Local TV

Media General Gets Specific

Newspaper division sold, group focuses on immediacy and urgency of broadcast and digital 10/29/2012 12:01:00 AM Eastern

At a Glance: Media General

Top Execs:

Marshall N. Morton, president and CEO; George L. Mahoney, VP/ COO, incoming president and CEO; James R. Conschafter, VP, broadcast markets; John R. Cottingham, VP, broadcast markets

Public or Private:

Public

U.S. Coverage:

8.2%

Number of Stations:

18

Locations:

Based in Richmond, Va.; stations include WFLA Tampa, WJAR Providence and WCMH Columbus (Ohio)

Website:

mediageneral.com

Media General looks a whole lot different today, to say the
least, than when its Richmond Dispatch newspaper debuted in 1850. And
after divesting its last newspaper earlier this month, the company is now
focusing solely on its 18 TV stations and their respective digital properties.
Marshall Morton, who took over as president and CEO in 2005, retires at the end
of the year to make way for current VP/chief operating officer George Mahoney.
Morton spoke with B&C deputy editor Michael Malone about the
colossal cultural shift that occurred on his watch.

What specifically does it mean for the stations now that the company is
a pure-play broadcaster?

The first thing it means is that the stations have all our
attention. You might make the case that they don't want so much attention from
corporate, but in this case it works in their advantage in many ways, and I think
they would say the same thing. For years we looked at broadcast as a second way
to address the market; we also had our newspapers, and as time went on, the
past 10-15 years, the marketplace was becoming more and more in control of its
media usage. It wasn't willing to wait for a prescheduled newscast or the
delivery of newspapers. The whole mindset at the corporate level turned to
serving a customer that's completely in charge. Today, really the only kind of
customer we've got is broadcast, and we can devote our technology and capital
spending to supporting that.

One thing I see at the market level is much greater interest
in locally produced programming aimed at specific consumer tastes in that
market. Birmingham's approach to news and entertainment is different than that
in Providence or Columbus. We need to address that on the DMA's terms, not on
our own cookie-cutter terms, and we're much better able to do that now.

Any regrets about having the newspapers depart on your watch? After
all, they were part of company for 160 years.

Yes, of course-it's an emotional pull because many of the
people in the business are friends. Newspapers gave us our start, and also gave
us great values that we use today in the broadcast business. Beyond that, we
decided in 1995 that we want to be the leading provider of news and information
and entertainment in our marketplaces. The marketplaces are changing and if we
are going to be true to our mission, then the packaging we use to get that news
and information to the customer makes a big difference, too.

I don't see that we could have any better heritage than the
one newspapers gave us. But when it comes to getting it to the marketplace on
their terms, I think digital and broadcast do that [best]. They're also the
most adept, from the standpoint of growth. We're not tied down by geography.
The only thing that holds us back from growth is good ideas. So if we have good
ideas about presenting [digital] products that are useful to someone in Oregon,
they don't have to wait for us to build a branch in Oregon.

The broadcast side of the house did something I don't think
newspapers ever could have done, and that's give us a sense of need for
immediacy, need to react quickly to consumers' changing tastes. We've always
had competition in the broadcast business-there's been at least three other
networks to wrestle with for market position and ad share. That's something
newspapers typically have not had to contend with. The whole DNA of a
broadcaster is, be there first, be there accurately and focus on community
needs. I think we've got the right product. I'll admit to some emotional ties
that were broken, but not any unhappiness that we made this change to focus
purely on broadcast and digital.

Tell me about this George Mahoney character...

(Laughs) George
came to us from Dow Jones as our general counsel. He's very much a
business-oriented attorney, a get-to-yes kind of guy, and he understood the
ethics of the media business very well from his Dow Jones days, but also
understands as a public company the obligation to be good stewards of the
assets.

From 2000-2010, it became increasingly obvious that George
was interested in the business experience too, not just the legal work. We
bought a lot of TV stations, and sold businesses, and he showed himself to be
adept at that. Around 2006 or 2007 he began working on the structured
innovation process in the company. You and I have things that we need to get
through the day in fine order, and what Media General wants to do is figure out
what they are, how do we train assets to become the go-to spot in the
marketplace with the answers you and I need?

George was very heavily involved in that. Most recently he
ran our growth and performance area, looking for new revenue streams, new ideas
and new packaging across all our product lines and in all our markets. He
showed himself to be very good at that. It was also his first chance to manage
P&L.

He has good experience, has the right mindset and loves
problem solving. And he's a very collegial kind of person.

I can't guarantee he'll run everything just like I did; I
hope he won't. But I think he will be focused on the future. He's said this
many times-make sure we don't allow broadcast to get in the same position in
the market that newspapers got into.

How do you describe a Media General station?

