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Broadcastig&CaDIeJune 12,1998Vlume 128www.broadcastingcable.comNone,Y6TOP OF THE WEEK / 4Spot walks a tightropeMidterm elections could mean a record 400 millionpolitical advertising bonanza for a nonpresidential voting year, but the spot market isextremely soft this month, prompting worries about the third quarter/4Primestar operators may surrender to DO) Cable operators that own61% of Primestar are considering selling their entire stake to overcome Department ofJustice objections to Primestar's proposed takeover of American Sky Broadcasting. 10/ABC dealing for Alibritton's TVs Allbritton Communications Co.'s eighttelevision stations and two local marketing agreements reportedly are being sold toABC Inc. for more than 1 billion /12Unity Motion to launch HDTV Start-up HDTV satellite distributorUnityMotion is planning its first national broadcast of HDTV programming this week /12More than 6,600 promotion, marketingand design executives made their wayto Toronto for the annual PromaxBDAconference las! week. / 13Disney stakes big 'Net claim Following NBC's lead with its CNet deal, The Walt Disney Co. acquiresstake in Info.eek and an option to take a majority piece of the popular Web search engine./15a 43%.Chipping awayViewers saw the first working V-chip in action last week, when one of the devices blocked a livebroadcast of CBS's TV-14 -D rated The Young and the Restless in a Capitol Hill demonstration. /15Radio pirate walks the plank Broadcasters won a long- sought victory last week when a California judge orderedapirate radio station in the state oft the air/19For late-breaking news, see "In Brief" on pages 80 -81BROADCASTING148'King' could top 'Simpsons' syndication salesMicrosoft, Compaq to make tracks withTwentieth Television's off -network sales for King of the HillRoad Runner Microsoft Corp. and Compaq Computerare on target to eclipse the studio's last animated series to hitsyndication. The Simpsons, by more than 1 million anepisode.won the bidding war over a sizable piece of Road Runnerlast week, and a bigger piece of the action in cable software. 62/48'Party'clears 95%/COVER STORYWeekend syndication runs ofColumbia TriStar TelevisionFeature films are Hollywood's hot tickets. /54Distribution'sParty of Fire have been cleared in more than 95% of thecountry for a September launch.leave theAdvertiser Syndicated Television Association (ASTA) atthe end of next year. after 11 years at the helm./50CABLE / 55Interactive Channel focuseson digital delivery Dallas -basedSource Media may be small, but it'splacing a big bet - 300 million-on adigital cable future. 55/In January, the networks paid an unprecedented 18 billion for the rights to air NFL games.But advertisers say that they shouldnot have to foot the bill, and some observers say those high -priced contractsmay spell financial trouble. 26//48Duncan exits ASTA Tim Duncan willIn hot pursuitChase Carey got game ChaseSPSusploommiaiumummCarey, chairman of Fox Television andco -COO ofthe parent,News Corp.sits downWith BROADCASTING & CABLEto talk about the emergenceof News Corp./Fox on thedomestic sports scene./40Cover photo by CraigT.MathewEchoStar, Loral in ventureEchoStar and Loral Skynet are allyingis expanding itsto deliver niche programming, including CNNnightly 'Moneyline'ethnic and business services. 58to an hour. //Changing HandsClassifiedClosed Circuit7564 Datebook8266 Editorials18 Fates & Fortunes . 78JUNE 22, 19981Fifth EstaterIn BriefOpen MikeBROADCASTING & CABLE7680773
BroadcastmgaCableTOP OF THE WEEKisinSpot walks a tightropeIf not for expected political business, spending projected to be up only 2 % -3%BySteve McClellanThere's good news and bad news on the national spotadvertising front. The good news is Congress is gearing up for midterm elections this fall, which may translate to a 400 million bonanza in political dollars, a recordfor a nonpresidential voting year.The bad news is the spot market is extremely soft thismonth, prompting worriesabout the third quarter.Indeed, political spendingthis year will be the spot market's salvation -helping toboost it to perhaps a 7% gaintributing to the softness, he says, are spending cutbacks in theautomotive, telecommunications and movie industries.Trigony says that some regions of the country are beinghurt worse than others. The Southeast, for example, is a particular challenge for national spot, although the West Coastseems somewhat robust.The TVB estimates that the second quarter will still manage 6r4 growth despite the June slump.Most of the third quarter may be worse, butfLOCAL /SPOT SPENDINGTrigony says that thecomparison to 1997 istough: Last year's thirdquarter was up by doublefor the year. Without thepolitical spending, spotdigitsbecausetheAtlanta Olympics of thewould be facing an estimated2 % -3% increase in 1998.previous year sucked alot of third -quarter spotdollars out of the market.The tail end of thethird quarter and earlyNovember