Headquartered in Montgomery, Alabama, and with a cluster of stations across the southeast, Raycom Media was in a unique position to cover the tornadoes that tore through the region recently. President/CEO Paul McTear said the group relied on well-drilled emergency plans to keep residents informed.
Local content is a Raycom core value; its group-wide show America Now becomes a daily this fall, and Raycom is a partner on another called Right This Minute. Both represent an effort to break from costly syndicated programs. McTear, a B&C Hall of Famer, spoke with deputy editor Michael Malone about how Raycom stations kept people informed-and alive-during the natural disasters.
How's business looking?
The second quarter is not as good as the first but the third looks to be better than both. I think in the aggregate, we'll be OK at the end of the year.
The tornadoes really hit Raycom's breadbasket. What was that like?
If you looked at the map of Alabama April 27, there were more than a dozen [major] tornadoes. We had significant opportunities to warn our communities and report on our communities. Most of the Huntsville market was without power for six days. We had to move a generator out of storage in Montgomery, take it up to Huntsville, negotiate a deal with a gas station operator, then hook up the generator so we could pump gas from his storage tanks for the news vehicles to go out and continue coverage. Then we had to cut a deal to truck in fuel for the generator that operated the studio.
Without power [in Alabama in late April], it's not exactly cool. The living conditions in the Huntsville area were not good. You've seen the videos of several small towns in the Huntsville and Tuscaloosa marketplace, the damage across the state of Alabama. Our men and women that went out there as first responders saw a lot of damage, a lot of injury, a lot of loss of life. It's almost as if, in some cases, it was worse than what our troops see in Afghanistan and Iraq in the course of a week.
We did a good job of wall-to-wall coverage in those markets for a couple days. We were very, very fortunate that not one employee had significant damage to their home, though everybody knew somebody who did. We did lose our radar in Huntsville-it was blown off the tower and they found it five miles away. The tower itself was torqued, and that's got to be repaired dramatically. The building that houses all the equipment was destroyed. The only other significant damage we had was, two live trucks had their windows blown out in Birmingham. But we as a company were very, very fortunate.
It must've been quite a learning experience for the staffers.
It's always a learning experience, but Susanna Schuler, our VP of news, has a system that goes way back to our experiences with Katrina and other hurricanes the last several years. We divide our group into regions and each region has "Go teams." When we have catastrophic events, big events of enormous news, we're able to move people and trucks and vehicles into the markets where they're needed. We flew in a lot of men and women from Charleston and Richmond and Cincinnati and Cleveland and fed them into the Birmingham and Huntsville markets. One regional news director, Steve Ackermann, came down from Cincinnati and was in residence in Birmingham probably for two weeks.
That's what we needed to do to continue to inform the audiences in the marketplaces where we do business. Our No. 1 job is to warn them as best we can when all this happens, then inform them so they can be directed to the right place. It was a big job and we spent hundreds of thousands to do that and do it correctly, with overtime and extra satellite time and extra fuel, those kinds of things. But that's what you need to do.
And that's coupled with not having commercials on the air for long stretches...
Yes, some stations in Huntsville and Birmingham went without commercials for a couple of days. Huntsville may have been longer than that. We did not do commercials for a lot of time, but the traffic folks and sales folks and local advertisers in particular were patient in understanding, and they all worked together to make that time good in the days and weeks after the disasters.
What words come to mind when you describe a Raycom station?
News and community.
Do you figure Raycom is a keeper of spectrum, or a seller?
I can't envision any circumstances whereby we would sell any of it. We are fully utilizing it today, between the dot-2 business we currently have and some earmarking for mobile DTV on a going forward basis. We are part of Pearl [Project]/MVC and have rolled out six television stations [with mobile DTV]. And we are launching Bounce, an African American network, on [26] of our dot-2s.
Partnering with the group running Bounce, we can improve the kinds of programming the African-American community receives. I look at a lot of markets where we're 30-plus percent African-American. We believe we haven't done a very good job of bringing product that is unique and special to that audience. Part of our agreement with Bounce is that we will be able to put on some local programming on a daily basis-it's our job to cross-pollinate some of our news and shows on dot-2 channels that carry Bounce. We're looking for some cross-marketing opportunities as well.
Are you mollified by what you're hearing from the FCC about spectrum or are you worried?
I remain concerned. I think if we're able to get a fair and accurate inventory, there would be other spectrum available to still fulfill the needs of the National Broadband Plan. I think the NAB's position is very clear; they are supportive of that. If they are going to look at taking spectrum and requiring television stations to be compressed, I think there's going to be a lot of services that are not going to happen. With the numbers I've seen in a lot of larger markets, a number of stations [would] end up going dark.
The NAB is trying to do what it can in working with folks at the Commission. But as a court of last resort, we can throw this case back to the public, and I'm not sure the average consumer fully understands the impact or implications for them as viewers if the allocated spectrum for over-the-air broadcasting is changed. I think there will be some impact. The most recent statistics we've seen, over-the-air audience has actually grown over last year-I think we're up to 15%.
Media General is resorting to employee furloughs to cut costs. Is Raycom cutting or adding costs at stations?
We have no intentions of furloughs or layoffs or anything in that regard. We got through 2009 without that, and this year we are actually adding jobs. If you look at this year's budget versus last year, we're actually adding a hundred folks. We're expanding news-particularly 4 p.m. news in place of Oprah, and with our microsites. We have an agreement with the folks at DataSphere-we continue to roll out microsites in all of our markets. Charlotte, for instance, has 35-36 microsites.
