EXECUTIVE SESSION WITH WAYNE DAUGHERTY

Raycom Executes DIY Programming Plan

The COO of the nation's 15th largest station group believes broadcasters need to wean themselves from their heavy dependence on Hollywood syndicators. With that in mind, he says, Raycom is developing its own shows and looking for broadcasters outside of Raycom markets to give them national reach. In this interview, Daugherty also talks about how business is pacing, mobile DTV, the FCC spectrum grab, virtual duopolies, the sharing of retrans revenue with the networks and more.

A small rebellion is stirring in Montgomery, Ala.

Montgomery-based Raycom Media is shaking off its heavy dependence on Hollywood syndicators and developing some of its own programming.

The first effort is America Now, an hour-long lifestyle show that in large part comprises segments produced by Raycom stations. Now in weekend double runs, the show is being prepped to fill key slots like the evening news lead-in that Oprah will be abandoning this fall.

Raycom has the resources to back such an initiative.

Funded by Alabama state pensions, it is the nation’s 15th largest station group, operating 45 stations in 36 markets that collectively cover 12.6% of the nation TV homes. The group has a nice mix of major affiliates: 17 NBC, 10 CBS, five ABC, six Fox, three MNT and one CW.

Since 2006, Wayne Daugherty has been COO and EVP, the right hand of CEO Paul McTear. He also happens to be the current chairman of the CBS affiliate board.

BRAND CONNECTIONS

In this interview with TVNewsCheck Editor Harry A. Jessell, Daugherty discusses America Now, noting that it is now being shopped to broadcasters outside the Raycom markets by Debmar-Mercury. He also talks about how business is pacing, mobile DTV, the FCC spectrum grab, virtual duopolies, the sharing of retrans revenue the networks and more.

An edited transcript:

Last fall, Raycom launched America Now, an original lifestyle show that you’re producing in conjunction with ITV Studios in Los Angeles. How is that going?

It’s a news kind of deal, but it has compartments on health, automobiles, health care, pet care, lifestyle, all that.

Raycom funded the entire project. We now have double runs over the weekends, one on Saturday, one on Sunday. We’ve been pleasantly surprised about the content and how well it’s been received. We’ve fine-tuned it a little bit.

Our plan is to go forward with that show as a strip and make it available in markets outside Raycom markets as well. In fact, Debmar-Mercury has been hired by us as a syndicator, and they are out selling markets currently.

Other people have the same problems we’re having here. So, if we can come to the table with something that at least makes some sense, there’s interest among other groups that are saying, ‘You know what? That might be worth a try.’

The very existence of the show suggests that you aren’t very happy with what the syndicators have been offering.

You know, there’s nothing really out there in the syndicated world. You got the Oprahs of the world going away. There’s no Oprah on the horizon. We don’t see one. The things that they bring you today are the same old same old. I mean, most of them don’t work. You get them for a year; you wish you hadn’t. And it’s not their fault. It’s just that they don’t work. So we decided to take our destiny in our own hands and take some risk.

When it becomes a strip, where will you schedule it?

It’ll be different times at different stations, but we think it’s a great news lead-in product.

Will it actually replace Oprah anywhere?

In some markets it will. In some markets, we chose to do news instead. And even in markets where we do news at 4, we back up and look at 3 and ask, is this something that’ll run at 3?

Any other original programming in the works?

Yeah. There’s one I can’t talk about yet, because it’s only in the developing part and there are some NDAs in place. It would be a strip, too. But there are some other things that we’re looking at. We’re not stopping at America Now.

It all sounds like quite a risk.

There’s a big production cost involved in doing these things. But we have some advantage in that we have a wide platform of television stations so we can spread the cost over a pretty wide platform.

How is 2011 panning out for you?

It started off a little slow. Our January was fine. February was like somebody took a vacation, and then March is fine. On the whole, we’re going to be right on our budget number, and we’re going to be above last year, probably by four, maybe five percent when we get done here–not including political.

Have there been any surprises or disappointments?

Well, yeah. National is not as good as we thought it would be. The weather, I think, had a lot to do with that. When you look at the snowstorms that hit the major cities toward the end of the year and the first of the year, that put a lot of buys behind. A lot of people didn’t work for a week, and sometimes more.

What’s at the top of your agenda these days?

We’re doing like everybody else: We’re doing what we can to make local business happen. We spend a lot of time talking to our folks about local business, because that’s the part of the business we have the most control of. We don’t depend on over-the-transom business or the same old business we had last year.

We’re doing a lot of developmental business. In some markets, we’ve even hired sales teams that do nothing but call on non-existent business. So they’re like road warrior-type people who call on every shingle that’s out there.

Raycom has been involved in several virtual duopoly situations where one station takes over another in the same market. Raycom has been on both ends of such deals. Do you think we are going to see more of this across the industry?

I don’t know how many more of them you’re going to see. But I think people are going to look at them. With the cost of business anymore, and particularly if you’re not the No. 1 station in your marketplace, it’s really tough. We’ll continue to look at them, and other companies, I’m sure, will look at them.

Raycom is one of the station groups that is working with NBC and Fox to develop the mobile DTV business. What’s the latest on that consortium, Mobile Content Venture?

I’m not too involved in that. Paul McTear, my boss, is the guy who kind of leads that, and has been the most involved. But it’s moving forward. I think mobile is an animal that’s growing so fast. When you look at the numbers and see where this business is going, we think we have to be in it, and this is our toe in the water.

What do you see mobile DTV as being? Is it basically simulcast of your broadcast service?

Initially, it will be. After that, I think it’ll develop into some original stuff as well.

