NPG Counts 4 Reasons For Long-Term TV Bet

Come July 1, Mike Meara takes over as president of the News-Press & Gazette broadcasting group from the semi-retiring John Kueneke, who will stay on as a strategic adviser and continue to represent NPG on the NAB board.

For Meara, it will be a reward for six years of service to NPG. He joined NPG in 2009 as a director of sales and was upped to EVP-COO for broadcasting in January 2013. Prior to NPG, he was director of sales for Tegna’s KSDK St. Louis (2003-09) and for KPLR St. Louis when it was owned by Acme Communications (1997-2003). He began his TV career at KSDK in 1985 as an account executive and rose to local sales manager before jumping to KPLR in 1997.

St. Joseph, Mo.-based NPG is among the several family-owned media companies that continues to thrive with a mix of small-market newspapers and TV stations. It’s headed by Chairman and CEO David Bradley.

The publishing side comprises 13 daily and weekly papers in Missouri and Kansas. Meara’s TV broadcasting wing counts 42 network affiliates in 10 markets: Palm Springs, Calif.; Santa Barbara, Calif.; Salinas, Calif.; Colorado Springs, Colo.; Idaho Falls, Idaho; Columbia, Mo.; St. Joseph, Mo.; El Paso, Texas; Bend, Ore.; and Yuma, Ariz..

NPG squeezes all those affiliates into the markets through the use of digital subchannels and LPTVs, not joint sales and shared services agreements. Affiliations include all the Big Four and well as CW, MNT, Telemundo and a smattering of diginets.

In this interview with TVNewsCheck Editor Harry A. Jessell, Meara talks about the Bradley family’s long-term commitment to broadcasting and how he should be able to sustain growth through four healthy revenue streams — spot, digital, retrans and political. He also addresses ATSC 3.0, the incentive auction and Nielsen’s code-readers.

An edited transcript:

Where do you stand on ATSC 3.0? Can you afford to upgrade all your stations with a new broadcast standard not knowing whether there will be a return on investment?

We’re certainly supportive of what the NAB and the industry leading companies are doing to further our prospects. It can enhance our delivery system with the best picture, and there is potential for future businesses, but like everybody else, we’re trying to find the business model and there doesn’t seem to be one that’s become evident at this point or the way to pay for it. 

That’s what they said about HD. Have you implemented HD news everywhere?

We really tried to be at the forefront on that. We were the first in virtually every one of our small market to do that.

Well, there was no concrete return on the HD investment, was there?

You can’t quantify it, but we felt the return is that if you are not HD your ratings were going to go down.

Tell me about the thinking at News-Press & Gazette. Do you feel comfortable that it’s in it for the long haul?

Yes, it’s a unique company.  It’s 60 years old and rooted in local print journalism. It started with the newspaper in St. Joe [St Joseph (Mo.) News-Press] and the Bradleys now have the fourth generation running it. Everything that they tell me and they tell the stations is that they’re trying to keep this business going to pass down to the fifth generation. So they’re long-term players, they’re long-term broadcasters and they feel good about our business going forward.

I assume you do, too. Why?

With respect to our company, we really focus and concentrate on local markets and I believe that local news and localism and community service is even more important in the smaller markets.

The ad business is still growing. Seventy-five percent of our revenue in our company is local and we’re really focused on the local side. We work hard on business development and expanding our long-term partnerships with advertisers. Our digital is growing and we will talk at some point I’m sure about retransmission. And then every other year you put in political. Those four give you a nice every-other-year balance and a good business.

Let’s talk about spot since you brought it up. You say your spot revenue grows every year.

Yes. It’s not certainly the growth of the old days, but we’re growing again this year and have grown every year since I have been with the company [2009].

Can you ballpark that growth for me?

Not to be too specific, but we are projecting low to middle single digits on core — local and national combined — and then on digital we can certainly do a lot better than that.

What are you doing on the digital front?

We have really renewed our focus to expand that advertiser base, and we have also been more aggressive in going outside our websites and mobile properties and partnering on retargeting and getting involved in programmatic networks.

What kind of partnering are your talking about?

We partnered with a company called Simplify. They provide retargeting services for our advertisers so our people can go out and tell an auto advertiser that if somebody goes to our site you will be able to follow them as they go shop for cars.

So that’s proved a good enhancement?

Yes, because ultimately we still have with television the best mass media brand builder that was ever invented. If we can work an advertiser through the best branding medium ever and then through digital assets and get down to a lead generation or fulfillment, that’s a powerful proposition. We can tell local advertisers we will let people know who you are and then we will track your customers and provide leads to you.

When you look at your markets, what threats do you see other than the other broadcasters? What about Google and local search?

Yeah, that’s the monster. The fellow that you interviewed [last] week?

Brian Weiser [securities analyst with Pivotal Research Group]?

That was a very interesting article. The thing he said that really blew me away was that if you took Facebook and Google out of the equation, overall digital advertising was flat. That really caught my attention. Google has been taking a lot of money out of local markets for a long time. They have tried to partner with us. They would like to have our local relationships.

Do you feel that any of your money is drifting away to search? Are you the going into some of these advertisers and found they have already spent their budget with Google?

