Sunday, August 17, 2008

Channel Surfing

Sam Zell has made it clear in several stories that the future of Tribune is in television. The newpapers are being scaled down to size and revenue, and retrofitted to serve television, especially local news. The profit is juicier in local televison news because there are no middlemen to suck up a portion of the earnings.

Television news, and especially local television news, wouldn't exist without the newspapers from which they crib stories. It is a truth universally accepted that television doesn't employ one-tenth of the reporting staff that newspapers do (or used to). When you hear the morning news on "all news" cable television or a snippet of news on the morning network shows, the great majority of it is regurgitated from the morning paper.

If you want an example of television's commitment to local news, look no further than crime news. Television didn't veer away from crime news when it was clear that crime was falling across the United States in the 1990s and into the 2000s. Why? Because it's easy to cover crime news. All you need is a police scanner and a backpack journalist, if that. Thoughtful stories require manpower, legwork and time.

If newspapers shrink in size and depth of reporting, you will soon see that reflected in your local news and radio broadcasts. But I digress.

There is one newspaper chain who has nearly abandoned newspapers and has pursued television in a big way. It would not surprise me if Zell is channeling in some way Scripps Howard. (Full disclosure: I once worked for a Scripps Howard paper in San Juan, Puerto Rico.)

Scripps Howard owns about 10 local televsision stations, including two in Florida, plus it's the parent of HGTV, Food Network, DIY Network, Fine Living Network, the Great American Country television network as well as SN Digital, food- and shelter-related interactive businesses. The latter group is known as the Scripps Network.

According to its latest second-quarter results, Scripps Network revenue jumped 13 percent and its profit increased 10 percent, very healthy numbers compared with the dismal state of newspapers. Scripps' local television stations, though down in revenue, are still doing OK, compared with newspapers. There's no mistaking that Scripps Howard is clearly a broadcast company now. Scripps Network revenue makes up nearly 53 percent of all revenue. Combined with local television stations, the figure jumps to 65 percent.

And what of its newspapers? There are 15 of them left, including four in Florida. The largest of its newspapers are probably the Rocky Mountain News and the Memphis Commercial Appeal. Scripps historically has been quick to go the JOA (joint operating agreement) route. The Denver paper now is a JOA after a bruising fight with the Denver Post.

Last year, Scripps closed down its Cincinatti Post and Kentucky Post (across the state line) newspapers after a JOA with Gannett expired. Which is to say, Scripps closed down the newspapers in its very headquarters city (Cincinatti) rather than keep the papers going! This year, Scripps closed its Albuquerque paper when the JOA with Journal Publishing expired.

Do you see a pattern here? How long do you think the Rocky Mountain News will be around? I'm taking all bets.

The point is, Scripps is the wave of Zell's future. When all the slicing and dicing is done at Tribune, it may very well resemble something like Scripps (give or take local television vs. network television) in its overall makeup.

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