NEW YORK — Granite Broadcasting’s San Jose station KNTV will cash out of its affiliation agreement with ABC five years early to become a news-focused independent with broader distribution on regional cable systems.
The deal is a good one for both Granite and ABC, which will pay the New York-based station group $14 million to end the affiliation deal next year instead of in 2005.
Granite, which also owns KBWB-TV (the WB affiliate in San Francisco), had been operating the two stations under a temporary waiver from the FCC. The fed agency’s Aug. 5 vote to allow broadcasters to own two stations in the same market under certain conditions freed Granite to move ahead with plans to combine resources of the two stations.
“With ownership uncertainty behind us, we can now utilize the combined resources of KNTV and KBWB-TV,” the company said. The combination of the two stations will give Granite a powerful presence in the nation’s fifth-largest market.
Path of least resistance
And KNTV’s going independent will end the friction with ABC’s 0&0 KGO-TV, based in the same San Francisco-Oakland-San Jose market. “The two stations kept bumping up against each other. It wasn’t good,” Granite chairman and CEO Don Cornwell told Daily Variety. Viewers don’t need two outlets for ABC shows, he said, which is why an independent KNTV plans to more than double its news programming to at least 50 hours a week, with special focus on the South Bay.
The station will also triple its cable carriage to reach 1.5 million subscribers. The terms of its affiliation agreement with ABC limited KNTV’s cable carriage to 500,000 subs in the South Bay and Monterey-Salinas areas.
These changes will “significantly enhance the value of the station,” Cornwell said.
Asked whether Granite itself could be swallowed up by a bigger competitor in the wake of the FCC ruling, which has made his company and a number of others eminently more attractive, Cornwell said, “We’re running a business and we say that we’re here trying to make our assets worth more to our shareholders.”
“Activity has definitely increased, even if it’s just at the level of conversation,” he added. “Everybody is coming up on everybody else’s radar screen.”
Elsewhere on the San Francisco TV scene, bidders continue to circle around KRON, the NBC affil put on the block earlier this year by Chronicle Broadcasting Co. The station is expected to fetch at least $600 million.
NBC and Fox are believed to be contenders for the station, along with Atlanta-based Raycom Media and Gannett Broadcasting. There’s talk that NBC would look to buy the station along with a partner, much as it owns KXAS Dallas with Lin Television as a minority partner.
Fox’s level of interest in acquiring KRON is unclear. Insiders say News Corp. is eager to have an O&O outlet in the fifth-largest TV market, yet it’s also understood that Fox has been in protracted negotiations to renew its affiliation agreement with the web’s current San Francisco affil, Cox Broadcasting-owned KTVU.
Reps for Chronicle Broadcasting would not comment on a timeline to complete the sale process on KRON. The company inked a deal to sell its San Francisco Chronicle newspaper to the Hearst Co. last month.
(Cynthia Littleton in Los Angeles contributed to this report.)