Merger expected to bring new player to TV market

The TV landscape in Rhode Island is going to change as result of the proposed merger of Media General, owner of WJAR-TV NBC 10, and Providence-based LIN Media LLC, owner of WPRI-TV CBS 12 and operator of WNAC-TV Fox 64. One of the stations is expected to get a new owner due to federal regulations that in most cases prevent ownership of more than one station in the same market.
The two media companies have TV stations that overlap in five markets, including Providence; Birmingham, Ala.; Green Bay, Wis.; Mobile, Ala.; and Savannah, Ga.
“We know we’re going to have to deal with those and, in most cases, swap or sell,” said Media General President and CEO George L. Mahoney in a March 21 webcast and conference call for investors to discuss the merger.
“The basic rule is that no one can own more than one station in the market, unless there are at least eight stations in the market and no more than one of the stations can be in the top four,” said attorney David Silverman, a partner at Davis Wright Tremaine in Washington, D.C., who specializes in broadcast issues.
The Providence-New Bedford market doesn’t have eight stations, said Silverman, which are defined as full-power broadcasting stations, not cable or satellite subscriber services.
In Rhode Island, LIN Media owns WPRI-TV, and also operates, but doesn’t own, WNAC-TV.
“That’s a shared-services agreement where stations can share facilities or staff,” said Silverman. “LIN may have to stop operating WNAC. One thing the FCC is discussing is the situation where one company owns one station and operates another. I think the FCC is going to disallow that here.”
Before the deal can be finalized, which is expected in early 2015, it must be approved by the Federal Communications Commission, possibly by other federal agencies and the shareholders of Media General and LIN Media.
The anticipated shift of ownership suggests varied scenarios to media professionals and media watchers. Some see WJAR-TV as the likely one to be sold or swapped for a station in another market; others think it would be WPRI-TV.
“The FCC is protective of diversity of voices in the marketplace and between the Channel 10 and Channel 12 ratings, that’s likely a bigger percent of the audience than the regulators are comfortable having,” said Holland Cooke, a Block Island-based media consultant who has held on-air and management positions in broadcasting. “It’s certainly likely that Media General will choose to keep Channel 10, given its ratings dominance and its legacy,” said Cooke. “In the case of a tie, Channel 10 would win. They have generations of credibility as the news leader in this market.
“However, Channel 12 is on their heels and at times, scores a win. You want to watch Channel 12 at 11 p.m.,” added Cooke.
A swap of Channel 12 would likely attract a media company with equally high standards, benefiting viewers, he said.
“Providence is an attractive market, and no one is going to come here if they’re not going to compete aggressively,” Cooke said.
Former WLNE-TV ABC 6 reporter Barbara Meagher, who worked at the station from 1983 to 2001, sees the opposite scenario regarding the anticipated change.
LIN Media President and CEO Vincent L. Sadusky will become president and CEO of the newly formed joint company, to be named Media General with the current Richmond, Va., base as the headquarters. That makes Meagher, an associate professor of journalism at the University of Rhode Island’s Harrington School of Communication and Media, think WJAR-TV will be sold or swapped.
“[Sadusky] helped build Channel 12, and he’s been running it for a long time now,” she said.
Meagher added that WPRI-TV’s digital emphasis is a strong point in its favor, but acknowledged there could be “dollars-and-cents reasons to sell Channel 12. They have to think about the stockholders.
“I think people at both stations are really concerned about it, because when they get a new owner, there’s a lot of uncertainty,” she said.
The digital business was highlighted by both Media General and LIN Media as an important element of the merger.
“In addition to the websites associated with each TV station, Media General’s digital media portfolio will include LIN Digital, LIN Mobile, Dedicated Media, HYFN, Nami Media and Federated Media,” according to the joint press release. “This portfolio is poised to grow rapidly.”
The digital business gives the stations more to offer advertisers, said Chris Tzianabosom, general manager of WLNE-TV ABC 6. Overall, the merger means the ownership will change, but it won’t greatly impact the audience, he said.
“The competitive landscape won’t change much. Both Channel 10 and Channel 12 are very well-run stations, and I have the utmost respect for the two companies,” said Tzianabosom, who began working at WLNE-TV when it came out of receivership three years ago and was sold to Citadel Communications.
One potentially significant operational difference between WJAR-TV and WPRI-TV is that the former is a union shop and the latter is not.
WJAR-TV has more than 100 employees and about 65 percent are in the International Brotherhood of Electrical Workers, said station General Manager Vic Vetters. Those union employees are represented by Local 1228, which represents broadcast employees in New England, according to the IBEW website.
WPRI-TV management did not immediately return calls seeking comment last week. WLNE-TV has about 65 employees and none of them are members of a union, said Tzianabosom.
Fletcher Fischer, business and financial secretary of IBEW Local 1228, doesn’t think WJAR-TV’s union connection will be a deciding factor in which station is sold or swapped.
“I don’t think the union being there or not being there is going to have much sway. It will be mostly about other factors,” said Fischer. “They could probably make more money by selling Channel 10 than Channel 12.”
The IBEW ratified a new three-year agreement with Media General for WJAR-TV that went into effect Jan. 1, with annual wage increases of 3 percent, 2 percent and 3 percent.
Edward Atorino, a media analyst with Benchmark Co., agrees that one station having a union is unlikely to affect whether it is sold or not.
“But that would show up in the cash flow numbers,” he said. “If the union scale is too high and they have too many employees, that would affect the price. The final analysis is the cash flow.”
Atorino says Media General might let the market decide which station gets a new owner, if that is ultimately required.
“They might put both stations on the market and see which one gets the better price,” he said. •

No posts to display