Newspapers Invest in Local TV Stations Despite Warning Signs

Aug 05, 2013

Many media business analysts have applauded recent Gannett Co. and Tribune Co. moves to increase their stable of local television stations and reduce their reliance on newspaper holdings. Gannett's $1.5 billion purchase of Belo Corp. in June added 20 local stations to its portfolio, making it the fourth-biggest owner of local affiliates in the country. A week after Tribune's July 1 purchase of 19 new local TV stations for $2.7 billion, the company spun off its newspaper properties, which are widely believed to be on the market.

In response to the recent buying spree of local stations-which also includes Sinclair's plan to buy seven stations from Albritton Communications for about $1 billion-one analyst declared that the local television business "is the best it's been in a long time. I call it a renaissance."

There are a number of business reasons for these big investments in local television. Political ad spending at these stations reached a record $3.1 billion in 2012 and the Supreme Court's Citizens United ruling seems to guarantee more such windfalls in even-numbered years.  Retransmission fees, paid by cable and satellite companies to carry local channels, are growing rapidly-by an estimated 32% in 2012-and are expected to keep rising. The economic benefits of owning a large number of stations include everything from shared editorial resources to increased leverage with the broadcast networks over how to split retransmission money. And according to Pew Research survey data, nearly half of Americans (48%) say they regularly watch local news, a solid number in an era of fragmenting media use.

Read the full report on the Pew Research Center's Project for Excellence in Journalism website.

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