should soar,however, when close to70% of this year'sLocal spending remainsrobust, but has slowed fromthe 12% growth pace of thefirst quarter.According to HaroldSimpson, research vicepresident at the Televisionexpected political moneyis likely to be spent. TheTVB's Simpson still estimates that the spot market will be up 5 % -7% forthe year. "The way it'sgoing now, I'd bet on theBureau of Advertising.political spending in thefirst four months of thisB Bi000year is tracking 25% aheadof the first four months of188618871994, the last nonpresidential election year.Local 7.2 7,5 6% -8%high end" of that estiIn 1994, political spendhe says.National Spot 7.0 5% -7% mate,ing totalled 355 million, aAd spending at therecord for a nonpresidentiallocal level remains strong,Source for 1996 and 1997 spending: TVB from data reported byelection year. Simpson prealthough growth there is.0 R's Media Wa., Servige.growth esti ,ardicts that political spendingcooling off as the yearthis year will be in the 400progresses. TVB, relyingmillion range. That would be at the same level as in 1996. a on CMR data, says that local spending in the first quarter waspresidential election year that brought in 400.4 million in up an average 12% over the first quarter of 1997. In April, thepolitical spending, according to Competitive Media Reports. last month of available data, Simpson says that local spendingOf that total, 366.6 million was spent locally or in national was up 7 %, according to a survey of local stations compiled byspot, with the remaining 33.8 million going to the net- Ernst & Young. Simpson estimates that the full -year 1998works.growth rate for local TV ad spending will average 6 % -8 %.In the first quarter, national spot (where national advertis- "Again, at this point I'd bet on the high end," he says.ers place ads in select local markets) chugged along at 9 %"Local business is good," says Trigony. The Cox TV10% above the first quarter of 1997. It held that pace in April group will show a 20% gain in local sales in the second quarbut slowed down in Maysomewhere in the mid single ter, with every station ahead of where they were a year ago.digit range. And in June sales are running just 1%-3% above Trigony says that his stations are getting more local saleslast year, rep executives say.and fewer national spot dollars than in the pasttrend he"June is the softest month of the second quarter" for nation- sees continuing. "It used to be 50 -50, but in the second quaral spot, says Nick Trigony, president of Cox Broadcasting,ter, for us, it will be 55 % -45% local to national," he says.which includes rep firms Telerep, HRP and MMT. "EveryOne reason that he cites for that trend: It's easier to develbody is going into the third quarter a little concerned." Con - op new business locally.4 7-to-a4BROADCASTING & CABLE / JUNE 22,111118
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TOP OF THE WEEKPrimestar operators may surrender toDOJMSO partners pondering selling out of DBS service to allow ASkyB takeoverBy John M. HigginsCable operators that own 61% ofPrimestar are considering sellingtheir entire interest in the DBSservice to overcome Department ofJustice objections to Primestar's pro-posed takeover of American SkyBroadcasting.Primestar and MSO executives havegrown extremely skeptical that a lessradical change in the ownership willappease Justice antitrust chief JoelKlein, who has gone to court to blockPrimestar's acquisition of News Corp.and MCI Communications Inc.'sASkyB and its crucial high -power DBSlicense. Not only has the restructuringproposal to settle that suit received achilly response from Justice officials,but discussions have broken downbecause of internal disagreements.An exit would essentially be a surrender to Klein, who believes that astrengthened DBS service with largeMSO ownership will avoid competingvigorously with cable systems, insteadprimarily targeting satellite rivalsEchoStar and DirecTV. Primestar andits owners counter that Justice shouldbe focusing on the competition amongthe three DBS operators.Industry executivesfamiliar with the discussions say that thecompanies now areseriously discussing acomplete exit to simplywith life," says an executive with oneMSO that owns a slice of the company."They're moving along."Primestar's new CEO, Carl Vogel,gave an unusually pessimistic assessment of the company's prospects for aless radical settlement with antitrust regulators. According to financiers attending a Primestar presentation at Donaldson,Lufkin & Jenrette'ssatellite investmentconference in NewYork last Wednesday,Vogel said that a complete exit would mostlikely be the only wayto get the ASkyB dealdone."He prefers a totaltakeout of the MSOs,"says one money manager at the presentation."He was really upfront.really unequivocal.""Hedidn't sayHowever, even if cableoperators are willing tosell, the exit would bewickedly complicated.The first obstacle wouldbe finding a buyer willing to put up the 