Tribune Keeping TV Spectrum Options Open

Earlier this week, CBS CEO Les Moonves and 21st Century Fox COO James Murdoch told investors that they would sell some of their TV spectrum in the FCC incentive auction if they determined it made sense.

In his turn with investors this morning in New York, Tribune Media CEO Peter Liguori didn’t go that far, but almost.

Asked at the Tribune Media Investor Day how much spectrum Tribune could sell without undermining its existing broadcasting business, Liguori said it was “incredibly premature” to answer such a question.

But he noted that Tribune does have a lot of spectrum — 12 MHz in its large duopoly markets — and that the spectrum is valuable.

“We have crazy optionality with something like that,” he said. “We could sit here and line up six, seven, eight different options on how we can maximize that spectrum and really drive some shareholder value.

“Rest assured we look at it [the incentive auction] every day. We are active in the debate, we are monitoring the situation and we are sitting in a very good position.”

Liguori was also asked about its stand-off with Fox in September over its affiliation with Tribune’s Seattle station, KCPQ.

At the time, Fox tried to force Tribune to sell it the station so that it could capitalize fully on the highly rated Seattle Seahawks NFL football games. Fox holds the network rights to the Seahawk games, which air on KCPQ.

Liguori said that while Fox had the right to revoke the station’s affiliation, the resolution of the rift — Tribune will keep the affiliation through 2018 — proves networks still need affiliates and vise versa.

“These affiliations don’t change very often. And the reason why is there is a lot of friction if you do,” he said. “We bring a lot of value. They bring value. We pay for that value.

“I actually felt at the end of the day that Seattle proved that the ecosystem, with all its fractures, is still strong, still works, still exists,” he said. 

The Investor Day was a formal coming out for Tribune Media, which spun off its newspapers into a separate company (Tribune Publishing) in August and whose shares began trading on the New York Stock Exchange last Friday.

During his formal presentation, Liguori said the company “is more relevant, nimble … and ready to face the challenges that face the changing media environment” than at any point in its history, primarily due to its investment in broadcast TV.

Liguori said growing the company’s portfolio of TV stations from 23 to 42 mostly through the purchase of Local TV LLC — as well as the hours of local news, sports and Tribune-owned content — has led to a surge in revenue from retransmission consent fees and political advertising.

Retrans revenue has risen to $230 million in 2014 from $130 million in 2013 and just $2 million in 2001 — and that’s just with half the number of retransmission deals signed and done. The remaining half will be done incrementally over the next three years, he said.

“Scale matters more than anytime in media history given the amount of consolidation going on at the moment and all the changes,” Liguori said.

That newly expanded reach (Tribune stations now cover 50 million homes in 44% of the U.S.) also paid off in political advertising in 2014, which rose to $105 million from $56 million in 2010, he said.

With stations in 11 presidential battleground stations, the group is well positioned to reap another political windfall in 2016. In 2012, the last presidential campaign year, the group recorded $166 million in political advertising. “Clearly, we hope to beat that.”

Tribune Broadcasting President Larry Wert, who also spoke at the conference, said the vast majority of  the money this year came from three states with highly contested races: Colorado, Iowa and Arkansas. 

“We’re not always sure where it will come from but we are ready for it,” Wert said.

Wert said that Tribune’s success isn’t based on just the number of stations, which now include stations in the country’s five largest markets, seven of the top 10 and 14 of the top 25.

Content also matters, he said. The hours of local news (which generates 47% of station revenue) produced by Tribune has grown 57% since 2008, he said. The broadcast group currently produces 75,000 hours of news a year.

Wert said Tribune morning shows in Los Angeles, Chicago and Cleveland are “crushing” the cable competition, piling up more viewers than all of the cable news channels combined.