WISH and WRTV and TV Stations and TV Ratings and TV and Communications and Media & Marketing

Will spurned TV station launch ABC courtship?

August 16, 2014

Could WISH-TV Channel 8 rebound from the stunning loss of its CBS affiliation by stealing away WRTV-TV Channel 6’s ABC affiliation, which is due to expire in January?

It’s an intriguing scenario, albeit an unlikely one, as WISH, a CBS affiliate for more than a half century, contemplates how to program itself and rebuild viewership after the year-end shift of the nation’s top-rated network to WTTV-TV Channel 4, a former market also-ran.

Media experts say CBS played hardball with WISH to prove to affiliates nationwide that it’s serious about scooping up a bigger chunk of “retransmission consent” fees—the money TV stations get from cable and satellite providers for the right to carry their signals. For WISH, those fees total some $10 million a year, Wedbush Securities estimates.

While networks and affiliates lately have been splitting retransmission fees 50/50, CBS CEO Leslie Moonves has been outspoken in asserting that’s not good enough, given the eyeballs top shows like “NCIS” draw for affiliates and the massive sums the network spends for NFL football rights.

In a conference call with analysts this month, Moonves said, “We decide what we think is fair. It generally is higher than the 50-percent number. And we negotiate on that basis.”

Affiliation switches are highly unusual nationwide, analysts said, which might have led LIN executives to misread the risks of holding firm in negotiations.

“The indication here is, they did not have a Plan B,” said a WISH newsroom staffer who requested anonymity because employees were told not to talk publicly.

It’s hard to understate the severity of the setback the loss of the CBS affiliation is for WISH’s owner, Austin, Texas-based LIN Media Corp., which is in the process of being acquired by Richmond, Virginia-based Media General Corp. for $1.6 billion.

LIN has made no public statements since Chicago-based Tribune Broadcasting, owner of WXIN-TV Channel 59 as well as WTTV, announced the CBS affiliation switch on Aug. 11.

In a Securities and Exchange Commission filing that day, however, LIN said it was evaluating whether the affiliation loss would cause it to restate the station’s value on its financial statements.

The consequences could be even broader. In a report, Evercore Partners analyst Douglas Arthur wondered whether the affiliation switch could muck up the sale to Media General, which has the right to reopen talks or part ways if a “material adverse change” has occurred.

LIN has TV stations in 23 markets, but Indianapolis, the No. 26 TV market, is among its most important. The only larger market where the company has stations is Portland, Oregon, which ranks 22nd.

Could striking an affiliation deal with ABC save the day?

“I suspect they will try,” said Rick Gevers, an Indianapolis-based agent who represents on-air news talent. But he doubts LIN would get far, given that WRTV’s owner, Cincinnati-based E.W. Scripps Co., is one of the leading owners of ABC affiliates. It has 11 ABC stations, five of them in top 20 markets.

The affiliation agreements for all 11 are up in January, said Scripps spokeswoman Carolyn Micheli. She noted that Scripps’ ABC stations collectively reach 12 percent of U.S. households.

Micheli would not characterize negotiations, but said, “We have been a really good partner with ABC over the years. … We think they have been happy with our relationship.”

Scripps is about to gain even more clout. Last month, the company and Milwaukee-based Journal Communications Inc. announced they were combining their broadcast operations while spinning off their newspapers into a separate company. Journal Communications’ holdings include four ABC stations.

If WISH can’t land a major network affiliation, LIN management will face tough choices, industry observers said.

It could help fill the programming void by expanding its news programming. However, Tribune says that when the CBS affiliation switches to WTTV, it will launch its own newscasts—bringing to five the number of local TV stations with their own news brands.

Gevers said it’s unclear whether Indianapolis has the advertising revenue to support so many news outposts. Not many cities have five, and those that do are generally in larger markets.

Another alternative would be to ratchet down the station’s aspirations, reducing expenses and perhaps even the station’s news department.

On-air talent is somewhat protected by multi-year contracts, but those agreements typically give stations the opportunity to opt out at least annually.

“A lot of people are in jeopardy,” the WISH newsroom staffer told IBJ.•

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