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Loss of CBS affiliation slices $110M from Indy station's value

August 26, 2014

How much value did the CBS network affiliation bring to WISH-TV Channel 8? About $110 million, if you believe the parent company’s calculation.

Austin, Texas-based LIN Media agreed to shave that amount off its sale price to Richmond, Virginia-based Media General in an acknowledgement of just how deeply the loss of CBS hits the Indianapolis TV station. The move affects the stock portion of the $1.6 billion merger deal.

Tribune Media, which owns FOX affiliate WXIN-TV Channel 59, wrested away the CBS affiliation for its WTTV-TV Channel 4 station. Analysts say the move is both a big victory for Tribune and a cautionary tale for other local stations as networks push for a larger share of revenue from pay TV operators.

LIN Media CEO Vince Sadusky told Wall Street analysts on an Aug. 20 conference call that WISH-TV will draw a much smaller audience without CBS and face a more than 50-percent drop in retransmission fees from cable companies, but that the parent company remains “committed to localism.”

“We look at WISH as an opportunity to work a different model,” Sadusky told analysts. “We have assembled a strategic team that has experience in running unaffiliated television stations, and we are putting our heads together and working on what that new model will be for WISH-TV.”

On the call, Sadusky described the change to the merger agreement as "a technical recalibration in light of the change in affiliation status of WISH TV." Later in the call, Media General CEO George Mahoney said "the term changes are principally a reflection of the changes in Indianapolis."

On the flip side, the deal catapults WTTV’s value higher overnight, said Tom Cochrun, a former WTHR anchor and WISH news director.

“They have to go out and make that happen, but on paper and in theory certainly the stations value is greater,” he said.

Meantime, Cochrun sees an opportunity for WISH to double-down on local programming—extending news coverage, adding high school sports, broadcasting community and cultural events, and developing talk shows hosted by community personalities.

“In all actuality, it probably costs less to put studio lights on and keep talent working than it does to go out and buy syndicated programming or old movie packages,” Cochrun said. “They could become a truly local station. There is a way forward if LIN wants to make a commitment.”

Another option—one that’s less attractive to news consumers and WISH employees—would be to automate the station with syndicated content.

WISH-TV could become an all-news channel, but that won’t necessarily limit “collateral damage” from such a dramatic change, said Tobe Berkovitz, an associate professor of communication at Boston University. WISH-TV will be losing a strong primetime lineup, NFL package and the just-added Thursday Night Football.

Revenue will fall without such strong lead-in content.

“The question is whether there’s a model to find,” he said. “I wouldn’t want to be a stockholder in a broadcaster without any affiliation.”

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