For Tribune’s Wert, Bigger Is Much Better

With its $2.7 billion purchase of Local TV LLC, Tribune Co. signaled that publishing is its past and that broadcasting is its future. Upon closing, the deal will more than double its TV stations from 20 to 42, diversify its network affiliations and expand its footprint to 44% of TV homes.

Tribune underscored the broadcasting-centric strategy this morning, announcing plans to segregate its newspapers into a new company, Tribune Publishing Co., a possible prelude to selling them.

Key to executing the strategy is strong, experienced group management, something that has been lacking during the four troubled years that Tribune spent in bankruptcy.

For that job, president of local broadcasting, Tribune CEO Peter Liguori early this year tapped 56-year-old Larry Wert, a career broadcaster who was running NBC’s WMAQ Chicago as president-GM. Between 2008 and 2011, the last three before General Electric sold control of NBC to Comcast, Wert also oversaw four other NBC O&Os.

Before joining WMAQ in 1998, Wert spent a decade in radio. He was president of Evergreen Media when it merged with Chancellor Broadcasting in 1996. He then spent two years as a Chancellor regional manager.

In this interview with TVNewsCheck Editor Harry A. Jessell, Wert extols the importance of scale in big-league broadcasting, promises more news from the stations, indicates that he is losing interest in overexposed off-net sitcoms and maintains the newly established Tribune Studios will not be his stations’ only source of first-run programming.

An edited transcript:

In the conference call following the announcement of the Local TV LLC deal, Peter Liguori indicated that he wanted to acquire more stations. Why? What’s the strategic imperative?

I think the top thing he talked about was scale and the opportunities that scale provides in everything from programming to sales to marketing. Scale matters. It goes on and on, efficiencies and economies of scale.

So you think you need size to deal with whom? The networks? The syndicators? Cable operators? Equipment vendors?

Everybody. And when you’re talking about the networks, it gives you some diversity as well. If you’re affiliated with a variety of networks, in the peaks and valleys of programming acquisitions and in the peaks and valleys of event television like Super Bowls, it just gives us optionality.

With the addition of Local TV you have about 44% of the country covered. What’s your goal? What kind of footprint do you ultimately want?

I don’t think we have a footprint goal at this point in time. Any other acquisitions are going to have to be strategic and make sense and complement the portfolio we have now.

You mentioned affiliation diversity. The Local TV deal really puts you into the Big Three affiliate business for the first time.

Yeah, we will have five CBS, two NBC and now we’re up to three ABC. We moved to the No. 1 Fox group with 14 and the No. 1 CW group with 14.

But you don’t have any Big Three affiliates until you get down to market 41, Oklahoma City. Is it important to get Big Three affiliates in the top markets?

I think that we know that the owned-and-operated network groups have most of those stations. So, we would strategically look at those. For example, Allbritton is for sale. They obviously have Washington, market No. 8.

So I take it you’re looking at Allbritton — WJLA in Washington?

I think everyone is. Anyone who is shopping is looking because they’re on the market. It’s rare that a top-three affiliate major market would become available.

You are heavily relying on the CW in the top 10 markets now. Do you have any suggestions on what it could be doing better or differently to make your life better?

I think all the partners involved with CW are intensely focused on what has been built to date and what is possible as it evolves.

With the broadcasting division doubling in size in terms of the number of stations, are you planning any reorganization of the group management or planning any additional group-level hires?

We’re certainly taking a strategic look at that.

What’s your group-level team look like now? Julio Marenghi heads sales, correct?

Yeah, he’s the head of station sales, but I don’t think I want to peel the onion on who our team is and everything. That’s kind of playbook stuff.

Tribune created Tribune Digital Ventures to develop the digital side of the company and then hired a guy named Shashi Seth to run it. Does that mean he runs all the station websites and apps?

Tribune Digital is a stand-alone business set up to create, design and develop new digital products and businesses that leverage our content. It isn’t involved with the day-to-day operation of our television websites or their infrastructure.

So the station websites and apps are under you and on your P&L, right?

Yes.

Are you happy with the conflict shows on the Tribune schedule — Cunningham, Springer, Maury and, starting at fall, The Test from CBS? Will they remain the cornerstones of your daytime programming?

