Raycom Chief Goes Over The Top - Broadcasting & Cable

Raycom Chief Goes Over The Top

Broadcaster of the Year Paul McTear on the spectrum auction, OTT, M&A and Katrina 10 years later
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Related: TVB Looking Forward to Data, Politics and Future at Sept. 17 Conference

While the mergers and acquisitions that dominated the station group story lines in recent years have slowed down, Raycom Media, under the stewardship of president/CEO Paul McTear, nonetheless has had a blockbuster year in terms of growing the group’s reach. McTear’s deft moves, including a $160 million grab of Drewry Communications, both expanded Raycom’s scale, and the breadth of productions originated in-house. As local broadcasters fight to be relevant in the mobile age, he also positioned Raycom in the increasingly vital over-the-top space, in terms of local news and entertainment.

McTear, who was inducted into the B&C Hall of Fame in 2007, spoke with deputy editor Michael Malone before getting his Broadcaster of the Year award at the TVB Forward conference in New York on Sept. 17. An edited transcript follows.

What’s been the highlight of 2015 for you and for Raycom?

A couple things. Steady growth in the television business. I know that almost sounds like an oxymoron, considering the economy and viewership and the Nielsen challenges that we all face. But we’re still very bullish on the local television business. We have two transactions in front of the FCC. We are purchasing a Fox television station in Boise, Idaho [KNIN] as part of the fallout, if you will, from the Scripps-Journal Broadcasting deal. [The two groups completed their merger earlier this year.] Journal had two stations [in Boise] and couldn’t transfer those to Scripps, so we purchased that Fox station; that’s in front of the FCC.

And after a rather long diligence process, we reached an agreement to buy Drewry Broadcasting. Drewry is four television stations—three in west Texas and one in Lawton, Okla. It’s very interesting because they’re network affiliates, but they also have a Telemundo [station], and two of the markets have Spanish-language radio; the Spanish-language radio folks provide Spanish-language news on the Telemundo station. That’s an area we’ve not been in before, other than our Telemundo on a dot-two in Tyler, Texas, so this will be interesting for us.

In addition to that, we have a relationship with another station that’s owned by Hoak, which American Spirit will be purchasing. [Last month, Raycom agreed to acquire KAUZ Wichita Falls (Texas) from Hoak Media and spin it off to American Spirit, which will enter into a shared services agreement with Raycom.]

Drewry was one of the few group deals—actual multi-station deals—this year. Are those transactions harder to come by? (The Media General-Meredith merger announcement occurred several days after the interview.)

I think they are. There is a bit of a pause in sellers’ minds. Nobody quite knows the impact of the spectrum auction and the repacking and eventual transition into ATSC 3. I think that causes a lot of people to say, let’s just wait and see. You’re right, there may be some onesies and twosies—we saw Gray bought a station [KCRG Cedar Rapids for $100 million]. But there are not a lot of larger transactions pending at this time.

But we’re continuing to work. We have a diligence process underway now for two stations, just onesies, that are available that we’re looking at.

Anything else you are looking at?

We closed [last week] on a sports production company in Indianapolis called WebStream. What’s interesting about WebStream is that they have as customers a handful smaller [college] conferences—Big South is one of them. We believe having access to content, particularly sports content, has value, especially when you look at our portfolio—midsized and smaller markets. This a well-run business, and when we align it with the sports production business we have in Raycom Sports, it gives us access to some of the [sports] content that is not controlled by ESPN.

Then in the digital area, we launched four channels of content called The Southern Weekend. Right now it’s available as a website [TheSouthernWeekend.com] but our goal is to put that over-the-top—we’re in the final stages of a Roku app to enable that. The four channels are Automobile, Travel, Food and Outdoor. They’re the activities that take place on a southern weekend for most people. We look at Southern Weekend as being more about lifestyle than a geographic area.

In October of ’14, we bought a small production company in Franklin, Tenn.—RTM PowerBlock. It’s a 50,000-square-foot facility with six studios, including a paint shop. They produce television shows for automobile enthusiasts, maybe a show where a ’65 Dodge Charger gets customized. That content is on CBS Sports Network, NBC Sports Network and Spike. This fall we’re going to syndicate on, I think, 33 of our stations, either a one-or two-hour block on weekends. They have a significant digital library that will help feed one of those [Southern Weekend] channels in the over-the-top world.

In terms of Food, if you look at our portfolio and the amount of restaurants and chefs available to us, producing that content will not be a challenge for us. We also have a relationship and a small equity investment in a company called PlanesTrains + Automobiles—they produce travel videos, not in a traditional way, but in a much more what I consider [contemporary] way. So you may see something like Postcards from Nashville, which is fast-paced with music, a look at cool things to do in Nashville. They do longer form programs as well, such as Day Off in Atlanta, which is a half-hour show that follows a professional athlete who has a day off—what you could do if you had a [free] day in Atlanta. We would use that model and some of that content in that over-the-top business.

For Outdoor, it’s golf and fishing and hunting, and we have some relationships there.

Speaking of over-the-top, Raycom is a backer in the streaming news platform NewsOn. (Expected to launch later this year, NewsOn is a joint venture between ABC Owned Television Station Group, Cox Media Group, Hearst Television, Media General and Raycom.) Tell us about that.

