Business ups and downs: a newspaper demise, TV gold mine, Chrysler outlook; Vote of confidence in commercial TV
Some people may think cable television is the wave of the future, but $220 million can certainly be called a vote of confidence in commercial TV. That's the record price being paid by a growing multimedia company, Metromedia Inc., for Boston's WCVB-TV, a station considered one of the most innovative in the United States and a key affiliate in the ABC network. The amount is more than double the money previously spent for a local station.
"I think it is a vote of confidence," Robert Bennett, the president of Boston Broadcasters Inc., the company that has owned WCVB since 1972, said in an interview with the Monitor. The chairman of Metromedia, John Kluge, "would hardly be putting up $220 million for a television station if he thought commercial television was going to go in the tank," Mr. Bennett said.
Metromedia, Bennett said, "feels cable is too capital-intensive and isn't planning on putting five cents in it."
"I guess everyone isn't sold on cable TV," agreed Warren Casey, portfolio manager at the Fidelity Fund in Boston. "It can get pretty expensive for some families . . . and I'm not sure their [cable's] programming is all that superior."
Instead of operating a cable company itself, Metromedia has followed a strategy that there is more money to be made in supplying programs to the dozens of program-hungry channels. In some markets, cable companies are promising as many as 100 channels. Although many of these channels will carry frequently updated weather, sports, and financial news, many others will have to be filled with more general-interest programming.
With a nine-year track record of locally produced programs that are then syndicated to stations covering as much as 80 percent of the nation's viewers, WCVB is seen as an important supplier to the cable market. The 62 hours of programs produced at its station in Boston's suburbs is more than any other outlet in the US. Although many of these hours are news programs with little or no syndication possibilities, many more can be packaged for sale.
And while WCVB will be selling programs to cable companies as part of Metromedia, it will continue to supply noncable commercial stations like itself, Bennett says.
"Local commercial television will be with us for a long, long time," said William P. Suter, vice-president at Merrill Lynch, Pierce, Fenner & Smith Inc. "It will continue to grow and be a major force in broadcasting."
Metromedia is the nation's fourth-largest broadcast operation, following the three major commercial networks. It already owns five very high-frequency (VHF) stations and two ultra-high-frequency (UHF) stations and will have to sell one of them to win Federal Communications Commission (FCC) approval of the WCVB purchase, since it has reached the legal limit on the number of stations one company can own. Metromedia presently has stations in New York, Washington, Los Angeles, Minneapolis-St. Paul, and Kansas City.
While Metromedia executives and others remain skeptical of cable's future, the WCVB sale comes less than two weeks before the awarding of a lucrative cable TV franchise by Boston Mayor Kevin H. White. On July 31, Mr. White is scheduled to make the final selection between the Cablevision Company and Warner-Amex, a division of Warner Communications. The Boston contract reportedly will be worth as much as $100 million.
Although he admitted the $220 million price tag for WCVB is high, Bennett noted the growing value of urban TV markets in recent years and that, to his knowledge, WCVB is the first station from one of the 10 largest TV markets to be sold in 15 years.
Another Boston station could eventually change hands if the license for WNAC-TV is removed from the RKO General Corporation by the FCC. A challenge to that lice nse has been filed in federal court by several groups.