Texas two-step

Belo, Time Warner hitch wagons in San Antonio and Houston to create two new Lone Star cable news channels

Belo and Time Warner Cable will spend $25 million to launch two new 24-hour cable news channels in Houston and San Antonio in 2002. The 50-50 joint ventures are part of a bigger deal that gives TWC retransmission rights to Belo's TV stations and that commits TWC to carrying Belo's existing Texas Cable News channel across its Texas systems.

For more than 18 months, Time Warner and Belo had been trying to hammer out a new retransmission consent deal.

There was just one problem: both companies wanted to dominate the 24-hour cable news business in Texas. Last week, the companies figured out a way to do it together. "The more we talked, the more we found to talk about," said John Newton, the Time Warner Cable senior vice president, who led the talks for the MSO.

In late 1998, Belo launched the Texas Cable News network (TXCN), designed as a statewide cable news channel. Shortly thereafter, Time Warner launched News 8, a cable news channel serving Austin, Texas, with plans of launching similar channels in markets like Houston and San Antonio where it operates big cable systems.

In the meantime, Belo needed distribution for TXCN on TWC's cable systems-covering about 1.5 million subscribers in Texas-in order to make it a truly statewide service.

After protracted talks, the two sides reached a deal last week. Time Warner receives 10-year retransmission-consent licenses to carry Belo's four Texas TV stations on its systems-khou-tv Houston; WFAA-TV Dallas; KVUE-TV Austin; and KENS-TV San Antonio.

In return, Time Warner agrees to distribute Belo's TXCN on its systems throughout the state. To start, TWC will carry the news channel on systems serving about 550,000 subscribers, with a pledge to roll it out to its remaining 950,000 subscribers as capacity permits.

Like the retrans deal, TWC's commitment to carry TXCN has a 10-year term. The two joint-venture news channels have initial 20-year terms.

According to Skip Cass, the Belo senior vice president who led the talks for the broadcaster, the target date for launching the Houston channel is early 2002, to be followed by the San Antonio channel in mid-2002.

In both cases, the news channels will work in cooperation with Belo's stations in the markets, khou and kens. Both stations will provide newsgathering resources for the cable news channels, Cass said. "There's a lot of news being gathered and a limited amount of time" to show it on the broadcast stations.

But Cass said the news channels, with staffs of between 75 and 100 employees, will also be cranking out a lot of its own original material, to which the broadcast stations will have access. "It's a two-way street."

TWC will pay a per-subscriber fee for TXCN, although both sides declined to reveal it. The TXCN distribution will be on digital tiers on some of TWC's cable systems and on analog tiers in others. The cable network will be distributed on digital tiers on TWC's systems in Houston, San Antonio and Austin.

Belo and TWC each already operates five cable news channels, either as wholly owned ventures or in partnership with others. In addition to TXCN, Belo has them in Arizona, the Pacific Northwest, New Orleans and Norfolk, Va. In addition to Austin, TWC has them in New York and Rochester, N.Y.; Orlando and Tampa, Fla.

And TWC's Newton says the cable MSO has plans to create "a dozen or more in the next few years." Not only are they good advertising vehicles, but subscribers like them. "They're great for acquisition and retention [of subscribers]," he says.