Content

Moving Beyond Local News

6/09/2006 8:00 PM Eastern

It has been nearly 20 years since News 12 went on the air in 700,000 Cablevision Systems Corp. homes on Long Island, New York, making it the first local cable news network. While the idea inspired other operators to launch their own cable news networks in the late 1980s and early 1990s, News 12 faced early financial struggles.

Advertisers were skeptical and expansion was slow. Nine years passed before Cablevision felt confident enough to launch another News 12 channel for its Westchester operations.

Today, News 12 Networks has 7 local cable news channels, 5 weather and traffic channels, interactive TV channels and an expanding array of online and mobile efforts that serve about 3.8 million homes in New York, New Jersey and Connecticut.

Regional Fab Five
The top five local cable news channels:
Channel Distribution Owner
News 12 Networks 3.8 million Cablevision
New England Cable News 3.6 million Comcast/Hearst
New York 1 2.9 million Time Warner Cable
Northwest Cable News 2.5 million Belo
Chicagoland Television News 1.8 million Tribune
Source: Company executives. CN8 is not included because it offers a hybrid programming schedule that includes comedy, music and sporting events.

A THIRD TUNE IN

“About one third of our homes tune in to the channel each day,” said News 12 Networks president Patrick Dolan, who adds that they’ve become a leader in new media applications. Their interactive channels, which log about 1.5 million page views a month, allow viewers to select from a wide range of stories, from news summaries and weather reports to longer interviews with celebrities.

News 12’s transformation from a struggling startup to a successful multimedia operation, generating about $40 million in ad revenue this year, says much about the state of the local cable news sector and its development in the last 20 years.

In the early 1990s, negotiations over retransmission consent between cable operators and broadcasters helped fuel a boom in the local cable news business. The new channels gave operators a way to offer unique programming, while some broadcasters got a chance to amortize the cost of their news operations.

Time Warner Cable, Comcast Corp., Bright House Networks and Cox Communications Inc. all jumped into the business, as did such broadcasters as Tribune Broadcasting, Hearst-Argyle Television and Belo Corp.

Initially, the hefty costs of running a 24-hour news operation and the difficulty of attracting advertisers crushed any expectations of quick profits. “Local cable news has not been the big money maker that some had expected,” said Wayne Lynch, news director of Northwest Cable News. “You have to push every button to control expenses and maximize revenues.”

Another cable news veteran, Charles Kravetz, vice president of news and programming at New England Cable News quipped that “local cable news today is a little like the Internet 2.0. In the 1990s, there was an initial exuberance about this business. But it faded pretty quickly because building local cable news into a real business takes time. Those that have survived are now well established and powerful forces in their markets.”

That has made cable news an increasingly popular fixture in a number of local markets. In the February sweeps, for example, NECN’s cumulative audience made it the No. 5 cable network in the Boston market, behind ESPN but way ahead of Cable News Network, Fox News Channel and other national news services.

In Florida, Elliot Wiser, vice president and general manager of BN9, which reaches over 1 million homes, and vice president of news programming for Bright House Networks Florida Group, added that “in the February rating book, BN9 was the No. 3 in the morning in the Tampa Bay [designated market area], which is a pretty impressive performance when you consider that we only cover about 60% of the DMA.”

During major breaking news events, ratings can spike even higher. In the early-morning hours on the eve of the December 2005 New York City transit strike, “about half of the TVs in the city were turned to NY1,” said Steve Paulus, senior vice president of Time Warner Cable’s New York State News Division and general manager of NY1. “At 2 a.m., we were the only outlet providing live coverage of the negotiations. Whenever there is a big story, people turn to us.”

Providing 24-hour news coverage remains expensive and a number of networks have regionalized their feeds as a way to amortize costs and expand ad revenues and subscriber fees.

Dave Lougee, executive vice president of media operations at Belo, noted that to “have a larger regional footprint has really been an important part of the success of [Northwest Cable News].” The network, which is able to control costs by relying on news footage of from Belo’s broadcast TV affiliates in Seattle, Portland, Ore., and Boise, Idaho, began turning a profit in 2000.

Over the past two years, Time Warner Cable has consolidated some of the editorial operations for its upstate news channels, NY1’s Paulus said. “We had three staffs doing weather updates [for the Rochester, Albany and Syracuse local news channels] and now we have one.”

Paulus has also secured distribution for NY1 on the digital tier throughout Time Warner Cable’s New York State operations and on Cablevision’s New York City systems, thus boosting total distribution to nearly 2.9 million homes.

One of the most extreme examples of the trend towards regionalization can be found at CN8, which offers a hybrid of news, entertainment, music, talk and sports programming that is now more nationally focused than local. Jon Gorchow, vice president and general manager of CN8, Comcast Newsmakers and Comcast original programming, said the news outlet has increased distribution from about 3 million in 2001 to 7 million today and expects to hit 10 million by the end of the year, covering much of the Atlantic seaboard. “As we’ve grown, our cash flow has also been growing at double-digit rates,” Gorchow said.

COST-CUTTING ALLIANCES

A number of services also rely heavily on alliances to help cut news costs. Tribune’s Chicagoland Television News, for example, works closely with WGN, the Chicago Tribune, and Tribune’s online operations, according to CLTV general manager Steve Farber.

CLTV, for example, runs a Metromix show on local entertainment and restaurants that’s tied to Tribune’s popular Metromix.com site. “That’s been a centerpiece in attracting new viewers,” Farber said. “Working with the Web sites, WGN and the Chicago Tribune to share content makes us all more competitive.”

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