Locally-focused and with a growing understanding of how
important it is to provide locally-produced news and information for the
marketplace. Five or six years ago we started a morning show in Tampa, with two
hosts, long-form advertising, community events and public service subjects. The
idea was to syndicate it among our stations and perhaps others if they wanted
it, leaving time blocks so our other stations could insert something local. It
never worked out quite the way we wanted it to. It did very well in Tampa, but
our other stations said, No, we have plenty of time to do this ourselves.

That kind of programming has been very popular-it attracts
audiences fast and becomes profitable fast. In a couple of markets we've got
evening shows that are very popular. It moves us away from syndicated
programming into something that's hyper-local. We're doing a lot of sports-high
school sports in particular. This growing awareness that the local marketplace
has monetizable interest, and that it's a way to anchor audience for us, is
something that has become instantly obvious to us-instantly of course after
five years of proving to ourselves. So we see it growing all the time.

In the past year or so we've added 35-40 hours a week of
local programming in our markets, news hours as well as the programs I just
mentioned. The local station is focused on excellent sales education, excellent
information education by topical programming, and understanding that the
technology changes so fast that you've got to stay very close to that. So there
are at least three branches that are in heavy pursuit in every marketplace.

I'm making a point to visit all of our stations between now
and the end of the calendar year to talk about the strength of Media General
today, with its broadcast and digital focus, its ability to train all its
capital, and all its free cash, on its needs in broadcast.

Our balance sheet is in very strong shape. We've got a very
committed lender in Warren Buffett-Berkshire-Hathaway, more precisely. He
understands our thrust. Altogether we're a firmer company; the support we can
give our local stations is stronger than ever. They've been encouraged, and I
think George Mahoney will continue to encourage this, to press on new ideas and
new products and new ways to address the market.

Might Media General do station acquisitions in the near term?

That would not be the top of the list. I think managing
stations and LMAs [Local Marketing Agreements[, something like that, as we do
in Augusta [GA] with WAGT, is probably the better course. Our sales
organizations are typically very strong; we have a lot of traction in the
marketplace and can do a good job with whatever station we manage. In Augusta,
it has allowed both stations to move into a facility that's better suited to
their needs, and to upgrade the technology. Our partner there [Schurz] is very
happy with the arrangement, and we're incentivized to do better to gain market
share for their station.

I think you'll probably see more of that. The industry is
certainly consolidating, and we'll be very alert to opportunities.

Is Media General a keeper of its broadcast spectrum?

Yes. We're fortunate enough to live where we do in Richmond,
and we can talk to the FCC face to face, hear what they're thinking, talk to
our [elected] representatives and hear that they're thinking. And they get a
chance to hear what we're thinking too. We told them we are keepers. We use a
major piece of our spectrum assignment for HD, and we also have dot-two channels,
and productively use those for news, weather and in some cases the Me-TV
concept, which is very popular.

Then there's mobile-we have four markets with mobile
signals. We think the future of mobile is just undeniable. There's a
chicken-and-egg aspect to that of course, in that there are not that many
appliances in the marketplace, but it's easy to make your iPhone, iPad and
Droid into a TV if you wanted to. The potential for mobile signals-particularly
in crisis management, things like that where it won't drag down the cellphone
system, a one-to-many kind of communications device-I think it's going to be
unbeatable. If you want to watch TV in your backyard, your country cabin,
whatever-America does not like be tied down anything, so the idea of sidestepping
cable or a satellite dish, I think Americans like [that].

Are you concerned with what you're hearing in Washington?

Not really. Some of the earlier ticklish points were
essentially resolved, such as compensation for any gross expenditure required
on repacking. I think there's goodwill among participants [in Washington] in
getting it done. Our concern with the FCC in the past had been cross-ownership;
we felt the rules created in 1975 did not have heavy relevance today in terms
of the technology. An awful lot of things we do today were not even on the
horizon when that legislation was written.

But the commissioners coming in are a younger breed. They've
seen the expansion of broadcast and understand digital and understand what kind
of competition it is in the marketplace. I think they're not blind to the facts
there.

Can you give an update on Media General's mobile DTV strategy?

There are four markets where we're in play; we expect to add
a couple more this year. There's limited usage for the reasons I mentioned, but
we think it's an undeniable opportunity and one that people want to take
advantage of. With the iPhone, Droid and [other] smartphones, the caliber of
pictures is actually pretty stunning. I talk to people who fly across the
Atlantic and watch a movie on their iPhone and have a perfectly good time with
it.

At the moment it's a case of gaining audience. We're going
to push it and promote it. One thing we have with an audience, a digitized
audience, is the ability to let them know what we're up to, and quickly they
can let us know if they like it or not. So we're able to fine-tune what we're
doing.

Are you surprised by the political that's coming in?

