William H. Pollack, president of Pollack Broadcasting Co. in Memphis, is one of the nation's many small broadcasters girding for a change in the Federal Communications Commission's media-ownership rules on June 2. The $6 million company owns two TV stations -- one each in Alexandria, La., and Eureka, Calif., and six radio stations in Kenett, Mo.
If the FCC allows newspapers to own TV stations in markets as small as Alexandria, Richmond (Va.)-based Media General (MEG ) may sell its KALB-TV, the town's leading station, to the Gannett Corp. (GCI ), which owns The Town Call, Alexandria's only newspaper. If that happens, Pollack's No. 2 station, KLAX-TV, would face tough competition. And because the top four stations in a market can't merge among themselves and Alexandria has only three stations, Pollack couldn't buy KALB-TV -- even if it could compete with the deep-pocketed Gannett. BusinessWeek Correspondent Catherine Yang spoke with Pollack about the potential impact of media consolidation on his business. Edited excerpts of their conversation follow.
Q: What would be the impact on the Alexandria market if Gannett bought the biggest TV station there from Media General?
A:If Gannett took Channel 5 in Alexandria, they'd be the supreme media source in central Louisiana. Nothing would come close.
Q: What would be the impact on news in that town?
A:Right now, Gannett and Media General are the only full-time news outlets in the market. We don't do news anymore. KLAX-TV did it until recently, but the economics of the market no longer allow it. It would be nice if we could merge with another TV station or with the newspaper -- that is, a smaller operator merging with a large one, rather than two large operators merging.
I'm for an unregulated market. But newspapers and the broadcast industry are such a vital part of our daily lives that I have reservations when considering the merger of Media General and a Gannett newspaper in a market where there's no comparable news competition.
Q: Are you afraid that the combined newspaper-TV entity would dominate the viewpoints delivered to the community?
A:I don't believe managers can truly control the editorial output of the news division. I don't have the ability to walk in and tell [my news team] what position to take. It's not so much that I'm concerned about the slant of the newspaper but more the control of a market.
Q: What would the impact be on competition in the market?
A:There would be no economic viability for a new competitor to take on something like a Media General-Gannett combo. [Media General's] Channel 5 has had local news on air for 50 years. It's difficult for a new entrant when generations of families have watched one particular news source. When it comes to entertainment, they switch to the station with their favorite show. But when it comes to trusted news presentation, they're used to the same anchors and weatherman.
We had a news show, but it wasn't economically viable. We had an outstanding product -- we won every major award -- yet we weren't able to attract a large enough audience to demand the ad rates to support a local news division.
At the same time, I don't question for a moment that Gannett's ownership of a newspaper and a larger station wouldn't be beneficial for the [audience] because Gannett has the financial resources for newsgathering.
Q: How much does it cost to run a local news show?
A:It costs upwards of $700,000 a year to operate news in a local market. I started our news program in 1988 [and closed it last year] after years of losing money. Thirty years ago, you could run a newscast with one to three people in a small market. One would do news and the weather, one would do sports, and you'd have one technician. You can't do that anymore. We have to look as good and be as competitive as what people are used to watching on cable and satellite.
Now, you need seven or eight people just from the technical standpoint. Even in the smallest news departments, you need 7 to 11 editorial people in addition to that. As much as we want to put on local news -- we feel it's an obligation -- it's massively expensive. It's the difference between our station staying on air or going out of business. That doesn't mean some day as the economy improves and as the station continues to grow, we won't reintroduce local news. But in the present circumstances, it's an impossible dream.
Q: Should the FCC allow media mergers in small markets?
A:The FCC thinks backward when it comes to deregulation. Where deregulation is most needed is in the smallest markets. It's not needed in New York, Chicago, L.A. -- fast-growing markets with enormous ad revenues available.
In small markets, we fight over a couple of car dealers and furniture stores for advertisers. I'm in markets with very little, if any, growth. The FCC should allow us to buy another station or vice versa. The FCC is concerned about diversification of voices. But you'd have greater degree of diversification if you had the resources to present them. You could do that if you had one staff covering two stations but double the amount of ad inventory.
Edited by Patriicia O'Connell