KCAL has firm plans to dump the King World magazine series “Inside Edition” and “American Journal” from the 7 p.m. access slot and replace the duo with an additional hour of news to create a four-hour weeknight news block, according to a research report sent out last week by the New York stock brokerage firm Bear, Stearns & Co. Inc. to its client shareholders.
While Deborah McDermott, station group executive VP for KCAL’s new owner Young Broadcasting Inc., had told reporters in November that the station was pondering a switch to news and dropping “Edition” and “Journal” as a cost-cutting measure, it was not considered a certainty then.
However, the Bear, Stearns document outlined the new 7 p.m. strategy as a done deal and maintained that the move would “save KCAL an estimated $6 million annually.” It added that the only question was exactly when KCAL would pull the trigger, noting that “each quarter delay in the launch of the (7 p.m.) news would add $1 million in syndication fees.”
King World’s view
McDermott did not return phone calls Monday. However, King World prexy and CEO Michael King said he was unaware of the KCAL plan and that he was under the impression that Young, which took control of KCAL from Disney on Nov. 22, liked the mag shows.
“I can’t imagine that the only magazine shows whose ratings and shares have grown this year in the United States would have a problem in Los Angeles,” King said.
King added that such a move by KCAL also would not save the station money in the short term, given that the station is already committed to run the shows and pay syndie fees on them through ’97, “and they have to pay us regardless.”
In the just-released Nielsen demographic ratings report on the Los Angeles market for November sweeps, the “Inside Edition”/”American Journal” combo ranks down the list with viewers 18-49 and 25-54, trailing KTTV (“Home Improvement”/”The Simpsons”), KTLA (“Bzzz”/”Seinfeld”) and KABC (“Jeopardy!”/”Wheel of Fortune”) as well as KNBC’s “Extra” and KCBS’ “Entertainment Tonight.”
KCBS is reportedly making a bid to snare the “Inside Edition”/”American Journal” package despite the marginal demo numbers locally.
The Bear, Stearns report alludes to the 7 p.m. changes at KCAL almost in passing as part of its assessment of Young Broadcasting’s stock prognosis for the coming year and its recommendations to potential stock investors.
A good buy
It is the brokerage firm’s prediction that in the wake of the KCAL acquisition, Young stock is a good buy, predicting a per-share rise to $40 by the end of 1997, up 45% from its trading level of about $27 last week.
The report goes on to detail that KCAL operated with a broadcast cash flow in 1996 of $27.6 million, but that based on programming cutbacks, work force reductions, savings on the employee benefit plan and trims in KCAL’s advertising/promotion budget and other miscellaneous areas, the station hopes to up its cash flow to $48.5 million by the end of ’97, or an optimistic increase of $20.9 million.
The stockbroker isn’t quite so bullish on KCAL’s cash-flow increase prospects, believing that the station’s 35% work force reduction (from 354 employees to the present 230) and 21% slash in costs will require efficiency adjustments that it predicts will hold Young to a still-healthy $15.9 million cash flow.
Young’s assumed year-end debt of $680 million gives the company leverage of about 5.8 times operating cash flow, according to the report.