The Broadcast Television Division operates 26 network- affiliated stations, including 13 from the pending Spartan Communications acquisition. Together they reach more than 30 percent of all television households in the Southeast and nearly eight percent of those in the United States.

James A. Zimmerman
President
Broadcast Television Division

Q: What successes did the Broadcast Television Division see in 1999?

A: We significantly improved our local newscasts. We were recognized both statewide and regionally with numerous journalism awards at many of our stations, some for the first time in the history of those stations. We also upgraded our daily entertainment programming and continued to deliver on our five-year growth plan. When we acquired stations from Park Communications in 1997, we set specific audience and market revenue-share growth targets for all of our stations. Since the acquisition, six of the 10 stations have increased their audience share by an average of 2.5 share points in the Nielson ratings, while the group as a whole has increased by 1 full share point. With regard to revenue share, seven of the 10 stations we acquired from Park are up an average of 2.4 share points, and our group as a whole is up 1.7 points. We believe our strategy is working: grow the audience share first, then convert that growth into increased share of market revenues, which ultimately produces higher profits.

Q: What factors depressed the Division’s profits in 1999?

A: 1999 was a traditional “hammock” year, meaning a year lacking significant political and Olympic advertising spending. These categories hindered advertising growth in the Division, particularly compared with 1998, which featured prominent political races in many of our markets. Additionally, as we progressed through 1999, an extremely soft national spot market and the absence of anticipated millennial advertising compounded the problem. In fact, the industry was flat or down one percent last year. The Division finished slightly above the industry but below our expectations, primarily due to lower time sales than projected at our Tampa and Birmingham stations.

Q: What can we expect in 2000?

A: This year we are estimating overall industry revenue growth of 8.5 percent. We believe political spending will account for nearly half of that growth. The rest will come from transactional spot business, the summer Olympics and other special events. We believe that Media General’s Broadcast Television Division will outperform those industry predictions. We now have a detailed understanding of the marketplaces that we have expanded into during the past few years. In addition, we have much stronger management and sales teams in place. Our syndicated and news products continue to improve, and we have created favorable momentum in both ratings and revenues at many of our key Stations. Adding to those factors, the cyclical influence that the elections and the Olympics will have on television advertising in 2000 presents an opportunity to significantly elevate the profitability of the Division.

Q: How are the rapid advances in technology shaping your plans for the future?

A: We must consider not only the technological advances in our industry, but also how technology is changing the way viewers and advertisers use our products. Operationally, we are implementing systems that will allow us to consolidate and centralize our traffic (daily scheduling) and on-air control for all of our current stations. Further, we have created an intranet site for the sharing of graphics among all of our stations. We will expand this system to provide full video and audio sharing of news stories, promotional campaigns and commercial spot inventory. Our transition to a digital signal will enable us to transmit as many as four programs simultaneously, where we currently are limited to one. The digital technology also will provide sharper, clearer video. During 1999, we made an investment in ReacTV that gives us the capability to stream our newscasts over the Internet and enhance our broadcast stories with the rich depth and detail from our colleagues in the Publishing Division.

Q: How do you plan to capitalize on the Spartan Communications acquisition?

A: The opportunity to acquire Spartan Communications could not have come at a better time. The changing landscape of television station ownership virtually dictates that media groups become buyers or sellers. Also, it has been Media General’s intent to significantly expand its penetration of southeastern television households. With eight of the 13 Spartan stations located in our chosen region, our penetration of television households jumps to 30 percent from 22 percent across eight states.

This geographical cluster of 21 Southeast stations greatly enhances our ability to share resources, leverage our size when purchasing programming, provide special sales promotions and generate cost efficiencies. The Spartan stations are ranked either first or second in their markets, enjoy excellent reputations and have very strong management. All of these factors indicate that they will immediately contribute to Media General’s growth.