Why Local News Is in a Sharing Mood

With budgets tight, more stations are outsourcing their news to market rivals
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When WNYO Buffalo, N.Y., debuted a 10 p.m. newscast last spring, some viewers likely did a double take. The program features anchors and reporters from NBC affiliate WGRZ, including its star 11 p.m. anchors Maryalice Demler and Scott Levin reading the day's top headlines.

Under a new partnership, Sinclair-owned WNYO, soon to be christened a MyNetworkTV (MNT) affiliate, airs a newscast produced by Gannett Broadcasting's WGRZ, using the NBC station's studio, talent and crew. In return, WGRZ takes a cut of revenue from the advertising sales. Even the show's name is a blended effort: 2 News on 49, a combination of WGRZ's news branding and WNYO's channel number.

The deal gives WNYO news on the cheap and offers WGRZ a chance to break into a new time period. “We wanted to expose our news to another audience,” says WGRZ General Manager Jim Toellner.

From top-10 markets such as Philadelphia to small outposts such as LaCrosse-Eau Claire, Wis., stations across the country are adding news to increase market share and boost profits. The most popular effort is a “news share,” where a Big Three station—an NBC, ABC or CBS outlet—produces a newscast for a Fox affiliate or a soon-to-be CW or MNT station. The programs are not simulcasts but original newscasts for the partner.

Today, nearly three dozen markets feature such newscasts, and new deals are inked almost weekly. This influx of local news comes at a time when the TV-ad market is struggling and TV stations are under increased pressure to cultivate new revenue sources. Many are building digital products, such as elaborate Websites and wireless services, to grow future revenues, but, so far, the businesses are young and returns modest.

Local news, in contrast, is a proven moneymaker. News accounts for as much as 50% of a station's revenue, and by launching more newscasts, stations are relying on their bread-and-butter product. A station in a midsize market can make $1 million in added annual revenue producing news for another affiliate in town. Such a deal also helps a newsroom to amortize expenses for high-priced anchors and equipment over extra time periods.

“Adding more news is an opportunity to get your brand out there to more people,” says TV-station consultant Scott Tallal, president of Insite Media Research. “It is like occupying more shelf space at the grocery store.”

But such expansion can be risky. With cable news channels and countless Websites churning out news 24/7, news consumers have never had so many destinations for information. To stand out, TV stations have marketed their local expertise. However, as more affiliates get into the news game, they chance making hyper-local news a commodity.

At the same time, stations face intense competition from entertainment programming on TV. In recent TV seasons, broadcast and cable networks have launched popular 10 p.m. shows, including CSI and Grey's Anatomy, that might keep a viewer from watching “early” late news at 10 p.m. (9 p.m. Central or Mountain), the most popular time slot for new newscasts.

Stations also worry about cannibalizing their own audience and stretching their staffs too thin. In Buffalo, when WGRZ signed on to produce a 10 p.m. for WNYO, station managers were concerned about competing with their own flagship 11 p.m. show. To differentiate the newscasts, WGRZ developed a fresh format for 10 p.m., where the first 15 minutes are Headline News-style rapid-fire reports, followed by 15 minutes of sports. It added several staffers to support the show.

“The 10 p.m. is news of convenience, and we give viewers news, weather and sports. If they want more in-depth news, they can go to our 11 p.m.,” says WGRZ's Toellner.

For any station, broadcasting local news offers marketing and financial opportunities. News helps brand a station in the community, where anchors are often local celebrities. News also attracts the high-end, educated viewers that advertisers seek, particularly in a political year.

“With news, you're relevant, you're local, and you keep the inventory to sell to advertisers,” says Bill Hague, a consultant with Frank N. Magid Associates.

Despite the upside, some stations cannot afford to produce news. It can cost millions of dollars to start up a news department that needs staff, cameras, trucks and equipment. Stations that do take the plunge often find that a half-hour of news per day does not generate enough revenue to justify the expense.

Three years ago, Sinclair tried to create a more efficient model by fashioning a centralized news operation, News Central, to funnel content to all its stations. The company's WB stations and several of its Fox affiliates launched late newscasts that relied heavily on News Central feeds. But the shows failed to produce in the ratings, and, last spring, Sinclair cancelled many of the newscasts and scaled back News Central.

By outsourcing news to another station, a smaller outlet can reap the benefits of local news without the infrastructure costs. In Spokane, Wash., Northwest Broadcasting's Fox affiliate KAYU used to produce its own 10 p.m. news but cancelled the show in March 2004. Now Cowles Publishing's NBC affiliate KHQ produces the show. “We wanted to have a competitive product that was profitable,” says KAYU General Manager John Rand. Without the overhead, he says the show is thriving, even after KHQ takes a cut of revenue. “This newscast started making money in the second month.”

Such partnerships first sprouted up in the 1990s, as Fox stations looked for a way to capitalize on their growing primetime and get into local news without the expense. In 1997, Freedom Broadcasting's CBS affiliate WPEC West Palm Beach, Fla., cut one of the earliest deals, to produce a 10 p.m. news for Raycom's Fox affiliate WFLX. The show is still on the air and ranks as the No. 3 late news in the market.

