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StationaryTargetsThe coming of the cable-originated indie struck fear intothe hearts of independent broadcasters. Will cable nowimitate or innovate?

ndependent TV and cable have along, bloody history together,with must-carry, channel repositioning and syndex markingpoints on the battleground. Withthe advent of ATC's Rochester, N.Y.,cable station, WGRC, and the less con-spicuous ToledoVision 5 from BladeCablevision in Ohio, cable-originated"independents" have become the latestissue in the industry back-and-forth.Yet are cable indies wolves, or sheepin wolves' clothing? MSOs say they'renot about to blanket the country withcable stations. As ContinentalCablevision director of programmingR.B. Lerch obserles, "It's certainly not

a front-burner issue with us; I don't seetoo many situations where they're appli-cable. Given the cost of programmingand the potential for advertisingrevenue, they don't [make economicsensel if you don't cover all or most of amarket."Independent broadcasters, who see anew source of local-advertising compe-tition, still feel threatened. The only uni-versally acknowledged consequence ofWGRC and ToledoVision's appearanceis that the concept of the LO channelhas changed permanently. As DaveFox, CEO of the syndicator FordlorberAssociates, bluntly asserts, "Anybodywho thinks that more of these aren'tcoming is mistaken." Broadcasters wantto know whether competition for adver-tising will affect carriage or channel po-sition; whether subscriber fees willallow cable systems to outbid indies forprogramming, or low-ball them on adrates; and whether a federally regulatedbroadcaster can compete with a lightlyregulated cable "station."Time Warner Cable Group chairmanJoseph Collins, in a letter to Congress,asserted that cable indies are "subjectto nearly identical FCC regulations, in-

BY FRANK LOVECEcluding the political broadcast rules,"and that broadcasters, by virtue ofreach, can charge higher ad rates. Yetcontrary to Collins' assertion, regu-latory differences are real. No FCC filedrawer contains viewer complaintsabout cable programming to be read atlicense-renewal time. The FCC obligesbroadcasters to air issue-responsive pro-gramming, and to compile a quarterly

AIC's Frank Chiaino: Why should cable carryprogramming already available over-the-air?issues list. Cable indies are not socharged.Assuming that cable indies willprogram with ratings in mind, howmuch competition for revenue do theyreally represent? "How am I competingwith a $400,000 budget [againstbroadcast stationsl?" asks ToledoVision5's Allan Block, president of BladeCablevision. "I want to have $200,00 inadvertising revenue my first year.That's so little revenue, and where is itcoming from? Probably everybody-thenetwork affiliates, the independents, our

own cable service, radio. Let's say I'dtake $50,000 from [Fox affi]iateWUPWI. What does that mean to him?It's competition, but it's insignificant."WUPW g.m. Larry Blum agrees."They're no competition. We have thelarge reach, the entire ADI; cablesystems don't. And [LO channels] aren'trated. TV5 would have to cume 20percent of our ADI to get a rating, andthey're just not able to do that." YetBlum also believes cable indies couldbecome competitive when cable pene-tration reaches saturation.The local station's new rival forviewers and ad dollars grew from ahumble source. Traditionally, LOchannels-whether franchise-mandatedor voluntary-are the narrowcastingequivalent of weekly community news-papers. The niche they fill, says CharBeales, vice president of programmingand marketing for the NCTA, and exec-utive director of the trade group's Na-tional Academy of Cable Programming,is one of "serving the local communitywith programming they can't get any-where else . . . local public affairs,election coverage, a lot of high schoolsports, but also a lot of college sports."Local-origination channels across thecountry produce not only local public af-fairs shows and micro-documentaries,but also slick-looking comedy, music andtalk shows with a local bent. Highly lo-calized programming should continue toflourish if only because much of it ismandated by municipalities. Even inareas that now have only one LO, assystems rebuild and increase channel ca-pacity, there could be a multitude.But that scenario is far fromcertain-and for more reasons than theusual difficulty of forecasting techno-Iogical change. Of the more than 9,000cable systems in the nation, only about300 submit entries to the annual systemACE award competition. Tripling thatnumber still doesn't yield that manyLOs doing significant programming.The concern of independent broad-casters about LOs isn't civic anyway-they're worried about losing ad rev-enues, not losing the high-school game-of-the-week. Part of the reason WGRCcreated more commotion than theearlier ToledoVision 5 is that WGRCmay be a viable advertising competitor':It reaches 62 percent of the ADLToledoVision 5, says Block, reaches onl.y27 percent ofthe ADI: "Ifwe get a fourshare in our universe during some of ourtime periods, that would be a otre in our

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IN Focus/lRedefining Independent Tblevision

