EXECUTIVE SESSION WITH BILL HOFFMAN

Making The Most Of Multimedia Synergies

Cox Media Group President Bill Hoffman says his portfolio of 14 TV stations, 57 radio stations and eight dailies is enjoying the fruits of cross-media synergy, a philosophy that's fallen out of favor at some other media companies. In addition to synergy, Hoffman talks about the need for a TV station ownership limit and possibly an arbitration process to avoid retrans blackouts, the promise of station-produced syndicated programming and the outlook for the TV rep business (he oversees CoxReps) and TV Everywhere.

The idea that you can combine the resources and operations of the various legacy media and create better content and greater profits has fallen out of favor among old-line media companies of late.

But not at Cox Media Group.

The division of Atlanta-based Cox Enterprises that comprises 14 TV stations, 57 radio stations and eight dailies is enjoying the fruits of cross-media synergy — or so says Bill Hoffman, the longtime broadcaster and president of the division in this interview with TVNewsCheck Editor Harry A. Jessell. In fact, he says, the potential of radio-TV synergy drove its decision last year to purchase TV stations in Jacksonville, Fla., and Tulsa, Okla.

Hoffman, who started in the business as a sales rep in 1979 and for years ran Cox’s flagship WSB-TV Atlanta, was named president of the division last April, succeeding Doug Franklin, who moved up to corporate CFO. A month later, Hoffman promoted two women to handle day-to-day TV and radio operations as EVPs — Jane Williams and Kim Guthrie, respectively.

In addition to synergy, Hoffman talks about the need for a TV station ownership limit and possibly an arbitration process to avoid retrans blackouts, the promise of station-produced syndicated programming and the outlook for the TV rep business (his portfolio also include CoxReps) and TV Everywhere.

An edited transcript:

BRAND CONNECTIONS

We have had an active station trading market over the past year and a half. Cox has been a buyer and a seller. Last year, you bought stations in Jacksonville and Tulsa. This year, you went ahead and sold stations in El Paso, Johnstown, Reno and Steubenville. What’s the thinking behind those two moves?

We thought we could be most nimble and able to tightly manage our super brands if we could become more of a boutique TV and radio group with our portfolio being top 50 markets, for the most part. So if we can move the needle a little bit, it’s going to be throwing more cash back.

Let’s look at Allbritton [Communications] for a second. You had WJLA [Washington], which was the absolute prize, but if you wanted WJLA you had to take all these other stations. WJLA is a very attractive station, but taking on the other smaller stations would have been contrary to how we just realigned ourselves. [Editor’s note: Sinclair Broadcast Group ended up the buyer of the Allbritton group, paying $985 million.]

What about Dayton, Ohio? At DMA 63, it’s outside the top 50.

We have really made Dayton kind of this incubation center for collaboration because it’s the market where all three media — newspaper, radio, TV — are all under the same roof. Every single data point says that group is performing outstandingly — the station and the individual entities altogether. We just have a juggernaut of a media outlet there between newspaper, TV and radio.

There’s also sentimental value in Dayton. It’s where the company started.

Do you think you can duplicate that multimedia synergy strategy elsewhere?

Well, we believe in it so much that during the Newport [Television] bake off of which stations do you want, we chose Jacksonville and Tulsa because we had news talk-radio stations in strong radio clusters in those markets. We’re already synergizing in both those markets like we do in Orlando and Atlanta.

We have just become a big believer in the kind of collaboration you get between different media outlets in a single market.

We have pushed hard on Dayton and Atlanta to experiment, be entrepreneurial. The two markets are living out two different examples of how it could work. Dayton is a smaller market with everybody under one roof. Atlanta [where Cox owns the Atlanta Journal-Constitution, WSB-TV and WSB-AM-FM] is a much bigger market. To listener, readers, viewers in Atlanta, they feel like it’s three distinctive brands, but behind the scenes the kind of collaboration that’s going on in content, marketing, sales, back-room efficiencies is very robust. It’s leading to better financial performance. The brands are stronger by whatever use-metrics you can put against them. I mean WSB-TV has got some of the highest ratings they have had in the last 10 years.

How is that possible? Every number I have seen about local TV viewership shows that it has been trending down.

Localism is still very, very important. We did a longitudinal study against the six o’clock news in all of our markets against the last five years and found absolutely zero rating erosion. In some cases, ratings are growing.      

Do you think that’s peculiar to Cox, or do you think others are seeing that also?

I don’t want to tip my hand because there are stations and groups that I study that I think are entities that have stayed the course to superserve their market and have done it with great resolve. If they have a commitment to local programming and stay current and relevant, they’re doing fine.

So, maintaining your ratings in news is not just a function of having synergy across multiple stations and media?

