.__------------..,opofthe Wee'.....------------..., Belo now 11th·largest TV group owner By Elizabeth A. Rathbun from 7.986% to 11.855%, making it the WASHINGTON nation's 11th-largest broadcaster, accord­ ing to BROADCASTING & CABLE'S list of H. Bela's $1.5 billion purchase of the top 25 groups. the Providence Journal Co. last There are no station overlaps except in Aweek thrusts Bela into nine new TV Seattle, where Pro-Jo owns NBC affiliate markets and expands its reach to KING-TV and Belo owns UPN affiliate 11.855% of U.S. TV households. KIRQ-TV. Bela is negotiating with another For a company looking to grow in a broadcaster to trade KIRO-TV for a station hurry, last week's merger is a perfect or two elsewhere, says Michael D. Perry, deal, says broker Brian Cobb of Media Bela's senior vice president/chief finan­ Venture Partners. Before this, Bela had cial officer. not bought any TV stations this year, but Pro-Jo also gives Belo NBC affiliates was known to be looking to expand. for the first time-five of them. And Pro­ "Bela wanted to grow, and Providence Jo takes Bela into a new business: cable Journal has some great markets. It's just a programing. Pro-Jo owns 65% of Ameri­ great fit," Cobb says. ca's Health Network and 46% of the Great by Wall Street standards too. Pro­ Food TV Network. Jo's stock reached a 52-week high of 29 Both companies for years have com­ 7/8 on Friday, closing at 29, up 8 1/8. bined broadcasting with newspapering. Bela's stock fell 3 27/64 to close at 34 Belo owns the Dallas Morning News, 5/64. while Pro-Jo owns the Providence Jour­ Each Pro-Jo share will be exchanged for nal-Bulletin. That is compatible with $12.33 in cash plus .533 share of Bela Belo's emphasis on owning TV stations stock. That translates into roughly $5.7 with strong local news departments. Pro­ million for Pro-Jo Chairman Stephen Jo's two Fox affiliates, however, offer no Hamblett, who owns 186,300 Class A news. Their "potential" is being evaluat­ shares, while former president Trygve ed, Perry says. Myhren would walk away with roughly The deal, valued at 12.1 times estimat­ $5.2 million for his 168,750 shares. ed 1996 cash flow, will largely be fi­ The deal, which Dallas-based Belo ini­ nanced under Bela's $1 billion credit tiated, expands Bela's TV stations from facility, Perry says. Bela expects to pay seven to 16, including five stations in the $587 million in cash and issue 25.4 mil­ top 50 markets. Using FCC standards, the lion shares in exchange for Pro-Jo's 47.6 stations increase Bela's household reach million shares. _ ill ~ 1 1:~~ 8 September 30 1996 Broadcasting & Cable I CONSOLIDATION YEA OR NAY NAB takes up industry debate over relaxation ofduopoly, limitations on LMAs By Chris McConnell WASHINGTON TV'S TOP 10 ore TV consolidation may be While the Telecommunications Act of 1996 didn't do much to deregulate the television business, around the comer, some broad­ it did raise the cap on how many 1V households a broadcaster can cover. News Corp. raced to casters say. be the first to near the new 35% limit, in July 1996, and other companies are reaching for it. M No. " ofU.S. Others contend it has already hap­ Company ofstations ~ Fonner" .... pened. News Corp.lNew World 22 34.841 22.05 (News Corp.); TV broadcasters gathering in Naples, 12.78 (New World) Fla., this week for the National Associa­ Westinghouse/CBS 14 30.83 30.95 tion of Broadcasters joint board of 24.96 directors meeting will consider support­ Tribune/Renaissance 16 24.88 ing further relaxation of the FCC's TV NBC 11 24.134 24.65 ownership restrictions. Some broadcast­ Walt Disney/ABC 10 23.952 24.06 ers-particularly those heading smaller Paxson Communications 19 18.725 17.97 groups-fear that such deregulation Chris CraftlUnited Television 8 17.637 17.70 could open the door to placing more Silver King 16 16.448 20.00 channels in the hands offewer owners. Gannett/Multimedia 16 15.515 14.08 (Gannett) Those worries are echoed by adver­ Univision 12 13.352 12.8 tisers, watchdog groups and even the 'In millions, based on Nielsen estimates, September 1996; consistent with FCC rules, UHF stations Clinton administration. They fear that are credited for half the homes in a market. "B&C. July 8, 1996 the buying trend-totaling more than $10 billion in TV transactions in 1996 compared with $4.7 billion in 1995-is leading toward an era of Charles Fos­ Here are the biggest TV-group deals of 1995* and 1996: ter Kane-type media moguls. $19 billion: Walt Disney Co. buys CapitaJ CitIes/ABC and its 10 lV "Monopoly stations, 21 radio stations, interest in several cable networ1<s and publi­ power, pricing cations.