After an ambitious push into local markets with cable news channels, Time Warner Cable is considering the sale of some of the operations.
The consideration reflects Time Warner Cable's concerns that the business was expanded too quickly or too much by launching channels in markets that are either too small or too competitive to allow them to thrive.
In the past two years, six Time Warner systems have launched channels in such markets as Syracuse, N.Y.; Charlotte, N.C.; San Antonio and Houston—a total of 10 news channels around the country. "It continues to be an expensive business to be in," said the president of another regional news operation familiar with Time Warner's pullback. "It requires strong support from ownership. I don't think they have been able to get the traction that they needed or wanted."
The channels are also proving less effective than expected in a key role for which they were designed: dissuading subscribers from defecting to DBS rivals, say current and former Time Warner news executives. Time Warner initially reasoned that a local news channel would be precisely the deterrent needed to prevent cable customers from switching to satellite-TV services. "By the time they got around to doing something about it," says one former Time Warner news executive, "a lot of those customers were gone."
Time Warner Cable declines to discuss the news operation. "As a normal course of business, we review our operations," a spokesman says. "This includes our news channels."
A likely buyer of some properties would be TV-station and newspaper owner Belo Corp., which is a partner in four of Time Warner's channels and owns the Texas-wide TXCN and Seattle-based Northwest Cable News. But Belo execs aren't fond of Time Warner's "hyperlocal" approach to cable news, preferring statewide or a super-regional news, particularly tied to the news departments of its stations.
The first public sign of Time Warner's pullback came last year when the company shelved a channel planned for Milwaukee. At the time it was "delayed," Time Warner executives said it would launch in late 2004. But the plans have now been replaced with a slate of video-on-demand programming, "Wisconsin On Demand." So, instead of the latest coverage of City Hall or a big fire, subscribers can get prepackaged high school sports and travel tips to the Wisconsin Dells.
More recently, Time Warner Cable has axed much of its corporate staff that directed the news operations. The Houston channel has been without a general manager or news director for several months.
The retreat marks a dramatic change in strategy for Time Warner Cable, a pioneer in the local news business. Its biggest channel, New York City's 12-year-old NY1—which is not on the block—changed the way TV news is gathered. To keep costs low, NY1 employed the first "one-man bands": Reporters armed with digital cameras produce and shoot the coverage as well.
Time Warner's operations are loaded with advanced digital editing suites to keep labor to a minimum. "They were very early adopters of automation technology to let them run a station as cheaply as possible," said Mark Thalmier, former research director for the Radio-Television News Directors Association, who recently completed a 52-page overview of cable regional news channels.
Any buyer would inherit Time Warner's biggest challenge—keeping automated news fresh and entertaining.
Additional reporting by Ken Kerschbaumer