SpecialBeport

Breaking the UHF profit barrier

Its still a long time coming but Kaiser wants to prove upper band's viability is not a pipe dream by keeping the faith

There's a hint of fulfillment m the long - But Richard C. Block, Kaiser Broad- involved in ship construction and re- heralded viability of UHF broadcasting. casting's vice president and general pair, and holds controlling interests in For the first time since 1964 Kaiser manager, looks beyond the year -to -year Corp. (10th largest pro- Broadcasting Corp. has reported a P/L statements. "There are other as- ducer of iron and steel products in the profit: During last November the ag- pects to UHF; it's a growth industry. U.S.), & Chemical gregate profit- and -loss statements of It's growing faster than any other part Corp. (third largest domestic producer the Kaiser stations (including the FM of the television business. That's a key of aluminum and aluminum products), outlets) were written in black ink. to why and what we're doing." and Kaiser Cement & Gypsum Corp. It was an epochal moment for the He cites an expected five -year payout (largest producer of portland cement company -and a benchmark of impor- in expenses for Kaiser's WKBS -TV. "By used in the Pacific Coast area). tance for the entire UHF industry. For that time the station should be cash For the most part, Kaiser has been Kaiser Broadcasting is widely recog- generating and profitable or we're not a company that goes into markets nized as being closely identified with doing our job," he says. Independent where the general opinion is that there the fates and fortunes of UHF broad- sources project that by 1972 WKBS -TV is very little feasible opportunity -and casting as a whole. will have turned the profit corner (a Kaiser builds. Of course, the enterprise A wholly owned subsidiary of Kaiser full two years behind Mr. Block's five - has to measure up to return on invest- Industries Corp., Oakland, Calif. (with year prediction). But, at least one ment and all other criteria of good 1969 sales of $225.5 million), Kaiser Kaiser U property- wKBo-Tv -already business but, too, there is the special Broadcasting is part of the largest or- has shown its first profits, during the flavor of a company that is guided by ganization ever to be so totally com- last quarter of 1969. And this single the lofty precepts of the late Henry J. mitted for such a long period of time profit could signal the turning point in Kaiser Sr. and is run by people who to the establishment of so many UHF a long, tough five -year struggle Kaiser have been learning these lessons for stations. The company owns and op- Broadcasting has waged to prove UHF's 30 or 40 years. erates nonnetwork affiliated UHF's in can really work as independent TV One who was taught and has not (wKan -Tv), Burlington, N.J.- stations in major markets. forgotten is Kaiser Broadcasting boss (wKBs-Tv), Corona -Los There's no way to understand Kaiser Dick Block. "I remember," he recalls, Angeles (KBsc -Tv), and Broadcasting and the deep financial "one of the first times I met and talked (KBHK -Tv). It also has a 90% interest losses it has suffered with UHF, if the with Edgar Kaiser [elder son of Henry in WKBG-TV Cambridge- , and a basic philosophy of Kaiser as a cor- J. and now chairman of the board of 50% interest in WKBF -TV . porate entity is not spelled out. Kaiser the company]. He said: 'You've got to Like other operators of major- market Industries, through 100 divisions and have a dream. You've got to be going VHF's, Kaiser Broadcasting has in- subsidiaries, also engages in worldwide somewhere'." Mr. Block adds: "Our vested a huge amount of capital into engineering and construction activities, dream certainly isn't in greenbacks. the medium before seeing a return of produces and sells component parts and That's part of what comes along with dollars. Since 1964 it has shown an systems for the aerospace and elec- fulfillment of the dream." aggregate operating loss of $19,887,000 tronics industries (including cable -TV Essentially, the Kaiser dream in from total aggregate sales and operating equipment), produces and distributes broadcasting is formation of a televi- revenues of $31,623,000 (see page 65). sand, gravel and concrete products, is sion network with the Kaiser UHF The investment in UHF becomes stations as a base. This is in keeping more staggering when it's realized that with the company's compulsive desire to the company's two FM properties - do things big, to have an impact on iFoG San Francisco and WJIB Boston - society. are both considered highly successful. A 1961 interoffice memo from Mr. And the newly established Kaiser FM Block to E. E. Trefethen Jr. (now division is a profitable operation. The Kaiser Industries president) gave wings almost total weight of losses, then, is to the network dream. The memo was attributable to UHF operations. headed "UHF Project" and it read, in New start -ups in San Francisco and part: Cleveland gave Kaiser Broadcasting its "I recommend that the Broadcasting worst year in 1968 with a deficit of Division [it's now a wholly owned sub- $6.9 million despite revenues of about sidiary] take immediate steps to apply $9.8 million. With all nine properties for UHF television stations in San in operation (including a Boston AM Francisco, , New York, outlet), last year saw the losses nar- , and Philadelphia. Channels rowed to $5.6 million as sales and are available for primary service in operating revenues rose to $12.8 mil- these markets. lion. Kaiser's Block "I recommend taking this action for

64 BROADCASTING, March 16, 1970