A couple days back, I posted a diary about the possible bankruptcy of the right-wing Sinclair Broadcast Group. In the comments section, I observed that the current environment might present an opportunity for progressives to buy into some of the so-called "old" media.
Everyone knows that the "old" media -- broadcast radio, TV, newspapers -- are dying, so why would we want to do that? What's the potential upside and downside? My answers after the jump...
First, my focus will be on broadcast radio and TV, not newspapers -- while I suspect that much of what I'm going to write would also apply in the newspaper business, I just don't feel that I'm familiar enough with that field to comment on it specifically.
Next, let's be upfront -- it's a tough business right now, and it's going to stay that way. Newspapers, radio, and local TV broadcasting have been hit hardest by the current advertising downturn. Advertising revenue for broadcast television stations in all markets across the country has fallen from a peak of over $22 billion a few years back to an estimated $16 billion for this year. On the one hand, that's a huge drop. But on the other hand, it's still one heck of a lot of money.
There have, of course, been several prominent bankruptcies in the broadcast TV business. Tribune, Ion, Equity, Pappas, and Young are all broadcast groups that have landed in bankruptcy recently. Tribune and Ion will probably reorganize under current management. Equity's stations (mostly in smaller markets) have been sold off in bankruptcy auction at fire sale prices. The Pappas stations have been split into several smaller groups and sold off. Young was unable to find buyers, so it's stations (the largest of which is KRON-TV in San Francisco) will end up being owned by their debt holders. Sinclair, Clear Channel, and Citadel are amongst the big groups that are believed to be close to bankruptcy. Several other groups may not be far behind.
But it's interesting to note that in all cases, contributing factors to media bankruptcies include excessive debt taken on during consolidation and an excessive focus on cost cutting to meet the debt service.
Local TV can indeed be profitable. Just not profitable enough to support the excessive prices being payed for media properties a few years ago.
Consider this: two years ago, deals were being made for TV stations at 12 to 14 times annual cash flow. In contrast, the few sales that have occurred this year have been at half that level -- a Florida CW affiliate reportedly sold for an estimated 5.5 times annual cash flow. A full power TV station in Nashville (WMAK-DT, channel 7) sold for $1.5 million. Here in Texas, KLDT-DT (channel 54) in Dallas/Fort Worth and KNWS (channel 51) in Houston are in bankruptcy and likely to eventually sell for a fraction of what they would have gone for at the start of the decade.
In the near future, the FCC will open up a new filing window for those interested in starting brand new low powered television stations -- a service with some limitations (the signal doesn't travel as far from the transmitter, and generally isn't seen by cable subscribers), but very low start up costs.
At current prices, you're looking at a viable business -- especially if you're not burdened with debt and can invest in serving your community. Well, Daily Kos is a Democratci/progressive blog, not a place to post business opportunities, so why does this matter?
Simply put -- because we still need an effective response to the right wing noise machine, and conventional, over-the-air broadcast stations reach a lot of people. WABC, channel 7 in New York City, reaches over 4.4 million households each and every week (that's the number of households where at least one viewer tuned to channel 7 at least once during the week). In New York, even lowly WPXN, channel 31, was viewed at least once per week in over 700,000 households -- and that station is owned by Ion, one of those companies that is currently in bankruptcy.
Moving down in market size, the top rated station in Dallas/Fort Worth (WFAA, channel 8) reaches over 1.5 million households each week. In Seattle/Tacoma, KING-5 reaches over 1.2 million households per week. Even in a smaller market (like Spokane or Portland, Maine), you're looking at hundreds of thousands of viewers per week.
How would we like to be able to reach those millions of viewers with news that isn't skewed with right wing talking points? How much would that be worth? And what if it was possible to turn a profit while offering this service, so that it wouldn't require constantly begging for money?
Now some may raise the specter of Air America. But Air America did so much wrong -- they didn't own any of their own stations, and were consequently dependent on other media companies to carry their programming. The result was weak signals and an even weaker commitment to stand by their programming. Periodic proposals to launch a progressive cable TV network would face a similar challenge -- you're dependent on big cable and satellite companies to carry your programming, and it just isn't going to happen. In contrast, a full powered broadcast station gets your programming directly to the viewer or listener -- and in the case of TV, the cable and satellite companies are required by law to carry your programming.
What might progressive media look like?
It could be one of several forms. It could be individual television stations or station groups that are affiliated with one of the big networks (ABC, CBS, NBC, Fox), but which make it a point in their local newscasts and local programming to include news stories and viewpoints that are overlooked by most of the traditional media. Such a station would not have a political viewpoint per se, but would simply try to do the best job of news reporting and covering it's community as possible. The upfront cost of these stations would be relatively high, even today -- but such stations are also highly profitable (even in the down market) and reach an incredible number of viewers. The stations would be bought from groups that are in bankruptcy (or may end up in bankruptcy) due to excessive debt service, even though their stations are individually profitable.
An alternative is to run stations featuring opinion programming -- on TV, this would be the progressive counterpart to Fox News, and on radio it could be Air America done right, with owned stations instead of affiliates. In either case, this would involve the acquisition of multiple stations (radio or TV) that are currently unsuccessful and converting them to the new programming. A sufficient "critical mass" of stations would be needed in order to reach enough viewers or listeners. For television, these stations would be the bottom feeders bought out of bankruptcy -- the stations that currently run infomercials or home shopping, and are still losing money. The downside of this approach is that it reaches far fewer people -- and like conservative media, it mainly serves to preach to the already converted.
A low cost approach could rely heavily on low powered TV stations. Start up costs would be lowest of any of these approaches, but audience potential would also be limited relative to the other approaches.
Given the right resources and the right management, any of these approaches might have potential. Or, alternatively, all of them might have potential, since there's nothing that says that different individuals or organizations might now be able to pursue each of these approaches at the same time.
This is a pretty long diary, but I hope that the above has provided at least some worthwhile food for thought.