(no subject)
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Sat, 11 Oct 2008 08:19:32 -0400
Remember when?
Broadcast TV economics were something to be envied, at least in terms
of profit margins, not to mention incredible valuations based
primarily on the value of an FCC license...
At the peak of the market in 1999, KRON was sold to Young
Broadcasting for $820 million. Then NBC pulled the plug on Young,
purchasing KNTV for a mere $230 million.
Here's the history of the KRON/NBC discord - (according to Wikipedia)
http://en.wikipedia.org/wiki/KRON
In 1999, the deYoung family, owners of the parent corporation
Chronicle Publishing, decided to liquidate their assets. KRON's
longtime newspaper partner, the San Francisco Chronicle would be sold
to its current owner, Hearst Corporation.
NBC had made many offers for channel 4 over the years, but the
deYoungs had rebuffed them each time. It finally saw a chance to get
an O&O ("owned and operated") in the Bay Area, and quickly jumped
into the bidding war for channel 4. It was seen as the frontrunner
until it was outbid at the last second by New York City-based Young
Broadcasting (then-owner of KCAL-TV in Los Angeles and several
medium-small market stations). Young's purchase price for the station
($750 million (U.S.) at the outset rose to $820 million by closing)
was a record price for a single station that stands to this day. For
the down payment, Young was forced to sell WKBT in La Crosse,
Wisconsin to Morgan Murphy Stations.
NBC responded with a list of demands that would have required Young
to run the station under the conventions of an NBC O&O. For example,
NBC wanted Young to rebrand KRON as "NBC 4," and run the entire NBC
schedule in pattern with no pre-emptions except for local news
emergencies. Rather than give in to NBC's demands, Young decided not
to renew Channel 4's affiliation contract with NBC when it ran out in
2002. Granite Broadcasting's KNTV in San Jose later approached NBC
with a proposal to pay $37 million annually for the rights to
broadcast NBC programming, and NBC accepted the deal. In December of
2001, however, NBC purchased KNTV for a fraction of KRON's sale price
- $230 million in cash. That makes NBC the only network in the Bay
Area to switch from one local station to another.
------
Young Broadcasting's stock was selling at about $60 per share in
1999. The stock has been delisted from the NASDAQ and is currently
trading at 7.6 CENTS.
The following TV Technology story looks at the entire sector and the
financial wows for the local TV broadcast business.
Now imagine a world where the networks pull their content from Broadcast DTV...
http://www.tvtechnology.com/article/68090
There's Still Hope in the Broadcast Economy
10.09.2008
(From TV Technology NewsBytes.)
Don't turn off the lights quite yet-broadcasters could emerge from
the economic crisis alive, and they'll have many new opportunities to
create revenue.
But first, they have to survive the current downturn and credit crunch.
Among broadcasters, the four weeks since the crisis began in
mid-September have further hammered stock prices that already seemed
about as low as they could go-especially among smaller station groups.
Young Broadcasting flew at about $60 per share in 1999 before
plunging to Earth. It's now been delisted from the main NASDAQ board
and sat at 7.6 cents before the economic disaster began Sept. 15.
It's lost nearly half its remaining value since. And it still can't
find a buyer for KRON in San Francisco.
Acme Broadcasting once soared at about $30 per share and still topped
$3 in January. Since Sept. 12-the Friday before the economic bombs
exploded-what's left has shriveled from $1.11 to 71 cents as of Oct.
9.
Equity Media Holdings traded above $5 as late as March 2007. It's
been shedding stations and is worth around 50 cents now.
Gray Television traded above $11 in August 2007. It stood at $1.85
Sept. 12 and has dropped another two-thirds of its value and traded
at 61 cents Oct. 9.
Nexstar shares were worth nearly $15 in mid-2007. On Sept. 12, it
closed at $3.20. Now, it's at $1.73.
Lin Television nearly hit $20 per share last year. On Sept. 12, it
stood at $5.67. It's since dropped to $3.31.
Larger station groups have also suffered.
Sinclair Broadcast Group already fell a long way from its 2007 peak
above $17 per share. In the current crisis, it's slid from $6.46 to
$2.92.
Belo Corp. sold for more than $20 per share in 2007. Since Sept. 12,
it's dropped from $7 to $3.65.
"One thing to remember about television is we had estimated 10 to 11
percent revenue growth in 2008, and it's going to be barely breaking
even," said Mark Fratrik, vice president at BIA Financial Network, a
Chantilly, Va.-based research firm. "And that's truly remarkable,
given the [ad spending by] candidates."
Revenue related to the elections has come through as promised, but
the regular ad base tanked. The question broadcasters may be afraid
to ask is whether car dealers and local restaurants will return to
the ad market next year when the election ads are gone.
The situation could come to a head for stations without deep pockets,
should they run out of credit to meet the bills, and that could lead
to fire-sale prices on station properties. But BIA President Mark
Fratrik said the current credit crunch may be so severe that cash may
be hard to come by, even fire-sale prices. Buyers might be limited to
those who already have cash on hand. Come six or nine months from
now, if credit markets have improved, the healthy may have more
opportunities to buy stations cheaply.
The bright spots? The BIA guys and others say that mobile DTV, for
example, could provide billions of dollars in revenue in the next
several years with relatively little capital expenditure by stations.
And then there are the growing revenue areas of retransmission
consent fees and station Web sites-an area where broadcasters have
also seen major gains in activity and where they should have built-in
advantages over local competitors.
Most station groups have seen massive upticks in page views and
Internet revenues even as traditional revenues have flattened.
The Web brings minimal increased costs, gives them a dumping ground
for stations' video footage, and it leverages station's existing
sales staffs and relationships.
"Technology on the Web is getting really powerful and it's really
cheap," said Rick Ducey of BIA.
Broadcasters and other companies will offer another series of
benchmarks when they begin releasing third-quarter results later this
month.
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