Google has hurt the Yellow Pages directory type more.  Now what we are finding — and we are focused on it with auto dealers — is that they are shifting their money from broadcast into digital. That’s why we have been more aggressive in expanding our product base with digital — to make sure that when we are in talking to them, we can provide solutions that other people may be trying to provide.

Let’s shift gears to the incentive auction. Are there any stations that you might want to sell?  Some of the stations in California may have some value. What do you think?

I would refer you back to when I talked about the company and its intention to stay in business and be long-term broadcasters.  We’re not looking at this as a way to get out. Our concern is primarily with the repack.  Like the NAB, we are concerned about whether the money allocated by Congress is sufficient to bring over our repacking costs and bring no harm to local broadcasters, which is, as [NAB President] Gordon [Smith] says, the premise of the law.

But we are like everybody else. They have everyone’s attention. We have got a group inside the company that is talking to the FCC and going to their meetings. We’re looking forward to the rules coming out in the fall. So I would say that we have our eyes are open and we’re asking a lot of questions and learning because some of this is not still clear to us.

In terms of the repack, it’s not just a matter of money. It’s also a matter of time, right?

The 39 months [for moving channels in the repack] would be tough to do. There are only a couple of companies that can do the work. So the math just doesn’t work.

How are you getting along with the networks on reverse comp?

The networks are certainly aggressive in dealing with us, but we have found them to be fair.

Do you have long-term agreements in place with everybody right now?

Yes, we do — I mean as long a term as exists these days. We feel we are in good shape with the networks and, you know, we were in New York for the upfronts. We heard from all the networks about their commitment to the model going forward. I take them at their word. I also acknowledge that there is going to be some tough business negotiations along the way, but ultimately I think it’s in both of our best interests to keep this model going forward.

So you buy it when they say they love you and want to be with you forever.

Well, I am young and gullible.

What about the other side of the equation — retransmission consent?

With respect to retransmission, our position is that the system is working well with very few interruptions. The top line continues to grow. There’s still a sizeable disparity between the audience and the compensation.

So as you suggested earlier, net retrans is pointed up?

Yes.

And you think that’s going to continue for some time?

Our business is looking out five years and certainly for those five years it appears to be.

Are you sure political is going to keep growing?  That’s one that many think is vulnerable to some digital competition.

It is. There likely will be some peeling off in ’16, but I am still amazed at the amount of money. Each election the amount of money is just going up.As you know, political depends on the races and the markets. If you happen to be in the right place at the right time, it’s extremely good.

So how are you shaping up for ’16 with Arizona, California, Colorado and Missouri?

Arizona won’t be much for us. Colorado has always been strong for us. That state has really become a bellwether state, a purple state, and California is always interesting with the propositions. Missouri has a gubernatorial and a senate. So we are optimistic.

Are you going to participate in CBS All Access?

Yes, we partnered with them on that product and I think it’s important for us to work with the networks and to make our content available to as many people as possible and on as many platforms as possible providing there is a business model. We are not looking at the CBS All Access as a money maker in the short term, but we do think it’s important that we get alongside CBS and figure out this over-the-top business together.

There are considerable technology cost involved, aren’t there?

They have a financing deal to cover the Syncbak costs that they are making available to small markets. It costs $10,000 for the setup and then $1,500 a month. So what they do for small markets — and this is why it’s not a money maker in the short term for us —  is they will finance the setup and the first year of fees, but they will keep the 59, 69, 79 cents [the escalating affiliates’ per-sub, per-month cut of the subscriber fees]. So we will have a year of not paying. By the end of ’16, we will budget an expense for it.

What about the TV everywhere plans of the other networks?

From what we heard in New York, everybody is interested in it, but it hasn’t moved as quickly as people expected.

There are other OTT opportunity like Sony PlayStation Vue and the rumored Apple TV. Have they had any discussions with the networks about your involvement in them?

Again, like CBS All Access, we are trying to figure this platform out with all the networks, but we are definitely interested in getting our content out in front of as many people as possible.  I saw that Apple has delayed their service, but we were all very happy to see that they came out and said that they want local stations as part of their bundle.  So I thought that was a real positive.

You said the company is not a seller, but is it a buyer?

You know, since I have been with the company we have doubled in size.  So we have been pretty aggressive starting in ’12, but the company is very financially responsible. I would say we are at a pause right now like everybody else.

What’s your profile for acquisitions? What kind of stations are you interested in? Would you like to get into bigger markets?

We play in really small markets. You know, we have got some terrific locations and some real stunners in the group.  So I think for any expansion we probably we would still look smaller in the West.

I know that you are involved with Nielsen’s code-reader plans. How are you feeling about them at this point?

We are certainly interested in a measurement system that is an improvement over the diaries, which shouldn’t be difficult as it’s been unaccredited for a few years. 

We are in that rollout in Santa Barbara, Calif. We’re going to start seeing data from February in July.  In August, we see data from May and in September we see data from July. Then in October we start to get the regular data every 30 days.  We still have some concerns about the methodology and the collection of the demo ratings and, I think, their ability to keep the cost structure in line with markets our size.

By “cost-structure,” you mean it costs more money?

Yes. So, it’s just one market and there was an increase to us and I would prefer not to get specific. That’s why I have a concern. But it’s great because the diaries are not a good way to do business.