Bay Area Battlefield

The Bay Area, famed for cable cars and high tech, is an anomaly. It covers three cities—San Francisco, Oakland and San Jose—and their expansive suburbs, a daunting assignment. Only 13% of the population lives in San Francisco; Oakland and San Jose are each large enough to rank as a top-25 market. But sprawl in the nation's sixth-largest TV market is secondary to the area's new challenge: Nielsen rolled out local people meters (LPMs) Sept. 30. Stations get daily demo ratings, which can swing wildly.

“We're in for a year of transition,” says KNTV General Manager Linda Sullivan.

While coping with LPMs, stations program to an eclectic audience: a highly educated population, thanks to nearby tech paradise Silicon Valley and various universities, including UC Berkley and Stanford. Plus, the ethnic mix is unique: 11% of residents are of Asian decent, 18% of Hispanic origin.

“Addressing the needs of all these viewers is difficult,” admits Mike Antonitis, president and GM of independent KRON.

All this diversity “makes late news a battlefield,” says Tim McVay, GM for Cox Broadcasting's Fox affiliate, KTVU. KRON broadcasts at 9 p.m.; KTVU follows at 10 p.m. The Big Three stations—CBS-owned KPIX, ABC O&O KGO and NBC O&O KNTV—offer 11 p.m. shows. While no one station dominates, there is extraordinary viewer demand for weather and traffic reports. One or two ratings points can separate the top-rated stations across dayparts. In prime time, KPIX is the market leader, buoyed by strong network programming; KGO leads in fringe.

NBC's San Jose-based KNTV is the newest addition in the marketplace. (NBC also owns a Telemundo station there.) KNTV became an NBC station in 2001 after Young Broadcasting's KRON converted to an independent. Distance means KNTV is missing 400,000 homes, but a new transmitter should close the gap by next spring.

Although local broadcasters benefited from the late-1990s Internet boom, they've endured a revenue pinch since the bubble burst. “We're not as vibrant as five years ago, but each successive year has been a bit better,” says Ron Longinotti, president and GM for Viacom's San Francisco duopoly, KPIX and UPN station KBHK. Year-to-date, the local ad market is posting low-single-digit growth, executives say. TV revenues are up to $710 million this year, from $670 million in 2003, per BIA.

Comcast is the dominant cable operator, with a robust 66% cable penetration. And 29% of cable subscribers have upgraded to digital cable, according to Scarborough Research.

“What sets us apart,” says Longinotti, “is our incredible diversity.”