We are an initial investor in NewsOn; it’s an over-the-top initiative that enables viewers to have access to more than 200 stations, either through a live streaming component or VOD. So as we continue to do research on where the viewers are going, we want to make sure we’re able to put our content in front of those people and protect the brands we have established and had for many decades.

Apple is of course looking to get local channels into its OTT bundle. Is that a huge opportunity or more of a wait-and-see kind of thing?

I think it’s a wait-and-see thing. Obviously we would like to be connected with everybody who is distributing content. I just have to understand how Apple TV will be regulated in the future. How will that relationship be defined by the FCC, because the rules of the road become a little more confusing with each passing week, to be perfectly honest.

We recently passed the 10th anniversary of Hurricane Katrina. Raycom’s stations are mostly in the southeast, including WVUE New Orleans. [Raycom has an operating agreement with the Tom Benson-owned station.] Was that a chance to reflect on the role the stations serve in people’s lives?

It really was. We ran, I think, three different specials about Katrina down there and also ran them in multiple markets. I was in New Orleans and it was kind of a melancholy visit, when you talk to people down there. No. 1, there’s the flashback to the horror that was 10 years ago. And then you drive around and see the huge areas of growth and development. But that is contrasted by some of the neighborhoods that are just empty fields. Even in downtown, there are multi-story buildings which are abandoned and still not yet taken down. It really is a mixed bag, but we believe there is a bright future in New Orleans.

That’s part of why we did a five-year deal with the New Orleans Saints to produce and air, on a network, all of their preseason games.

How is political spending on the Raycom stations gearing up for this fall?

It’s OK; we’re about on pace. Like so many other things, it often comes in a market that you didn’t expect it to, but then in the market where you did expect it, it doesn’t show up. When you have the diversity we have, between different networks and the number of states we’re in, we seem to do OK in aggregate. But the hardest part of budgeting in this environment is, what will political look like next year? It all depends on who is going to run. Right now there’s no indication on either side of the party line who’s going to run.

The TVB is holding its Forward conference at the fancy Waldorf-Astoria this year. Should I take that as a sign that the industry is doing well?

I think the industry is doing very well. I think cash flows are strong and broadcasters today are more sophisticated than they have ever been before. Strategic planning is a significant part of everyday life. The challenge of retooling newsrooms and sales departments to take advantage of multiplatform audiences is helping us be better businesspeople.

When you look at the No. 1 traditional advertising category, automobile, we see there is a roll-off, if you will, of traditional television advertising over the air. But we’re all racing hard to capture that organically on the digital side.

It’s challenging, but it’s still a very strong business. I think the importance of the TVB is even more significant for broadcasters than ever in this multiplatform environment.

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McTear Likes the ‘VUE’ From New Orleans

A key piece of the Raycom portfolio is WVUE New Orleans, both economically and emotionally. Raycom entered into a shared services agreement with Tom Benson’s Louisiana Media Company two years ago, meaning the station stays locally owned, but is now operated by a group with the scale to compete in today’s environment. Paul McTear, Raycom president and CEO, was in New Orleans on a station visit in late August, and opened the meeting by recognizing that the 10-year anniversary of Hurricane Katrina had made it a draining week for staff.

“I think we are glad to put the anniversary behind us,” says Sandy Breland, Raycom group manager and WVUE general manager. “As someone who was impacted by the storm like so many others, I think we wanted to mark the anniversary and acknowledge what people had been through, but no one wanted to relive it.”

Much of WVUE’s coverage focused on the resiliency of the people and the city. “We didn’t want to just run video of devastation. We highlighted stories of families being reunited, businesses coming back, new people falling in love with and moving to New Orleans,” says Breland, a native of Metairie, La. “Those stories are a true reflection of how the city has come back post-Katrina.”

Breland was news director across town at WWL during the storm. While WWL has long been a ratings monster, WVUE has made huge strides. Breland is one of several people among WVUE leadership who made their bones at WWL, including news director Mikel Schaefer. The “Fox 8” news department is one of the most decorated in the nation, and adds three National Murrows to its trophy case, alongside various Peabodys and duPont-Columbia’s, next month. “Journalistic excellence remains a top priority,” says Breland.

WVUE’s reach goes beyond news. Raycom’s syndicated show, Flip My Food, is doing much of its production out of WVUE. A deal with the Saints, also owned by Tom Benson, saw WVUE produce the Saints’ preseason games this year, which aired on Raycom stations throughout the southeast, as well as others outside the group in a syndicated model.

Breland says her boss is coming around to the Saints. “While Paul may have grown up as an Eagles fan,” she says, “he’s earned the right to be called an honorary Who Dat!”

Saints-related or not, McTear relishes those visits to New Orleans. “It is a different market today than it was pre-Katrina,” he says. “It is a stronger market. We think the leadership in the city is strong, that there is a plan, and we are very pleased and proud to be part of it.”

Related: TVB Looking Forward to Data, Politics and Future at Sept. 17 Conference

While the mergers and acquisitions that dominated the station group story lines in recent years have slowed down, Raycom Media, under the stewardship of president/CEO Paul McTear, nonetheless has had a blockbuster year in terms of growing the group’s reach. McTear’s deft moves, including a $160 million grab of Drewry Communications, both expanded Raycom’s scale, and the breadth of productions originated in-house. As local broadcasters fight to be relevant in the mobile age, he also positioned Raycom in the increasingly vital over-the-top space, in terms of local news and entertainment.

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