The media industry is in an absolute upheaval right now as traditional media companies try to figure out how to make money on the Internet.
Television stations and major newspapers across the country have been hit by declining viewership and readership, respectively, along with dwindling advertising dollars.
That’s not to say that the big media companies aren’t profitable. They are. They just aren’t as profitable as they once were and Wall Street hates that.
It makes many wonder about the long-term business viability of local television news and traditional print media as people get their news and information more and more from the Internet.
Could it be they are all chasing a profitable death?
So there is some curiosity about the rationale of Bonten Media Group, a New York company backed by private equity, buying NewsChannel 5 as part of its plan to up television stations in second- and third-tier markets.
According to industry trade Broadcasting and Cable, Bonten paid Landmark Communications $200 million for the top station in Nashville.
Perhaps the firm is banking on the Federal Communications Commission pushing through a plan to relax ownership rules and allowing a newspaper company to own a television station in the same market. That would allow Bonten to sell its stations to the owner of the major dailies in the different locations.
Or on the flip side, Bonten could buy the daily papers at bargain prices if ailing newspapers companies choose to cast off assets to remain profitable. Then the smaller more nimble company could refashion its assets to focus on the Internet.
In Nashville, the option is The Tennessean, which has long coveted the prospect of owning NewsChannel 5.
Congress has been fighting the FCC’s rule change and winning. Congressman Jim Cooper has been particularly vocal in his opposition to Nashville’s daily owning a station.
Bonten bought its first group of stations early last year, when it acquired BlueStone TV Holdings from another private equity group for $230 million. The company now owns 16 stations around the country, all of them in markets where the major newspaper is owned by a large newspaper chain.
The station it owns in New Bern/Greenville, N.C., is in the same market as the Daily Reflector, a Cox newspaper. Its station in the Tri-Cities area in East Tennessee is in the same market as the Kingsport Times News, the Johnson City Press, and a slew of weekly satellite newspapers. Those papers are owned by family-run Sandusky Newspapers out of Ohio, which in Middle Tennessee owns daily The Lebanon Democrat in Wilson County.
E.W. Scripps Co. owns the newspaper in San Angelo, Texas, where Bonten owns the television station.
Randy Bongarten, a veteran broadcasting executive, leads Bonten. He couldn’t be reached to discuss the firm’s strategy, but he and his investors seem to think there is a strong future for local TV stations.
“Bonten Media Group and our sponsor, Diamond Castle Holdings, maintain a strong belief in the future of television and the central role it will continue to play in America's local communities,” he said in a prepared statement in late 2006 when Bonten Group announced its acquisition of BlueStone.
It’s an interesting vague statement. What is that role? Would it be the traditional role of nightly newscasts? Those have long been crucial to stations’ fight for viewership bragging rights. But they are fighting to be the top station for a dwindling audience. A joke about NewsChannel 5 is that when a funeral procession passed by that meant one less viewer.
But that could be said of all local TV news. Nightly newscasts are skewing to older age groups while younger viewers go to the Web. Many advertisers have followed them there and have reined in their overall spending because of the sluggish economy.
Maybe the content that now makes up the nightly news shifts to the Web. News teams could then create a nightly news magazine with depth instead of 30-second soundbites.
Meanwhile, Tennessean owner Gannett’s latest quarterly report paints a grim picture of the media business. Profits for the second quarter dropped 36 percent, in line with the tumble of competing newspaper companies. Print ad revenue dropped 14 percent while TV ad revenue fell 6 percent. Online revenues, though, were up 17 percent, but they’re not yet nearly big enough to make up the difference.
Gannett is cutting expenses again by laying off workers and freezing pensions. The company is taking an accounting charge of at least $2.5 billion to reflect its lower value. And the company’s stock price is about 70 percent below its 52-week high. It’s not alone: Shareholders of Scripps, New York Times Co. and Washington Post Co. have had to endure the same decline in revenues and stock price.
If they all keep cutting to stay profitable, it makes you wonder whether there will be anything left in newsrooms, effectively converting the papers to shoppers with nothing but ads — and fewer of those at that.
And with local television, instead of news, it’ll infomercials at 6 p.m.
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