I think we’re looking at everything. I am certainly familiar with those shows and their business model having come from NBC Universal and I think I have a better understanding of how they fit into the Tribune portfolio at this time. We are looking at the evolution and the complement of those shows creatively as well as at the business model.

Tribune just formed Tribune Studios with Matt Cherniss in charge. Should we expect that this will be the source of all your first-run syndicated programming in the future?

I don’t think it’s fair to assume that it will be the source of all first run. Now, we may make external partnerships. We may still partner with other content makers just as all the studios do. So I don’t think we will be an exclusive customer of theirs nor do I think they will be an exclusive provider to us.

Isn’t that one of the reasons for the big footprint, so you can provide a launch pad for shows?

Yes, absolutely. That will be the priority, but you said exclusive and, again, I’m not sure about that.

Will you personally have a hand in developing the programming through the Tribune Studios?

If it’s product for the stations, absolutely.

Do you have any programming ideas you would like to share?

No, not really. We’re having a lot of different discussions. I don’t want to be disrespectful, but actually the creative process is internal until it’s strategic to make it external.

I know that there’s been talk of a court show and a game show from Tribune. Anything imminent?

No, nothing imminent yet.

How about off-net sitcoms? Is that still part of the programming plan?

It’s still part of the plan right now, but you see more erosion and frequency of run on different platforms. So the model trajectory does not look favorable in my view.

Do you mean the sitcoms are getting too expensive or that you don’t like the idea of dual runs on cable?

You know, if it were only dual runs it might be more conceivable, but it’s conceivable that with all the different distribution out there, a program can run on a half a dozen platforms with high frequency in the same week. It’s very rare that there’s any off-net exclusivity anymore.

What about news expansion? Should we be prepared for more news in the next year or so from the Tribune stations?

I think the answer is yes — where it makes sense. We have expanded news hours in the last two years by over 130%. Once we are together with Local TV, we will be generating over 1,300 hours of news per week. Right now, we have many stations that don’t do weekend news. So I certainly can conceive of more expansion.

You just came out of a group that was making a huge investment in news, NBC. Do you have a sense that Tribune is ready to spend to upgrade news?

I think it’s a different company. I think that the NBC station group under the final years of General Electric was very aggressive in cost management — in the eyes of Comcast maybe too aggressive. Comcast’s response was to add strategic investment where it made sense. I think cost management is critical given some of the sector issues out there and we have to continue to look for more efficiencies and opportunities to distribute content. That said, if we think investment makes sense towards growth, I believe I will get company support to do it.

How do you see the spot business in the second quarter and what’s the outlook for the rest of the year?

The second quarter has not been terrific. Depending on the part of the country you look at, it’s down 5% to 7%. The third quarter however, is looking more favorable, but it still has to play out. We’re optimistic that traditional advertisers are coming back. Our top category, automotive, specifically domestic, is showing growth. As we go to the back of the third quarter and into the fourth quarter, we’re still looking for an up marketplace.

Do you think that the Obamacare implementation will generate as much spot TV advertising as some think it will?

We do, and it’s starting out geographically. So our first glimpse of it is in California where there are some significant dollars pending now.

Let’s me ask you about multicasting. Many of the Tribune stations are now airing Antenna TV and This TV on digital subchannels. Are these meaningful revenue and bottom line contributors?

They are very meaningful. I have been part of a couple of start-ups on digital channels and since joining Tribune I am very impressed with what they have accomplished with Antenna TV and now This TV. They have become very significant businesses for us.

More significant than online?

They are more lucrative right now than online; that’s for sure. And they are still growing.

You had a front-row seat to the consolidation that swept through the radio industry in the mid-1990s. You were right there in the middle of it all. There seems to be a consensus today that radio was hurt by all that consolidation. What do you think? Do you think that TV consolidation can go too far?

I think a couple of things happened during the radio consolidation era, including many of those companies going public at the same time. Many of them, in order to make their reported numbers, were shaving costs and adding inventory and that became a bit problematic for some of them.

Television has the benefit of learning from what came before. There’s an awareness that you need to maintain a local connection. If local television stations become over-commoditized, they will be, in my view, becoming less relevant.

You gave up a great job for a great job.

Yeah, I sure did. It was a pretty good job, but a seat at this table and getting to play in this media landscape, which is changing so quickly, is really invigorating. It is a bit of a race to get to the business models that are sustainable. Everyone in the industry is still figuring those models out in real time.