We had budgeted for far less than is coming in; we had not
thought the race would be so polarized. Being in four battleground states was
something we weren't completely prepared for, but it's actually better than the
four battleground states. For example, our Providence station-the DMA includes
three Massachusetts congressional districts, plus the Warren-Brown [senate]
race-is generating a lot of cash, too. We've been saying $57-58 million [for
the year], and that's far higher than we've ever shown before. It's fair to say
it's been surprising.

On the other hand, we've done things to position ourselves to
be a good repository for politicians, because we have a lot of news
programming. Most of our stations are No. 1 or No. 2 in their market, so the
audience mass they are looking for is available to them.

With eight NBC stations in the group, Media General's fortunes are tied
to NBC. What do you make of NBC's prime?

We've been looking for that for a long time. The early part
of the week, NBC has shown retainable kinds of gains. We're happy enough with
that. But we've always known that these things go through cycles-you're always
prone to weakness trends that turn into significant dollar loss, so you always
work hard to make local programming the calling card that keeps us in the
market position, not primetime. As a result I think we do OK on that front.
Many of our No. 1 and No. 2 stations were NBC affiliates, even before The Voice and Revolution began to take hold.

Media General's Tampa operation was a model for the convergence concept
a decade ago. With the
Tampa Tribune
sold, does that mean convergence didn't work?

The decision to sell the newspapers was completely separate
from anything about convergence. It was a recognition that the coming cohorts,
the young folks of today, are getting information from elsewhere. We held on
for four years, in the expectation that we were looking at a cycle, but we
admitted toward the end of last year that this is a trend, so we announced the
sale of the newspapers. But it had nothing to do with the success or failure of
convergence.

I would say convergence in Tampa worked about as well as it
could anywhere. TBO.com was the strongest website in the west coast of
Florida-they took great advantage of the video generated on the TV side, and
the depth of reporting that came out of the newspaper. Our site down there,
WFLA.com, never lost its luster. People go to it directly. For years we'd
redirect them to Tampa Bay Online [TBO.com]; now, of course, that no longer
happens. We're beefing up the website, the content management system, and we'll
begin to promote [WFLA.com] as a go-to source.

I'm sure you've seen these studies, but the growth in
Internet traffic is largely coming from mobile devices. Mobile devices
typically go to local TV, not their local newspapers, for local information.
Newspapers more and more are charging for access to the website. We don't do
that with our TV stations.

It will take a while to get complete traction [for WFLA.com]
like TBO.com did. But we're fortunate that WFLA has a strong brand and I think
we can build up that website very fast.

How is 2013 looking?

Core business is good. We go into 2013 as we've gone into
every [off political year] with new opportunities to sell, and incentive
packages to make sure key advertisers keep volume up. Auto is very strong so we
think that goes into next year. There's certainly some pullback over
presidential politics and that will be resolved. Nobody hates uncertainty like
the marketplace, so once we get the uncertainties behind us I think that helps.
For years we did an excellent job replacing the prior year's lost political; we
know how to do that in a non-recessionary environment, and the chances are very
strong that we are looking at a non-recessionary environment next year and
we'll be able to get back to our old pattern of replacing and supplanting the
previous year's political with new advertising and new advertisers.

The Internet is a better-known commodity for advertisers
than it was even five years ago. We do a lot of teaching our advertisers on how
to use the Internet and develop advertising packages for them. I think we'll
see continued hyper-growth in Internet revenues that are helpful to us also.

Every forecast is subject to unexpected stumbles, but in
terms of general trends, I think we can count on the Internet to provide us new
customers and new revenue streams.

What are your plans for retirement?

Having a calendar less structured than it is. (Laughs)

My wife and I enjoy traveling. I will enjoy playing more
tennis. I enjoy woodworking, so I'll get back in that. But for the most part,
and I'm sure every man or woman who retires says this, there are so many books
I want to read. My wife said our bedside table looks like a combat zone. I'll
get that pared down. And our children, and their children, are lots of fun.
We'll be plenty busy, I think. My wife and I are both involved in a lot of
civic things in Richmond, where you feel like you can make a difference. We'll
have more time for that.

Will you have an official role with Media General?

I will still be on the board. I succeeded Stewart Bryan [as
CEO], who set the standard as to how to deal with a situation like this. He was
very available to me when I needed him, but very out of the flow of
decision-making, and never with any interference. I'd like to use that model
when dealing with George and others here.


E-mail
comments to
mmalone@nbmedia.com
and follow
him on Twitter:
@BCMikeMalone

At a Glance: Media General

Top Execs:

Marshall N. Morton, president and CEO; George L. Mahoney, VP/ COO, incoming president and CEO; James R. Conschafter, VP, broadcast markets; John R. Cottingham, VP, broadcast markets

Public or Private:

Public

U.S. Coverage:

8.2%

Number of Stations:

18

Locations:

Based in Richmond, Va.; stations include WFLA Tampa, WJAR Providence and WCMH Columbus (Ohio)

Website:

mediageneral.com

 

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