[opendtv] Re: KRON story
- From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
- To: <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 14 Oct 2008 16:03:40 -0400
Craig Birkmaier wrote:
> That may a bit extreme - independents are typically quite viable
> in larger markets. The real issue is book value of a station.
> For years, stations have assigned very high book value to their
> assets, including the all important FCC license. The physical
> assets are there to support operations, and typically only
> represent a small amount of the total value of a station - the
> rest is the "goodwill" associated with a "Federal license to
> print money." When the FCC allowed stations to sell or trade
> these licenses, they became a huge part of station valuations.
> A big four network affiliate in a major market could expect to
> achieve profit margins greater than 25% and typically greater
> than 35%. This drove up the goodwill valuation. In the case of
> KRON it reached a pinnacle of over $800,000.
>
> NBC simply refused to pay the price. Instead they turned to an
> "out of market" station that was licensed to a city south of
> San Jose. They bought the station for a fraction of the price
> of KRON, then petitioned the FCC to relocate the transmitter
> north so that it would provide primary coverage in San Francisco.
Interesting. It wouldn't surprise me at all if independent OTA stations
lost their appeal these days, even in larger markets, if they don't
carry content that the masses find compelling. Because there are now
more alternatives for people to get their not-so-compelling TV content,
not to mention other ways to pass their leisure hours.
My bet is that congloms would buy (or affiliate with) these other
available stations too, if the FCC local and national caps did not
restrict them. And since the congloms have been buying up most of the
good content out there, independents are left with a difficult
situation. I really do like what our indie has done, transmitting 100
percent international content. (Don't know if my fellow OTA viewers like
this too, though.)
> KNTV was an ABC affiliate for the Monterey/Salinas market until
> 2001 when it was to switch to NBC, with a reverse compensation
> package valued at $37 million per year. The station also
> overlapped with the San Francisco station in the San Jose
> portion of the SF market. KNTV had tried for years to move its
> transmitter to San Bruno Mountain, but was blocked by KRON.
> They actually reduced power in the direction of SF to get the
overlapping ABC affiliation.
>
> When Young bought KRON everything changed. NBC signed up with
> Granite (KNTV) then wound up buying the station to create a
> duopoly in San Francisco (NBC also owns a Telemundo affiliate
> in SF). And they applied to move the transmitter north to San
> Bruno Mountain, which happened in 2005 giving them parity with
> the other SF stations.
Which says to me, when the conglom bought a particular OTA station, it
took an interest and improved that station to bring it up to par with
the best in the market. And KRON, which had asked too much, lost out in
the deal BECAUSE it is not affiliated with a major conglom.
What would have been worrisome to me would have been if NBC had bought
KNTV, and then proceeded to lose interest in it, e.g. to try to force
the SF area viewers to buy into MVPDs. Instead what NBC did is what any
interested, dedicated owner would do. Good for them.
> Localism IS important to OTA broadcasters, especially for
> their news franchises.
Craig, I'd say *only* for the local news/weather, and perhaps the
occasional politics hour, and that would account for a negligible number
of hours per week. And by the way, it's not at all clear to me that
every OTA station needs to do this in a given market. Only maybe two per
market, would probably be enough.
OTA viewers certainly want variety, good variety, to the extent they can
get it. Localism? In very tiny doses.
Bert
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