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Local TV is no longer a cash cow

Posted by Mort Greenberg on April 6, 2008


Nationwide, newsrooms are facing cutbacks

By David Zurawik and Chris Kaltenbach

Sun reporters

April 3, 2008

For decades, local TV stations in cities like Baltimore were cash cows for the companies that owned them. Even though one or two stations with the most popular anchors often came to dominate each market, everybody made money. Local TV was that surefire a business – even for last-place and poorly managed stations.

But not today.

More and more, the dominant story line for local TV news is one filled with talk of cutbacks, layoffs, lowered expectations and an urgent need to find new ways of doing business and winning viewers. This week, CBS announced a series of layoffs at its stations in cities across the country, including Baltimore. And last month, the local ABC affiliate, WMAR, laid off two producers and fired anchor Brian Wood.

“I don’t think we can sit here comfortably anymore and rely on the fact that we’ve been here for years,” says Mary Beth Marsden, anchor at WMAR, Channel 2. “How do we stay relevant, that’s the question. How do we stay the providers of information that people choose to go to? I think we’re still trying to figure it out.”

As part of CBS’ nationwide cuts, 14 newsroom employees were fired this week at San Francisco’s KPIX, Channel 5, including four on-air reporters.

In Boston, staff cuts at WBZ, Channel 4, were expected to reduce the station’s 220-person work force by about 10 percent.

At Chicago’s WBBM, Channel 2, at least 18 employees found themselves without a job Monday, including the station’s lead anchor, lead sportscaster and two more on-air personalities.

The toll was lighter in Baltimore, but the station still let go at least four employees. And some employees at WJZ worry more cuts may be coming.

“You don’t know what they’re going to do,” said one station employee, who did not want to be named for fear of being fired. “There are a lot of people there who don’t have contracts.”

And the drastic downsizing isn’t limited to stations owned by CBS. Other media companies such as ABC and NBC also are seeing ad revenue decline.

“There is no doubt about it, local TV stations are facing harder times, and what you’re seeing with the cutbacks and layoffs are media companies reacting to new economic realities,” says Douglas Gomery, media economist at the University of Maryland.

One reality involves the downturn in the general economy, with companies across the board looking to cut costs. The stations have been particularly hard hit as struggling car manufacturers and dealers have curtailed their advertising spending.

Automotive TV advertising fell to $7.6 billion in 2007, a drop of 8.3 percent from the year before, according to research firm TNS Media Intelligence. The decline has been even steeper in the first three months of 2008, according to analysts.

“Car advertising accounts for about 10 percent of TV revenue,” said Bob Papper, media studies professor at Hofstra University and author of the Radio and Television News Directors/Hofstra annual survey of local TV stations. “So, these cuts that you are seeing at stations across the country are in part a reaction to a drop in that revenue.”

And if the downturn continues, so could the layoffs, Papper said.

“NBC laid off at its local stations in December, and CBS is doing it now,” Papper says. I think it’s reasonable to think ABC might be doing it next – spreading out across its stations.”

But there are also “media-specific forces” driving the layoffs, Gomery said. “With a fragmenting of the audience and new strategies to reach customers in new online media, local TV is no longer as automatic a buy.”

“More of the focus in general is toward the Internet, and so more of the money is moving that way,” says Abe Novick, an advertising agency executive at Euro RSCG, a global advertising agency based in New York. “And that’s why the local TV news industry – as well as the newspaper business – is going through these convulsions of cutbacks and layoffs.”

WJZ Vice President and General Manager Jay Newman, who has spent a decade as head of the station, acknowledges the challenges faced by local newsrooms. But he insists they can be surmounted. The key, he says, is abandoning traditional concepts of what a local news operation entails and who watches it.

Instead of concentrating on two or three daily news shows, he notes, Channel 13 now broadcasts news six hours a day, stretching from 5 a.m. to 11:35 p.m. The station also updates its Web site regularly and has an agreement to share content and personnel with The Baltimore Examiner. WMAR has a similar agreement with The Sun.

“Years ago, people gathered around the TV set at 6 o’clock and watched and ate dinner together,” he says. “Now, people have different expectations. … What we need to do is to reach people more often, at more times throughout the day, both on TV and through multiple platforms.”

There are no job cuts planned for now at WBAL, Channel 11, says station President and General Manager Jordan Wertlieb. “It’s a competitive business,” he says. “We’ve gone though difficult economic times before. I think we’re optimistic that we’ve seen the worst.”

Like his counterpart at WJZ, Wertlieb says the challenge is to adapt the station’s news product to the changing marketplace. And the big change, he says, is in the number of different places people can go to find the news – and in the number of places advertisers can spend their money.

“Television viewership was up in 2007 to more than four hours a day for American adults,” Wertlieb says. “It’s at record levels. … Now you’re in a pool where you have to compete for audience, so you have to provide compelling content. You’re not splitting the [revenue] pie among three channels, you’re splitting the pie among 100.”

While Papper says he knows layoffs at stations lead to headlines, he begs for a bit of context as to how “dire” things are – or are not – for the local TV news business.

“When I worked at a TV station in Minneapolis, I remember the general manager telling me that the owner demanded a profit margin of 45 percent,” he says. “I guess if you are used to making a 45 percent profit and now you’re only making 20 or 30, it feels like you’re in the poorhouse. But in some businesses that would still be pretty good.”


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