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Shades of Gray

Gray Communications last week released figures on its financial performance for the year now, thankfully, past. Gray is a midsize TV-group owner, with 13 stations in the South and Midwest. Ordinarily, the results would merit a brief mention elsewhere in the book, but its elaboration of the factors behind that performance seemed to sum up the challenges faced by broadcasters and are, themselves, something of a commentary on the times.

Gray saw broadcast revenues decline about 12% from 2000. The chief culprit: the lack of political ad dollars, which virtually disappeared, dropping from $9 million in 2000 to only $287,000 in 2001. Its ad-free coverage of Sept. 11 and the aftermath cost about $1 million over its 13 stations. It collected $1.4 million less in network comp for three Texas stations following negotiations with CBS. And it's paying millions to go digital. Although Gray did not break out the cost for 2001, it said its total estimated cost between 1999 and 2002 will be $31.4 million, of which it had incurred $10.6 million by the end of 2001. That will put its 2002 DTV expenditures at just north of $20 million. Gray also could serve as an illustration of the state of DTV conversion: Of its 13 stations, two are on the air with digital, two will make the May 1 deadline, and the rest are in varying stages of not-quite-readiness due to weather, zoning and equipment-delivery problems.

The FCC has so far granted roughly a fifth of the more than 600 applications for delay. It should grant most of them. A look at the fascinating, sometimes troubling stories behind the requests suggests that you can color much of the industry some shade of Gray.

Advertising in moderation

Rather than cave in to Capitol Hill and the enormous pressure it can put on a regulated industry or to the AMA and its scare-tactic ad campaign, NBC is going ahead with its cautious introduction of hard-liquor ads.

The hard-liquor ban has always been a handshake agreement, never a rule or law, and has never made much sense given the ubiquity of beer and wine advertising. Non-deceptive advertising about a legal product whose use in moderation by adults does not pose a health hazard is none of Congress's business. Of course, if any advertising is being targeted to minors, the dynamic changes: The government has a clear interest in curbing the alarming rate of teenage drinking. But trying to keep young people ignorant of the product, instead of informing them of the danger of its misuse, is the wrong approach.

NBC's approach could hardly be more cautious: Advertisers must do a four-month PSA campaign; actors must be at least 30; 85% of the audience must be adults. And those are only three of its 19 points. Even Mothers Against Drunk Driving has said NBC's measured approach should be the model for those who carry hard-liquor ads. We agree.

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