Annual Report Index

James A. Zimmerman, president, Broadcast Television Division

A: A number of the stations required an immediate investment in personnel and broadcast equipment, but we knew from the outset that our new stations would bring several operating challenges and opportunities. Our efforts in 1997 were spent addressing these issues to ensure future operating stability and competitive success.

Q: What steps have been taken to integrate the new broadcast stations?

A: In 1997, we began a program to resolve the most significant technical and personnel issues at each station. In addition, we acquired more demographically targeted syndicated programming and initiated marketing strategies to reposition these stations in their marketplaces. We evaluated and redefined the focusof our news products and conducted audience perception research in most of our markets. We also completed the integration of the stations into our operating systems and company-wide data networks, implemented standardized operating policies and converted the stations to our financial reporting systems.

Q: What challenges will the Broadcast Division need to address in 1998?

A: We will continue to expand the initiatives started in 1997 at all 14 stations. This will involve upgrading broadcast facilities at several properties. We will continue to aggressively “rightsize” our operations and adjust compensation levels at all properties. We are maximizing our purchasing power through our ownership of Professional Communications Systems, a broadcast equipment distributor and system integrator, in upgrading or acquiring new equipment at each station. Also, we will continue to manage personnel, programming and purchasing throughout the Division.

Q: Please explain the FCC’s digital signal mandate and what Media General is doing to comply?

A: The FCC has mandated that all broadcasters transition to a digital signal by the year 2002. This five-year conversion project will begin in the larger markets and then move into the smaller ones. Between 1998 and 2006, television stations will be licensed to broadcast both an analog and a digital signal. In 2006, however, the analog signal may be revoked by the FCC and broadcasters will only transmit a digital signal to the home. We plan to transition our broadcast facilities to the new digital standard in accordance with the competitive and technological realities of our markets. At our largest station, in Tampa, we started construction in early 1998 of a new digital facility that will become operational by late 1999.

Q: What factors affected revenue in the Broadcast Division in 1997?

A: After outperforming our markets in 1996, several factors prevented the Broadcast Division from reaching its revenue goals in 1997. Among those factors were a drop in advertising rates due to the absence of the 1996 Summer Olympics and political campaigns, an unexpected decline in NBC’s strong prime-time ratings, and weaker than anticipated programming and demographic ratings at the newly acquired stations. In addition, softer than expected national spot sales, particularly in the automotive category, adversely affected revenues at our mid to small market stations.

Q: What is the outlook for the Broadcast Division in 1998?

A: With the return of the Winter Olympics, a strong U.S. economy and a very competitive political environment, the industry is estimating robust growth in time sales in 1998 of 6 to 7 percent. The Broadcast Division is expecting to exceed that growth rate as we continue to improve the performance of the stations acquired last year. Our strategy focuses on improving the quality and demographic appeal of the programs we air on our stations and using more efficiently our advertising time. Newly acquired syndicated programs, redesigned formats for our newscasts, some changes in local management and aggressive marketing of our television stations have already favorably impacted audience ratings and revenue shares. Based on the progress made to date and our expectations for the coming year, our outlook is very positive.

Q: What are your long range goals for the Broadcast Division?

A: With our new size, structure and personnel, we have set our sights on two principal goals: to continue to grow and develop our original stations and to reposition and enhance the performance of our newly acquired stations. We intend to achieve these goals by creating an effective marketing presence and providing our stations with the resources and the personnel necessary to produce a competitive product in their respective marketplaces. This is the foundation on which our goals and strategic plans are built. Simply put, our goals are to produce informative and entertaining programs for our communities, increase our share of audience and market revenues, and increase stockholder value.