In a wide-reaching retransmission-consent deal, Time Warner Cable and Belo agreed to invest $25 million to jointly create local-news channels in Houston and San Antonio, officials said last week.
Under the complex deal, Time Warner signed a 10-year analog and digital retransmission-consent agreement that covers Belo's Texas TV stations: KHOU-TV in Houston; KENS-TV in San Antonio; KVUE-TV in Austin; and WFAA-TV in Dallas/Fort Worth.
The MSO also came to terms on three-year retransmission-consent deals for Belo's non-Texas broadcast stations in Charlotte, N.C., New Orleans and Tulsa, Okla.
Part of last week's multifaceted agreement was a 20-year partnership through which Time Warner and Belo will create two new, 24-hour local news networks in Houston and San Antonio. Those channels would employ a separate management team and staff, but would have access to the newsgathering resources of Belo's TV stations. Belo said 75 to 100 employees would be hired for each of the start-ups.
The Houston news channel is slated to debut in early 2002, with the San Antonio outlet following in mid-2002. Operating costs for each news channel are estimated at $5 million to $8 million annually, and the networks are expected to turn a profit in four to five years, Belo officials said.
"There are obviously a lot of moving parts to this," Time Warner Cable spokesman Mike Luftman said of the overall Time Warner-Belo deal.
Belo chairman Robert Decherd said his company and Time Warner would invest a total of $25 million over the next few years to launch the two local-news channels, which they will jointly own and operate. Luftman declined to comment on the start-up costs.
"Over time, local [news] is a natural complement to our regional news service," Decherd said.
As part of the package, Belo will finally get Time Warner, Texas' largest cable operator, to carry its Texas Cable News under a 10-year agreement. The MSO and Belo have been negotiating TXCN carriage for more than a year.
Time Warner will distribute TXCN to 550,000 subscribers in Texas, on a digital tier in Houston, San Antonio and Austin and on analog in cities such as Waco, El Paso, the Rio Grande Valley, Wichita Falls, Laredo and Port Arthur/Beaumont.
Depending on channel availability, Time Warner plans to extend carriage of TXCN to all its Texas systems, which have more than 1.5 million subscribers. TXCN debuted in January 1999 and now serves 600,000 subscribers in North Texas.
Without carriage by Time Warner, TXCN had a tough time claiming it was a statewide news channel.
In the past, Time Warner-which owns local-news channels in New York City; Rochester, N.Y.; Austin, Texas; and Orlando and Tampa, Fla.-has favored a local, rather than statewide or regional, approach to all-news outlets. It has declined to carry Florida's statewide 24-hour cable news network, Florida's News Channel, and became involved in a nasty retransmission-consent battle late last year over carriage of Ohio News Network, a regional service for that state.
In June, Time Warner and Dispatch Broadcast Group, the owner of ONN, reached a deal that put the service on a digital tier in the Buckeye State.
Luftman said last week that there is room for both local and regional news programming at Time Warner systems, particularly in larger cities.
Earlier this year, it was reported that Time Warner was looking to expand its local-news channel portfolio by launching networks in markets such as Houston-where it will now partner with Belo-and in Milwaukee and Kansas City, Mo., where it has clusters of cable systems.
Belo is also a big cable-news player. In addition to TXCN and NorthWest Cable News, the company partners with Cox Communications Inc. for local-news channels in Phoenix, Norfolk, Va., and New Orleans. Those channels came about through retransmission-consent deals.