We're doing that in all our news-producing stations. The goal is twofold: take news and information from large market verticals or major Websites and push it down at the local community. The producer for that Website works with folks in that micro-community so that they can post news and information, including pictures and video, that is germane to their community. Every now and then you're going to find news and information that comes from a local community that's of interest to entire markets.
The long-term goal is to make our entire broadcasting operation much more granular so that, as we reach into neighborhoods, that becomes a two-way flow of information from the neighborhood itself.
You've got a few homegrown program efforts in America Now and RightThisMinute. How are those going?
America Now is a continuation of the one-hour trial run, if you will, that we did on the Raycom stations this past year where we ran it weekends only. This fall we make it a daily. We're fortunate enough to have Leeza Gibbons as a co-host with Bill Rancic. Having someone with her background on this kind of news magazine format is a big get for us. We think that's a nice balance with Bill and Leeza. We think it will be a better show with them.
We have the partnership with the folks from Scripps and Cox and the entrepreneurs from Magic Dust in Phoenix to do RightThisMinute, which is a show that harvests news and information off the internet, particularly video, that's professionally presented by journalists and discussed by journalists. It's headquartered, produced and aired from the Walter Cronkite School at Arizona University in Phoenix, which is a world-class facility.
Between those and the 4 p.m. newscasts, how are your syndicated costs this coming season?
Other than those investments, syndicated costs have dropped dramatically. We will not have Oprah in 16 markets and Dr. Phil in an additional 12 markets. That's 28 hours of [weekly] syndicated product that we will not have next year. That was one of the driving reasons for us to take a look at making some of these business decisions for investing in programming on our own, first with America Now and second with RightThisMinute. We wanted programs that are more news-friendly, so we have better control of audience flow into the very important news dayparts, or out of news dayparts.
We would be pitched on a show with someone who's been successful in other media, they did not have a producer, they did not have a pilot, yet you would have the privilege to sign up and pay for two years. We made a lot of mistakes in the syndicated market and thought we would like to at least try to leverage some of our existing content in partnership with somebody like ITV, who we're doing America Now with.
The RightThisMinute model, we share the risks among three similar companies. They are two different models from the traditional syndication model that we'd like to move forward with, because that's where we believe we need to be on a going-forward business.
Might you get more partners on board with RightThisMinute?
We hope to through distribution, but I don't think it will be necessary from an equity standpoint.
There's been a lot of interesting stuff going on with networks pushing affiliates for retrans. Is it fair play?
To me it's just business as usual. We have completed our cycle with all our cable and satellite operators more than once. We've been successful in the open marketplace. We believe we will successfully negotiate all our affiliate agreements, with some kind of programming payment or whatever each network wants to call their version of it. Do I think they are using their leverage? Sure. But each broadcaster has to make his individual decision as to the price he is willing to pay for the privilege of airing that programming.
It's a little bit different, but we've been paying for programming from syndicators a long time. The business model at the networks has changed-now we're paying the network for programming and we don't like it. But it's not going to change the fact that we are going to pay the network for programming.
You don't envision divorces coming for Raycom's stations?
I don't think so. We had discussions with Fox and I think we had good progress in discussions with CBS. We are probably about to have discussions with NBC. This year we cleared an ABC on a dot-2 in a little market, Albany, Georgia, that's been immensely successful for us. We were the big-dog NBC station and we cleared ABC on our dot-2. It's our first taste of a Big Four on a dot-2 and we think we've been very successful with it.
Again, are the negotiations with the networks difficult and tough? Yeah. But at the end of the day we're confident we'll reach some middle ground and do a business deal with them.
With your success in Albany, might you use a dot-2 to grab an affiliation if, say, Fox is cutting an affiliate loose?
We have a handful of short markets that, based on our performance in Albany, we would consider. In fact, we had discussions [June 23] about one of those markets. So yeah, I think we would take a look at that as well.
In a market where an affiliate does not exist currently...
Yes.
Is it a violation of the broadcasting brotherhood to take an affiliation from another station, or is it just business?
I think every circumstance is going to be different -- I don't think there's a summary answer to that that fits all circumstances. You need to understand the market, you need to understand the circumstances, you need to hear from both sides as to why it didn't work out before you consider accepting that business opportunity. We haven't been approached on any of those kinds of deals; the only deals we're actually talking to networks about right now are in markets where they have no specific coverage.
What do you make of NBC's framework to do retrans deals for affiliates? Would you be on board?
Based on what I know so far, and I don't know specific [details], but the theory of it is very interesting and something that Raycom would consider. I think most if not all of our NBCs are up at the end of this year. We will have the opportunity to test the validity of that solution in a very short period of time.
Might you be a buyer or seller of stations this year?
We always look at strategic acquisitions. There's still lots variables in the marketplace, spectrum and network [affiliation] issues. Until we're able to put those in black and white, it's very difficult to price something. When some of those issues are clarified-where is the spectrum going to end up, what will the final outcome be with some of networks, what are the networks' numbers going to be so we have a better understanding of what the cost of doing business is on a going forward basis-then we could make better estimates of the value there is in purchasing a property.
E-mail comments to michael.malone@nbmediacom, and follow him on Twitter: @StationBiz
