO of the Fox Television Stations, whose 28 stations in 17 markets will play a big role in implementing and monetizing the live TV strategy.

“We are going to be on every single skinny bundle and we are going to be available over the air. ESPN can’t say that and these other platforms can’t say that. They cannot reach 100% of the viewing audience with the NFL.”

For broadcast networks, healthy station groups have always been critical, generating the high profit margins that offset the high programming costs of the networks.

Acting on this ancient principle of network broadcasting, Fox, unlike its Big Three network peers, is seeking to significantly expand its portfolio of stations.

At the same time, the stations are doing their part in implementing the live strategy by steadily upping their hours of live local news. In terms of news, the stations are very much on their own. They get just one hour of public affairs from the network, Sunday morning’s Fox News Sunday.

Not waiting to close on Disney, Fox put its live broadcast strategy into high gear last January, when it agreed to pay $3.3 billion over five years for NFL Thursday Night Football. A few months later, it cut a deal to pay pro wrestling’s WWE $1 billion over five years for Smackdown, which will air live on Friday nights.

The Thursday football and Friday wrestling comes on top of Fox’s already ample live sports offerings, which also include Sunday NFL, the World Series and other post-season baseball, the Major League Soccer Championship, Big Ten Football, the World Cup, the U.S. Open and NASCAR.

The “massive investment in live sports … equates to an unrivaled negotiating hand that will lead to accelerated revenue growth over the next five years,” said the MoffettNathanson securities research firm in an August note to clients.

TVNewsCheck ranks stations groups by their spot revenue as estimated by BIA Advisory Services. In that ranking, Fox is No. 1 with nearly $1.6 billion in spot revenue. (Fox doesn’t break out the earnings of either the network or the stations.)

At an investment conference in September, 21st Century Fox CFO John Nallen said Fox would like to “increase the footprint of the Fox station group to the maximum level. We like getting further distribution, creating a bigger platform of our own distribution across the nation. It helps us with retrans discussions, helps us with advertising.”

Today, the station group covers 37.9% of TV homes, and, under the FCC’s irrational ownership rules, the “maximum level” for Fox would be about 66% of TV homes.

Over the past several years, Fox has been targeting stations in markets with NFL National Football Conference teams since it holds the Sunday TV rights to NFC games. But now that it has TNF, which airs NFC and American Football Conference games, it is eyeing AFC cities as well.

In May, Fox agreed to pay $910 million to buy seven stations that Sinclair is spinning off from its merger with Tribune. The seven included one NFC market (Seattle) and four AFC markets (Miami, Denver, Cleveland and San Diego). The deal would have stretched Fox stations’ reach from 37.9% of TV homes to about 46%.

The deal fizzled when the Sinclair-Tribune merger collapsed under FCC scrutiny over the summer. But Abernethy says that Fox remains interested in Tribune’s 14 Fox affiliates, particularly those in Seattle, Denver, Cleveland and San Diego that had been part of the ill-fated Sinclair deal.

It could buy some directly from Tribune or indirectly from a third-party buyer of Tribune as in the case of Sinclair. “There would be no reason why we wouldn’t do the same deal with Tribune that we did before,” says Abernethy.

Despite Nallen’s to-the-max assertion, Abernethy says Fox isn’t likely to stray too far outside the top 30 markets in its hunt for stations, although in a speech at the TVB Forward Conference in September he said he believed that the FCC should impose no cap and allow groups to grow as big as they want. “Only with size and scale can we have a chance to deal with the many challenges we face against competitors with no such restrictions.”

To Abernethy, the value of having the NFL broadcasts in NFL markets is self-evident. The broadcasts provide a promotional platform for all else that the network and stations do, create opportunities for shoulder programming and tightly tie stations to the communities they serve.

In discussing how to make the most of live sports that emanates from the network pipe, Abernethy cites not what the station do around the NFL games, but what they did around the World Cup over the summer.

Even though the U.S. failed to qualify for the tournament and games were scheduled at odd times that disrupted local news, Abernethy says the group “got behind the games 100%” with the goal of making “it something so that when it comes around four years from now it’s even bigger.”

In Washington, for example, reporters went to every embassy that had a team in the tournament for interviews. And in New York, reporters interviewed fans in Spanish with English subtitles. “It was great and they were so much more enthusiastic speaking in their own language than they would have been in their second language. It was really kind of cool,” Abernethy said.

The station group has been contributing to the live strategy by increasing its hours of local news. Since 2014, those hours have grown 16%, from 840 to 970. News now constitutes 40% of the stations’ total programming output.

The news expansion has enveloped the duopoly stations that Fox operates in several markets, in some cases pushing the programming of Fox’s secondary network, My Network Television, into latenight.

“In DC, we just added two top-of-the-hour news shows at 8 p.m. and 9 p.m. on [WDCA] and we no longer use the My Net marketing with it. It’s now Fox 5 Plus. So, either on WTTG [the Fox affiliate] or on Fox 5 Plus we have a newscast at the top of every hour from 5 to 11.

“From time to time, if there is a breaking news story and we have a Fox show, we will run either the breaking news on the duopoly and the Fox network show on Fox or the other way around.”

The Fox stations are facing the same challenges as other groups, most notably weakness of non-political advertising sales. Abernethy acknowledges that problem, but does not see it as critical and he has great hope that automated selling will get the stream moving a bit faster by “bringing the cost of transacting down.”

“We are probably more involved than anybody. This is an example of where with consolidation it gets much easier because there’s fewer players and better financed players that can come out and come up with some solutions.”

Abernethy’s other hope for spot derives from the Supreme Court decision in May that opens up the door for all states to permits sports gambling.

“This gambling issue could provide not only a big advertising category, but could be real complementary to the sports rights and properties that we have.”

Another sign of Fox’s commitment to broadcasting is its growing support for ATSC 3.0, the new standard. “I am more and more bullish about 3.0,” he says.

The Fox stations are involved with other leading station groups in a Phoenix trial aimed at figuring out how stations in any given market can cooperate in upgrading to the new standard in each market, while maintaining over-the-air service to millions of people with their current incompatible TV sets. “We are really in a position to now accelerate the rollout.

“My issue has always been, what’s the business model? Where should we be focusing? While there are some opportunities to enhance our over-the-air delivery, I think the real value is in businesses we haven’t even heard of.”

Fox has been filling more hours with news, but the initiative comes nowhere near meeting all of the group’s programming needs. On most weekdays, the network contributes only a couple of hours of primetime and nothing in daytime.

So, Fox has been — and will continue to be — broadcasting’s chief incubator of first-run syndication programming. It will occasionally take a shot at big-name shows as it did with NBCU’s Harry, but it prefers smaller shows that it can give test runs before making a full commitment.

The approach has spawned the likes of Wendy Williams, Page Six TV, The Real, Dish Nation and TMZ Live.

And as the station group grows, so will its importance to other producers and distributors. As Debmar-Mercury Co-President Mort Marcus puts it: “Fox is our best customer. It is probably every syndicator’s best customer.”

Among the Big Four, Fox stands alone. Unlike the others, it has a vision for broadcasting that goes beyond just doing more of the same and it has shown that it will spend nearly a billion dollars to back up that vision by buying more stations and billions more for the live sports.

How it all turns out is uncertain. But by this time next year, it is safe to say that the station group will be much bigger — and much livelier — than it is today.

Tomorrow, in part 2 of this special report, we’ll profile CEO Jack Abernethy, who’s leading the station group as it. And on Wednesday, we spotlight the general managers who lead the group’s 28 stations in 17 markets. You can read the other parts here.


Comments (0)

Leave a Reply


More News