Have TV stations lost their sheen?

TELEVISION STATION LICENSES have long been a license to print money, boasting the kind of gaudy profit margins that render most other legal endeavors paltry by comparison. So why are stations receiving so little respect?

Like newspapers, TV stations can no longer yield the annual growth Wall Street demands. So with increased competition from cable and the Internet pecking away at audience shares, operators have foolishly attempted to budget cut their way to financial health — a shortsighted approach that, taken to its extreme, risks damaging the core assets.

The issues facing stations — and some of the ill-considered responses — can be seen on various fronts, most recently in the boardroom battle at Tribune Co. and the start-up pangs of MyNetworkTV.

Tribune has discussed spinning off its TV stations — a major platform for launching new programming — under one scenario in which the company would keep its struggling newspapers, including the near-mutinous PR nightmare that is the Los Angeles Times, whose publisher has cautioned management against seeking to “cut their way into the future.” The biggest drawback, analysts say, is a shortage of eager buyers.

As for another high-profile group, the former Chris-Craft stations now owned by Fox — which provided the cornerstone of the UPN network — are looking decidedly run down thanks to the lurching start of MyNetworkTV, a hastily assembled primetime lineup to fill the void created by the surprise merger of UPN with the WB.

Blindsided by that announcement, Fox responded with a programming model that calls for adapting the Spanish-language telenovela for U.S. consumption. Tepid ratings for new soaps “Desire” and “Fashion House”and a queasy reaction from media buyers only feed perceptions that the strategy was cobbled together in slapdash fashion — throwing programs developed for syndication to the wolves simply because the next-to-nothing price was right.

All told, it’s a helluva way to handle lucrative local TV operations that will inevitably suffer if MyNetwork continues its current trajectory. In Los Angeles, for example, “Desire” and “Fashion House” dove almost 75% the week of Sept. 18 vs. the corresponding window in 2005, drawing a puny 58,000 viewers. Not surprisingly, local station KCOP’s lame-brained late news suffered accordingly, as ratings fell by a third year to year.

As with other old-media players, TV stations have sought to adapt and evolve. First, they created FCC-sanctioned duopolies to reduce overhead, but with those back-office trims made, further cuts could slice into bone. The next goal, then, is to monetize their content through avenues such as broadband, and find new ways to exploit their signals. It’s all very promising, but there’s scant evidence technological breakthroughs will come soon enough to prevent more bloodbaths as managers labor to improve balance sheets.

In the case of Tribune, some media watchers advocate private ownership, even if that means breaking up the company. At this point, that certainly sounds preferable to further budget slashing, until newspaper staffs are reduced to delivering more “paper” than “news.” (Full disclosure: I still hold some Tribune options from leaving the company in 2003. Their value has shrunk from a partial down payment on a fixer-upper in a bad neighborhood to a tiny condo where every unit has bars on the windows. But enough about L.A. real estate.)

As for MyNetworkTV, it will be a struggle to recapture the ground lost during this do-it-cheap experiment — a challenge tantamount to changing a tire on the freeway. If anybody can manage the trick, it’s probably Fox, but one shudders contemplating the attention-grabbing concepts that might be dreamt up in pursuit of a quick fix.

Rick Feldman, a former general manager of KCOP who is now president of the industry group NATPE, knows well the rock/hard place dynamic stations face.

“Stations are still turning over exceptional profit margins,” he says. “But these are mature businesses. A lot of it is this negative patina because the growth isn’t what it used to be … to satisfy Wall Street.”

There’s considerable irony, admittedly, that newspapers and broadcasters — public trusts in light of their civic roles, even if too few fulfill that ideal — have become incompatible with being publicly traded. Private control is hardly a panacea, but whoever holds the title, this much is clear: Something is seriously out of whack when stations get treated like Rodney Dangerfield because they’ve gone from printing money to merely earning it.

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