Broadcasting: No Country For Little Dogs

I felt sorry for Media General when CBS shifted its Indianapolis affiliation from Media General’s WISH to Tribune’s WTTV a year ago.  It was a big blow even though WISH was able to snag the CW. No more NFL. No more March Madness. No more Most-Watched primetime.

It turned out to be a foolish sentiment. After all, broadcasting is a business and, like most other businesses, it’s dog eat dog.

The reminder came the first week of the New Year. We learned that ABC unceremoniously dumped WKPT as its affiliate in the Tri-Cities market where Virginia, Tennessee and North Carolina mash together (DMA 97) and hooked up with another station in the market, WJHL, which already has the CBS affiliation.  WJHL will put ABC on a subchannel.

Oh, I almost forgot the irony. WJHL is owned by Media General.

From here, it looks like the networks are determined to wring as much of the retrans revenue out of their affiliates as they can. If that means unmercifully playing one affiliate off against another, so be it.

One of the unintended or unimagined consequences of broadcasting’s conversion to digital in 2009 is that the networks can threaten any of its affiliate with loss of affiliation because there is no longer a shortage of broadcast outlets in any market. Given the current state of digital compression, any station can have multiple affiliations, with two in HD.

In the old analog days, when it was one station, one channel, if a network wanted to move its affiliation, it had to find another station willing to give up its current affiliation.

Of course, in a dog-eat-dog world, it’s best to be a big dog. Media General is a big dog with 13 other ABC affiliates among 71 stations in 48 markets and soon to get bigger if it merges with Nexstar as is now widely expected.

If Media General is an Alaskan husky, WKPT is teacup chihauhau. It’s family-owned (Glenwood Communications) and its only other broadcast properties are seven Class A low-power stations and a cluster of radio stations in the region. Two of the Class As, which go by WAPK, serve as Tri-Cities’ MyNetworkTV affiliate.

I spoke to longtime WKPT General Manager George DeVault this week and he told me that the loss of ABC hit the station as hard as you might expect.

Without the ABC affiliation, he says, the station will lose $1.5 million in retrans and half its spot this year, and total revenue will sink to no more than $1.5 million or so.

Among other things, that means the end of news at the station and layoffs. “I think we are up to about 10 now and there could be as many as 10 more,” he says.

Ironically, he adds, the station restored news only after ABC made it a condition of its affiliation renewal five years ago. “We were getting along. The news wasn’t paying for itself yet, but with the retransmission money, that enabled us to fund the news department and things were going rather smoothly.

“In fact, I don’t have an end-of-year statement yet, but I suspect last year, 2015, will probably be the most profitable year in our 46-plus year history.”

The good times are history.

When ABC goes away at midnight on Jan. 31, WKPT will take over the MNT affiliation and WAPK will switch to MeTV, which is now on a WJHL subchannel (small solace, I think). “We are just feeling our way along, working on our pro formas, to try to find some combination of expenses and expected revenue that will make the TV operation break even.”

Under the last deal with ABC, WKPT paid the network $1.5 million a year, which amounted to about half its retrans revenue, says DeVault. But, he says, ABC wanted twice as much in reverse comp to renew — $15 million over five years or $3 million a year.

DeVault thought that he could talk ABC down as he had the last time around, but he was wrong. ABC was giving no ground. So, in the middle of December, recognizing that he needed the network, he told ABC he would accept its terms. “Then almost immediately they called back and said, well, we have decided to explore our other options in the market.”

That option, he learned on the afternoon of New Year’s Eve, was rival WJHL. ABC extended WKPT’s affiliation to Feb. 1 to allow for a smoother transition and that would be it.

In a statement, ABC suggested that the switch had nothing to do with Media General’s standing as a major affiliate or who would pay the most reverse comp: “We have the opportunity to broaden the exposure of ABC News and entertainment programs to the viewers in the Tri-Cities market.”

DeVault had another take. “It all boils down to retransmission consent,” he says. “They [Media General] can pay more reverse comp because they can negotiate for more retrans,” he says. “If they reach an impasse with Dish or Direct or Charter of Comcast, they can say we are going to pull 70 stations or whatever the number is. That has a much bigger impact with a multichannel carrier than one little station in market 97.”

The lesson is clear to DeVault. You have to have some bulk to  make a go of it in broadcasting these days. “I am afraid the days of the small, independently owned, family-owned television station are numbered…. I can’t speak for the Schurz family, but I imagine that they saw the handwriting on the wall, too, when they decided to sell out.”

Schurz’s agreement to sell its radio and TV properties to Gray Television is pending FCC approval.

DeVault is not totally resigned. He says he plans to petition the FCC to prevent broadcasters from circumventing the prohibition against owning two of the four top-rated stations in a market — that is, in most cases, two of the Big 4 affiliates — by using subchannels as WJHL is doing.

“If it saves the few remaining stations like us, the family owned stations who only have one full-power or two full-power TV stations, so be it. We will have helped our brethren in that regard.”

I can’t endorse such a rule change. It might be good for some small broadcasters, but not for broadcasting.

As DeVault himself understands, broadcasters need size and financial muscle to deal with the networks and with the MVPDs, not to mention programming and technology suppliers. Scale also allows groups to develop their own programming and improve news through the sharing of stories and assets.

That said, I would hope that broadcasters don’t undercut other broadcasters at affiliation renewal time or allow the networks to use them to squeeze other broadcasters for more reverse comp.

Of course, this might just be another foolish sentiment.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.