It’s not a prerequisite for success, but I am also telling you — I could write a white paper — it’s absolutely helpful.

Fox is said to be going around looking for stations in markets with NFC teams so that it can better leverage its TV rights for the conference. You have a Fox affiliate in San Francisco, home of the NFC 49ers. Do you have any concern that Fox may take away your affiliation for KTVU or force you to sell them the station.

We saw what they did in Charlotte so we see how a business strategy on their behalf is being actualized, OK?  We also know that we love KTVU and would like to keep it in perpetuity. We spent decades serving and delivering good will in that community. But we also know these are different times and they have got a business agenda and we have got a business agenda. We have a very good relationship with Fox and we would like nothing better than for KTVU to remain a strong Fox affiliate for as far as I can see out. [Editor’s note: Earlier this year, Fox purchased WJZY Charlotte, N.C., from Capitol Broadcasting and made it an O&O. In doing so, it yanked the Fox affiliation from Bahakel’s WCCB.]

So, you think you can fend them off then and live in peace with them in San Francisco?

We have got a contract that takes us out into the future and so that contract right now has me in a safe place.

So no immediate concern, but let’s talk about the long term. The FCC is considering eliminating the 50% UHF discount, which would limit Fox and other big groups to an aggregate household coverage of 39%. Do you favor getting rid of the discount and imposing a hard cap of 39%?

That discount was developed during the analog period when there was absolutely a difference between UHF or VHF and I just think it’s gone past its time of relevancy. It makes sense that it goes away.

So that in effect would limit everybody to 39%. Should the cap stay there or should it be raised to 45% or 50%?

It’s fairly apparent that a lot of big businesses believe scale is going to be a difference maker for reasons that I understand. I grew up in the business when there were lots and lots of mom and pop broadcasters that superserved their community or they had smaller groups and they could manage for excellence a lot tighter because there was less to manage. I like a world where there are a lot of competitors out there. It’s the world that I grew up in and I think is a healthy ecosystem.

So 39% cap is fine for now.

I’m thinking yes.

Let’s turn to retransmission consent.  What’s your take on the CBS-Time Warner Cable blackout?

If there’s going to be a series of these, it maybe points to a form of arbitration that can take place that is fair for everybody involved — the MVPD, the broadcaster and, most important, the viewer.

Are you talking literally about setting up an arbitration process?

Yeah. Why not?  I know that that is a very lively topic and you could have broadcasters come down on different sides with that. [Editor’s note: Cox Media Group parent Cox Enterprises also owns Cox Communications, the nation’s sixth largest MVPD, according to the National Cable & Telecommunications Association.]

Given the network demands for reverse comp, do you think you can significantly increase your net retransmission revenue over the next five years or so?  By net, I mean retransmission consent minus reverse comp.

I really don’t want to comment on that. That’s a star gaze.  I wouldn’t want to throw a dart at that.

On the programming side, Cox is partnered with Raycom and Scripps on Right This Minute, a syndicated show that’s heading into its third season. Should we expect more of that kind of thing from Cox and your broadcast peers?

I wouldn’t be surprised. We’re more than satisfied with what’s happening with Right This Minute. It’s like most things that you endeavor into when you are being entrepreneurial. If it’s not good, you want it to fail fast, learn your lessons and have that be something that helps you the next time something like this comes up. But this has been very healthy for us, very good. It’s left a very good taste about investing in these kinds of things.

Any upside in the rep business?

I want to think so. I look at the rep and I see the national footprint of sellers that we have. They’re everywhere and they have got fantastic relationships with the ad agencies. There’s a value exchange there that’s important.

I think what will be interesting is to see what happens as the buying exchange changes over time and maybe it will be something in the digital space. Agencies want to buy time, sometimes over the air, sometimes digitally, sometimes on your D2. We’re selling a lot of different things and we have got to have somebody there who is representing our wares.

ABC, NBC and Fox have all said they are willing to work with their affiliates in streaming broadcast signals as part of TV everywhere offerings.  Have you made any progress with the networks on TV Everywhere?

I think there’s good communicating going on between the networks and the affiliates. There are a lot of different versions of how they think mobile is going to live in the future. From our perspective at Cox, if it’s radio or TV, we want to be able to be every single place that technology and devices allow our users to be.

This will probably take a while to play out. There’s technology issues that are there. There’s the issue of getting a lot of broadcasters to coalesce around one solution.

What’s happening on the CBS front? They’re not doing TV Everywhere. They seem to be they have their own streaming plans. What are they telling you?

I know the same thing that you know.

That’s not much.

Some of these people are going to be slower than others and that’s fine, but at the end of the day, the consumer is going to drive acceptance of this and I think that’s going to force conformity very quickly.


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