This always brings up the question of the FCC and their proposal to take back some of the broadcast spectrum. What are your thoughts on that?

It’s the absolute worst time in history to try to do that. First of all, there is a lot of spectrum that is not being used currently. The term hoarding has been used in recent months by different people. There’s a ton of spectrum — and the government’s got some of it — that is not being used.

We are doing everything we can as an industry — and Raycom as a company — to make good use of the spectrum we have been allocated. We’ve launched D2’s, we have launched two mobile markets and we’ll launch four or five more this year. We’ve developed HD news in most all of our markets. We’ll finish the rollouts this year with those, all except maybe a couple. So we’re not sitting on our spectrum.

Why do you see the FCC plan as such a threat? The FCC says all they want to do is take some spectrum out of the biggest markets where you don’t even operate, auction it off and share the proceeds with the broadcasters.

I’m not a technical guy. But the truth of the matter is, they won’t be able to get the amount of spectrum they want just in those markets. So, it’s going to require some shrinkage of coverage of current television station signals. It’s going to require repacking. It’s going to cause some service to consumers to be lessened.

You mentioned D2 channels. Is there any money in those multicasting networks that you and a lot of other broadcasters have been experimenting with?

Not yet. It’s a developing business. I don’t know if anybody would tell you they’re making any money with it. I can tell you we’re not yet. But we think we can over time.

Let’s talk about retransmission consent. How are you guys doing on the retrans front with regard to the cable and satellite operators? How big a part of your business is that now, and how fast do you see that growing?

We’re not a public company, so I won’t give you a percentage. But it  has been a growing part of our business. Our negotiations with the cable and satellite guys have been, in some cases, long and laborious, but they’ve always ended up well for both parties — a deal both parties can live with. The amount of income that we get from that is growing a little bit. It has to because, you know, the other side of the story, which is that the networks are holding their hands out saying I want a piece of that.

Just how aggressive are the networks being? I know the Fox situation sort of blew out into the public, but what about the other networks?

They’re all asking, and they’re all in and around the same numbers. It depends on how you look at it. But you deal with them all differently. The approaches are all a little bit different and unique to that network. But, at the end of the day, the net result of their ask is not a lot different.

To be honest with you, I only have a handful [of affiliate renewals] that come up in the short term here. I only have two this year. I have some in ’12, I have some scattered out as late as ’15 and ’16. So it’s a little bit more out on the horizon for us.

You’re the current chairman of the CBS affiliate board. Is the board trying to inject itself into this process?

No. CBS has chosen to deal with each group individually as contracts come up.

NBC was pretty quiet last year on retrans sharing because, I assume, it was trying to be well behaved so it could get its deal through the FCC. What are you hearing from NBC now?

We don’t have anything right in front of us right now so I don’t know exactly where that is. But I think it’s much more like CBS than probably Fox.

How do you feel about watching the NCAA basketball tournament on cable?

I wish it were all on CBS. I wish it were all on over-the-air broadcast television. I think the model that you’re seeing is more the model of the future, though, with the rights fees that some of the cable networks are willing to pay.

I think that you’re going to see more and more partnerships like this. And I hope that we can continue to keep much of this on over-the-air broadcast. But it’s difficult. The rights costs are big. The amount of sports out there is just big. Sometimes it’s hard to believe that you could put it all on network over-the-air television even if you wanted to.

What are you guys going to do to keep these big events from migrating to cable?

We’ll continue to ask the networks to be aggressive in that. The affiliates already participate in that. We already pay some of the costs of the networks. And so we’re interested in being as aggressive in it as we can.

What would the loss of the NFL mean to Raycom?

Let me answer it more globally. I think it’s going to be a hit to all of us. It’s a great selling venue. It’s also a great viewership venue, and it will not be good. We’d like to have it, and we’d like to have it in pattern. We don’t want to see a strike or a delay, or any of that stuff. It would be disappointing if we’re not able to keep that on the air and in pattern.

If there’s no football, how badly would your revenue be hit?

I don’t have a percentage off the top of my head.

But how would you characterize it? Major? Significant?

I wouldn’t call it major. I’d call it significant.

You’ve done little station buying and selling over the last couple of years while no one else was doing anything. Are you in a position where you might buy some more stations?

If it were the right market and right location, yes. But to be honest with you, we’re not out there looking necessarily to buy right now. We’re not interested in putting more debt on our balance sheet. We’re probably like a lot of companies. And we’re not interested in selling.

You’re not interested in selling.

No, we’re pretty happy with what we got. We’re sticking with what we’ve got and trying to operate them and make the most out of them.


Comments (3)

Leave a Reply

mark wienkes says:

March 22, 2011 at 9:54 am

We have been pushing this local concept since 1987… The Auto Channel is ready to provide real TV stations with a full time D2 slate of saleable and audience generating programming which can also provide programs to the main station… In 1987 we tested the concept as a syndicated venture with The Auto Channel available to stations asa 30 minute 60 minute and 90 minute program with lots of local avails and windows for local dealers and services..it worked then, averaging a .09 rating in 50 or so markets with highs of a 4 rating and a 25 share…we continue to look for a broadcasting group partner to help kick it off…in the meantime in 1995 we went online and and developed a million plus page website http://www.theautochannel.com which continues to be the blueprint for a full time ad revenue generating programming concept…way to go Raycom…TV stations producing TV shows how refreshing.

Shaye Laska says:

March 22, 2011 at 4:39 pm

Exclusive local content is the sweet spot of broadcast TV….it gets noticed, and brings client results.

Janet Frankston Lorin says:

March 23, 2011 at 5:06 pm

That’s what makes us different from the other 500 channels.