2004 Annual Report - Local TV Ownership

The main trend in television station ownership has been that of a few of companies growing bigger, with the gap in revenue between the biggest and smallest companies growing larger.

While the status of the latest FCC regulation remains unresolved, the changes in television ownership debated in 2003 have their roots in deregulation that began in earnest in the 1980s during the Reagan administration, when the advent of cable persuaded a new generation of regulators that federal requirements on programming of the public airwaves were no longer necessary. The shift, however, is by no means a Republican move. The real change in ownership trends began in 1996, when the Clinton administration won passage of a law that loosened regulations so that, for the first time, a single company could own more than 12 stations. It also allowed companies to own stations that reach as much as 35 percent of American television viewers. It maintained rules banning ownership of more than one television station in all but the largest markets and, with some exceptions, banning ownership of a television station and a newspaper in the same market (also known as cross-ownership).

The next six years saw a rash of mergers and acquisitions of local television stations. The Chris-Craft station group was purchased by News Corp., creating Fox-UPN combinations in some of the country's biggest markets. Hearst-Argyle Television purchased the broadcast stations owned by the Pulitzer Company. Lee Enterprises, a newspaper publisher headquartered in Davenport, Iowa, sold its television stations to Emmis Communications in 2000.

Many companies have added assets in anticipation of the FCC further relaxing ownership rules and have received waivers from the FCC when their new acquisitions violated the existing rules. Several companies were in technical violation of the rules as they stood in 2003, including Viacom and News Corp., each of which owned stations covering more of the country than the ownership rules allowed. The Chicago-based Tribune Co. purchase of the Los Angeles based Times Mirror Company in 2000 required multiple FCC waivers because the merged company owns television-newspaper combinations in New York (WPIX and Newsday) and Los Angeles (KTLA and The Los Angeles Times).

Many smaller television companies, meanwhile, are eager to see relaxation of the ownership rules, particularly those involving cross-ownership and duopolies (owning more than one station in a single market). But they are also wary of the impact of bigger companies gaining more power. In particular, they worry that if the networks own more stations they will have too strong a hand when it comes to negotiating things like the number of commercials local stations are allowed to sell during prime-time programming.

By 2003, the local television landscape had broken down into four levels. The four major networks together owned 126 stations, mostly in the biggest cities and in all areas of the country. All four companies, for example, own stations in the four biggest television markets.

Average Station Revenue for Highest-Revenue Station Groups

1995-2002

Design Your Own Chart

Source: BIAfn MediaAccess Pro

They were followed in size by a group of major chains that were more regional, such as Belo (concentrated in Texas and the Northwest) and Gannett (which owns stations in most of the Southeast's biggest markets). Most of these station groups are owned by companies with substantial investment in other media sectors, including the Hearst and Tribune companies, and they are often involved in business relationships with the four major networks.

Next came medium-sized chains. Some of these groups have investments in other areas of the media, but they are generally too small to attract deals with the networks and their involvement in the television business is limited to what they receive from local station revenue.

Lastly, there are small chains clustered in midsize and small markets, many of them formed by investors who acquire and swap stations and eventually sell them to larger companies.

Vanishing were the local owners with one or maybe two stations.

Consider just the top 10 biggest local television companies, which include the four networks and most of the major chains.¹ In 1995, these 10 local television station owners had $5.9 billion in revenue and owned 104 stations. By 2002, those companies had doubled that revenue total and owned nearly three times as many stations.