In the past year, the pace of deals has picked up significantly. The largest market is Philadelphia, where Tribune Broadcasting's WPHL, a future MNT station, cancelled its news late last year and fired its news staff, then contracted NBC-owned WCAU to produce a 10 p.m. show. Two markets, Las Vegas and Knoxville, Tenn., now feature two shared newscasts.

Sinclair is now the leader in news shares. Thirteen of its stations contract other affiliates to produce news, which the company says will result in $5 million in cost savings each year. Several Sinclair stations will launch shared newscasts later this year, including MNT affiliate WSTR Cincinnati, which in August will premiere a show produced by Clear Channel-owned CBS affiliate WKRC.

In an era of media consolidation, critics might worry that news shares reduce the number of independent voices in a community. In most instances, however, these stations contracting another affiliate to produce news would not otherwise have a news presence. The additional news, proponents say, gives consumers more choices for local news.

A major concern is overtaxing newsrooms, already lean operations stressed by new demands on the Internet, as well as straining resources and ability to report in-depth. A common refrain from anchors and producers is that they are asked to do more work for news shares but are not necessarily compensated.

When a reporter rushes out to cover a fire for the 11 p.m. news, instead of chasing down leads with fire and police officials, they could be stuck in front of the camera shooting a live shot for the partner 10 p.m. news. “There are more demands than ever on reporters' time,” says news consultant Valerie Hyman, president of News and Management Training.

But news managers argue that their staffs are already in place for early-evening and late news and adding one more show gives them a chance to provide more news to a larger audience. Many stations say they've added several bodies to support the added newscast, including devoted producers and directors.

Despite the flurry of deals being cut, not all of news shares survive. In the past two years, several shared newscasts have been cancelled, including shows in Detroit, Syracuse, N.Y., and Madison, Wis. In each case, executives blame low ratings. “It never gained traction in the ratings,” says Tom Keeler, general manager for ACME's WBUW Madison, “and our WB programming didn't provide a good lead-in.” So the station invested in more syndicated programs.

When stations do strike deals, one of the most contentious issues can be what to call the news and who will host it. The station producing the show almost always wants its name in the title to help with marketing, but some partner stations are reluctant to give such a plug. Another issue: Some stations executives worry that using the same anchors for both the 10 and 11 p.m. newscasts will cause viewer confusion, while others say it increases credibility.

In Fresno, Calif., NBC affiliate KSEE last week launched a 10 p.m. news on MNT affiliate KAIL called KSEE 24 News at 10. KAIL's name is nowhere to be found in the title, but the station is getting a newscast with KSEE's main anchors and three strongest reporters. “We're using our brand and our best resources,” says KSEE General Manager Todd McWilliams.

But in Cincinnati, WKRC's upcoming news on Sinclair's WSTR will feature the CBS station's 4 p.m. news anchors. “We want it to look different than our 11 p.m.,” says WKRC General Manager Chris Sehring. “We don't want to compete with ourselves.”

News partners must also settle on a compensation model. In some deals, stations split the ad-sales revenue; in others, they agree to a flat annual license fee.

A simpler route to partnering on news comes when stations are owned by the same parent company as part of a duopoly. Several CBS owned-and-operated stations, for example, supply their UPN sister outlets with a late news.

In Indianapolis, LIN TV's CBS affiliate WISH produces a well rated 10 p.m. show for its sister WNDY, a future MNT station. When Meredith Broadcasting acquired KSMO, the future MNT station in Kansas City, Mo., last year, it immediately added a 9 p.m. news produced by its CBS station KCTV.

Duopolies are also expanding into new dayparts. Early morning, a growth area for local news, is a hot spot. In Raleigh-Durham, N.C., for instance, Capitol Broadcasting's CBS affiliate WRAL airs news from 5 to 7 a.m. and then moves its team to sister Fox affiliate WRAZ for a 7-9 a.m. block of local news.

These duopoly newscasts often make use of the same anchors and reporters. But the issue of ad sales is moot, since duopolies often share a sales staff, and stations are more invested in cross-promotion.

When opportunities arise, some stations are aggressively expanding news any way they reasonably can. Dozens of stations, including WESH Orlando, Fla., later this month, are adding 4 p.m. newscasts to counter-program The Oprah Winfrey Show on their rivals. Media General-owned WNCN Raleigh-Durham added the market's only 7 p.m. news by moving syndicated shows Extra and Inside Edition back to 5 to 6 p.m., where it previously aired news.

Later in the evening, several Fox stations, including Fox-owned WTTG Washington and WTVT Tampa, Fla., and Meredith's KPTV Portland, Ore., have expanded their traditional 10 p.m. newscasts to 11 p.m., where they compete with the NBC, CBS and ABC affiliates.

In Portland, KPTV is top-rated in late news and launched its new 11 p.m. show in February to capitalize on that success.

“We're so strong at 10 p.m., and we had the staff and the resources in place,” says General Manager Kieran Clarke. “Why not try our brand against the competition?”

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