WGRC's other advantages include a$3 million budget and the support ofGreater Rochester Cablevision's parentcompany, American Television & Com-munications, part of the Time Warnermonolith. After supplying what Roch-ester system president Frank Chiainocalls "a substantial amount of capitaland operating expenses beyond what wewere providing," ATC isn't in the gameto bleed money. As Chiaino puts it,"The way Time Inc. has always run itsbusinesses, every division is responsiblefor its own bottom line." Yet because asystem's main income source is sub-scriber fees and not ad revenue, WGRCcan afford to chip away at the ad marketgradually./flhere's a lot of lip service being' I 'naid bv cable to the local retailelI hght riow, and while you're wait-ing for him to become sophisticatedabout ratings and advertising strategy,your prices go down bo meet the chal-lenge," observes Michael Volpe, g.m. ofindependent WHLL in Shrewsbury,Mass. "Our spot cost that before localcable advertising really got an inroaclmight have been $100 is now $50. [Theresult isl you can't pay the money forthe syrrdicated programming you want."At Rochester indie WUHF, WGRC hashad no immediate effect on ad rates.Some advertisers have tried to useWGRC's existence to push down rates,but WUHF, says one staffer, is holdingits ground.For now, they can afford to do so. AsFrancie Nichols, a media buyer at Roch-ester ad agency Buck & Pulleyn, sug-gests, quasi-stations are "hamperedbecause they don't deliver the wholeaudience." And their promise of moreoff-network reruns is equally unenticing."Nickelodeon offers a niche packagewith a whole identity-family-oriented, agood old-fashioned evening. But WGRC. . . is just a mishmash of programming'"While ad rates are certainly very low,"you have to ask yourself what you'regetting. An upscale cable audience? Forthis programming? I don't think so."That could change. WGRC hasalready bought Warner Bros.'Al,F andPerfect Strangers and has talked aboutstarting newscasts. Yet without thekind of underwriting that WGRC hasreceived from ATC, it's almost impossi-ble for cable operators to afford desir-able, high-profile programs on a continu'ing basis.

Most syndicators other than Tvi'entiethCentury-Fox, which has a string of indieaffiliates, have no qualms about seilinglo cable stations. Genesis Entertain-ment, MCA, Orion, Palladium, TeleVen-tures, Turner, Viacom, Wamer Bros.and Worldvision have already doneso-though in virtualiy all cases onlyafter having given broaclcasters firstrefusal.Programming itself is only part of theequation. The cable stations wantmoney from major advertisers, but repfirms, afraid of upsetting their core cli-

N0 threat t0 indies: Toled0Vision's Allan Block.entele, are staying away. Sellel was tohave repped WGRC, but backed off clueto pressure from broaclcast clients in far-flung markets. "Even if you go into amarket where you don't have a station,"says ol-le rep-firm president, "your cli-enls are going to look at that and say,'Wait a minute. You're selling the idealhat they're just as good as an over-the-air TV station. The more you geb peopleto buy, the worse it's going lo be for meultimately.' You're going to upset them,not make a lot of money in the process,and chances are you'll put your corebusiness in jeopardy."Rep firms dealing exclusively in cableare more than happy to take up theslack. And local cable advertising in gen-eral is a growth area. The current Com-munications Industry Forecast byVeronis, Suhler & Associates reportsthat local cable advertising grew from15.1 percent of total cabie acl expenditures in 1983 ($50 million) to 21.6 percentin 1988 ($250 million). Local advertisinghas grown faster than has national: 38

percent versus 26.4 percent in the sixyears covered by the report. Projectionsare that local will continue to outpacenational through 1993: 17.1 percent ver-sus 15.9 percent, accounting for $550million of the $2.45 billion cable ad mar-ket in 1993.Bob Williams, president of the cable-rep firm National Cable Advertising,believes cable stations will not contrib-ute significanbly to local cable ad growthfor the foreseeable future: "The cost ofputting on programming is going toexceed the value of the audience it deliv-ers." BuL, he suggests, ratings aren'teverything. "The giant sponsors-P&G,Coke, McDonald's-have upped the antebeyond reach and frequency. If lhere'ssomething unique that a local channelcan bring to the table-high-school foot-ball, senior citizens' programming,shows about local government-then thevery largest advertisers may want thosesmall, select audiences."Ironically, it's the old-fashioned LOsWilliams finds more appealing. "I haveyet to make up my mind on the role ofmore reruns on cable. I think the opera-tor who now makes money ought not tothink about just buying another ALFrerun and putting some spots in it, butseriously consider the benefits of pro-ducing local programming."One celebrated example, begun in1986, is Cablevision's News 12 on LongIsland, a regional-news channel that fillsthe void left by the urban emphasis ofthe New York ADI's broadcast news.At Suburban Cablevision in northetnNew Jersey, Bruce LaRose, director ofLO programming and ad sales, has anactive, loyal viewership for his TV3,which in 1987 won a DuPont journalismaward-the first LO channel Lo do so.And one possible harbinger of the futureis Fiorida's LO "superchannel," theSunshine Network. Commercially spon'sored, it reaches about 2.5 million view-ers statewide via 74 systems'basic tiers.While primarily a regional sports ser'vice, Sunshine also devotes about 30percent of its time to public-affairs.Nobody's making a fortune right nowselling commercials on the more traditional LO channels. SuburbanCablevision's TV3, with a $1 millionbudget for both LO and public access,recoups only half that from ads and localinfomercials. It's easy to understand thelemptation to try to make money doingwhat an independent TV station does.But there's more than moneY atstake. The debate over WGRC isn't sim-