* power, is not a $SA billion: Westinghouse Electric Corp. buys CBS Inc.'s seven lVs, good thing no mat­ CBS lV Network, radio stations, radio networ1<s and CBS Entertainment ter what the medi­ Productions.* um is," says John $3 billion: News CorpJfox Television Stations Inc. acquires the 80% Kamp, senior vice it doesn't own of New Wor1d Communications Group Inc., including 10 president of the lVs and one LMA. American Associ­ $2.3 billion: Merger of Multimedia Inc. into Gannett Co. Deal ation of Advertis- Disney/ABC set the includes five lVs, two radios, acable system and 11 daily newspapers.* record for big deals. ing Agencies. $1.5 billion: Merger of Providence Journal Co. into A.H. Bel0 involves 11 l'vs, a "It's a way for the good old boys to newspaper and interest in cable networks. keep everybody out," adds Andrew $1.217 billion: In two separate deals worth $732 million and $485 million, Raycom Schwartzman, president of the Media Media Inc. buys 15lVs and two radios, and seven lVs. sellers are Ellis Communications Access Project. Inc. and AFlAC Inc., respectively. But others say that much of the $1.13 billion: Merger of Renaissance Communications and its six lVs into Tribune. feared consolidation already exists. They cite the widespread use of local ident. Jones-who opposes LMAs and tions station group. marketing agreements (LMAs), which further consolidation-also says relax­ Those LMA deals will eventually be allow broadcasters to manage stations ing restrictions on owning more than subject to local ownership restrictions, without counting them as "owned" one TV station in a market would under the proposal issued by commis­ facilities. Some 49 of the deals now merely make people striking the LMA sioners last November. The proposal exist in 45 markets. deals "feel less guilty." would treat new LMAs as owned sta­ "People have been slipping around "The major [deals] are probably tions and would grandfather existing the rule anyway." says Philip Jones, already done," adds William Sullivan, agreements until they expire. Meredith Corp. Broadcast Group pres- manager of the Cordillera Communica- The move to attribute LMAs follows 4 January 271997 Broadcasting & Cable ,... ~op of the Weet.---------------., a series of actions in Washington to said that he does not think that allow­ increase diversity of viewpoint and relax the ownership rules. In response ing common ownership of two TV sta­ programing in some markets. to the 1996 Telecommunications Act, tions in a market is a good idea. That was the argument favored by the FCC last year eliminated the 12­ "Outside of group owners, no one broadcasters at this month's NATPE station cap on TV ownership and raised thinks [further concentration] is a good convention in New Orleans. Dis­ the national audience-reach limit from idea," adds Larry Irving, head of the cussing the remaining restrictions, 25% to 35%. In 1995 the commission National Telecommunications and executives on one panel pitched the r also eliminated the financial interest Information Administration. "Syndica­ notion that more consolidation might and syndication (fin-syn) rule. tors and advertisers are scared to say mean more diversity. Clear Channel Such relaxations cleared the way for anything." Television's Rip Riordan pointed to Disney to buy Capital Cities/ABC and FCC commissioners, however, do not the use of LMAs to revive stations that I for Westinghouse to buy CBS. rule out the notion of some ownership otherwise would not be broadcasting. But while the FCC now is proposing relaxation. FCC Commissioner James LIN TV President James Babb. in 1 to tighten its "attribution" rules, it also Quello says he could see a UHF/UHF or favoring more relaxation, points to is asking comment on whether it even a UHFNHF combination in areas competition with cable and DBS. "We should relax more ownership rules to where the combination would not give need to be active in proposing that," allow common ownership of two UHF the owner too much control over the Babb says. stations or a UHF/VHF combination local advertising market. Others disagree. Hubbard Television within a market. And FCC Chairman Reed Hundt last Group President Robert Hubbard says Policymakers have differed on the month asked whether allowing com­ important distinctions remain between question. President Clinton last fall mon ownership of two stations might LMAs and outright ownership. And he Ttl·' ',( Ifl'l(j', l' I. II I/ 'Ill/' '(]I '.II' th "latIOns ttld! 111m·' Jldill, '111,,:, ' ).,/' ." II kr" 111 llft I 'Ill II,! i ' 1 1,,,,,I'l I; I \ J {, I~ ., C,B,I ! 'j/li ~II! r.~/\ I I'}.;,l' The world of LMAs 1 Marla't DMA StatlOlI Aftl/.