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In With TheIndie Crowdlf it weren't lor the lact that cable stationIoledoVision 5 signs on at 5 p.ir., its programschedule would be indistinguishable lromthat of a broadcast independent.Mondoy to Fridoy5 P.M.: Bugs & Friends5:30: The Andy Griffith Show6 P.M.: The Beverly Hillbillies6 P.M.: fhe Dick Von Dyke Show7 P.M.: I Love Lucy7:30: l3 News on Coble (reploy ofNBC offiliote WTVG's 6 P.M. newscost)8 P.M.: fhe Big Show (movie)l0 P.M.: USA lonight (lNN)l0:30: Consumer Mogozine (how-toshows)I I P.M.: Perry MosonMidnight: sign-offSoturdoy5 P.M.: Eugs & Friends6 P.M.: The Wild Wild West7 P.M.: Hee How (first-run syndicotion)8 P.M.: Movie Greofs (movie)10 P.M.: Eerie Sfreel fheoter (horrormovie)I l:30: USA lonight (lNN!Midnight: sign-offSundoy5 P.M.: Eugs & Friends6 P.M.: The Wild Wild West7 P.M.: Rowhide8 P.M.: Perry Moson9 P.M.: The HoneymoonersI I P.M.: Consumer'Mogozine (indieond sponsored how-to shows)I l:30: USA lonight (lNN)Midnight: sign-offSchedule olso includes occosionol pre-gome promolions{or Cincinnoti Reds ond Clevelond lndions boseboll ondvorious college sporls.

ply about ad revenues or the price ofALF . It's about control, control of bothdelivery and programming."If programming is going to be one ofthe driving forces in the future, likeeverybody's saying it will be," saysATC's Chiaino, "then we oughl to bemore in control of it. We ought to startgetting exclusive rights. What good iscarrying programming on cable if youcan get it on over-the-air television?"Chiaino has addressed the heart oftheissue. As one broadcast executive won-ders, "What's to prevent TCI, ATC andthe other top 20 MSOs, who have thepotential to convene every time there'sa Turner board meeting, from going toNBC and saying, 'Feed us and we'll payyou.' They could clear a common chan-

nel across the nation and pay 25 cents orwhatever a subscriber to have NBC as acable-only service. There's nothing thatpreventS them from doing it."Broadcasters aren't the only ones say-ing this. "I always tell my people, freeTV is not a birthright," says Scott Kur-nit, president of the Viewer's Choicepay-per-view network. "What if NBCwere to start charging $10 a month towatch? I think the programming thereis worth that much."Pessimists like Bert Ellis, president ofAct III Broadcasting (a sister companyof Channels'parent ACT III Publish-ing), which owns Rochester's WUHF,think broadcasters may blow the chanceto reregulate the WGRCs out of exis-tence, because they lack the philosophical cohesiveness of operators. "There'sVHF versus UHF, affiliates versusindies, haves versus have-nots, new sta-tions versus old stations. . . . There's nota damn thing we can do about it."Cable's lack of economic cohesiveness,however, may affect the future of cableindies. While in Rochester all 28 fran-chises are owned by ATC, larger mar-kets are still often sliced up amongmany operators. Lerch of ContinentalCable believes, "You'd have to have oneor at most two systems that cover mostof a market. I don't think seven or eightsystems are going to get together andput on a channel."Dirk Brinkerhoff of indie KTXA inDallas agrees. "If the two biggest sys-tems in our ADl-Sammons in ForthWorth or Heritage in Dallas-were topick up call letters and do that kind ofthing [WGRC], it might impacl on Lrs,"he reasons. "But the rest have so littlereach in comparison, you'd have to pull abunch of them together and divide upthe ad dollars. Why would they want todo that?" Yet the existence of suchadvertising cooperatives as Califomia'sBay Area Interconnect indicates thatmutually beneficial arrangements arepossible.For now, cable stations are yearsaway from seriously affecting broadcastrevenues. some may sign on in responseto WGRC and ToledoVision; most willfind that there's less money to be lostand more community goodwill to begained with old-style LO channels. TheIarger issue-the control of program-ming and its delivery-will manifestitself elsewhere. oFrank Louece is a New York-basedfreelance wri,ter.