600millionplusitwouldtake to buy out the cableJustice's Joel Klein looks tooperators. The compa- win this light.ny is owned by TimeWarner Inc., Comcast Corp., Cox Communications Inc. and MediaOne Group,plus many key shareholders of TeleCommunications Inc. (General ElectricCorp.'s satellite division, GE Americom,also owns a small slice.)"I think everyone's ready to get on10BBOADCABTIN6 & CABLE / JUNE22,1888est. even nonvoting.will Justice let them buyASkyB?"Also, they needabuyer. Primestar can'tafford to buy out thecompanies itself, andno one else is in thewings.Vogel told the DLJconference that thePrimestar's Carl Vogel ispessimistic about a DOJsettlement.whether it had to be inone step or two steps, but he did saythat's what Justice wants," adds another money manager. "I was a little surprised that he was forthright about it."However, in an interview last Fridaysalvage their investment in Primestar.two weeks ago. However, no one hasagreed to exit completely -and theMSOs worry that they'd be selling out atthe bottom, when Primestar's stock priceis about 6 per share. off more than 33%from its 52 -week high."They'd want some way to participatein the upside," says one Wall Street executive familiar with thediscussions. "But if theyhave an economic inter-company has not evenretained an investmentbanker to find somesort of financial help."Clearlyapro ratatransaction would be easier to finance."he said.The ASkyB deal has been draggingon for months. News Corp. and MCI rattled the cable market two years ago bymorning, Vogel saidthat the company isexploring some otherway of completing thedeal, either through abidding 682 million at an FCC auctionfor the last remaining high -poweredDBS orbital slot. After boasting andbraying about their threat to cable, Newsmilder settlement or bysimply fighting assistant attorney generalKlein in court. But hedid not express muchoptimism: "It looks tome [as if] the JusticeDepartment wants thecable industry in general to exit this transaction. Is there a solutionbetween here and that?I don't know."prospects as the fourth entrant in theOfficials at Justiceand several of the Primestar partnerswould not comment.Engineering such a deal would be difficult. The MSO partners all have agreedto shrink their position, with TimeWarner Inc. Chairman Gerald Levinpublicly acknowledging that positionCorp. and MCI realized that theirDBS market were bleak, so they agreedto merge the company into EchoStar.However, News Corp. executivesclashed with EchoStar Chairman CharlieErgen, so ASkyB scrapped the deal andagreed to a merger with Primestar for 1.1 billion in nonvoting stock-essen tially covering the cost of the license anda satellite under construction.To Primestar, the deal would be agodsend. As a medium -power service,Primestar requires subscribers to buydishes twice the size of the DirecTV andEchoStar units, and it can offer fewerchannels. A high -power license wouldfree the company of those handicaps.But after a lengthy investigation, theJustice Department sued to block theContinues on page 18
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TOP OFTHE WEEKABC dealingABC Inc.for Allbritton's NsNew YorkRobert Iger, president, ABCSubsidiary of The Walt Disney Co.,Michael Eisner, chairmanIs said to he paying more than 1 billion for eight stationsFCC coverage:By Sara BrownAIlbritton Communications Co.'seight television stations and twolocal marketing agreements(LMAs) reportedly are being sold toABC Inc. for more than 1 billion,almost 16 times the group's 62.8 million broadcast cash flow in 1997.All the stations are ABC affiliates.Although the deal may still be in thenegotiation phase, sources say thatAllbritton, which already rejectedasmaller offer from ABC, sources say,has informed the stations' management of an impending sale.The group's WJLA -TV (for Joseph L.Allbritton) Washington is the mostattractive station for ABC., sourcessay.ABC currently owns IO televisionstations, which reach 24.2% of U.S.TV households. The Allbritton stationswould add another 4.8 %, boostingABC's total coverage to 29 %.ABC was number six on BROADCASTING & CABLE'S list of top 25 TVgroups in April based on its FCC coverage (discounting UHF stations by50% and not counting LMAs) of23.9 %. With the Allbritton stations, thegroup would have FCC coverage of28.1% and would move up the list twoplaces, unseating both NBC Inc. andTribune Broadcasting.The Allbritton stations would bringABC's total to 18 TV stations and twoLMAs with no market overlaps.ABC was the only buyer consultedabout the sale, according to sources.The pricein excess of 1 billionwould be high, considering the absenceof any bidding process.Officials at Allbritton and ABC havenot publicly addressed reports of thesale and did not return phone calls.--ifStationwASC -TvKASC-Tvwi.s -rywin -TvKGO-TVKTHK -TVwrvo(rv)KFSN-wWJRT-TVwrvG(TV)23.9%10 stationsTotal coverage: 24.2%DMA/RankNew York/1Los Angeles/2Chicago/3Philadelphia/4San Francisco/5Houston/11Raleigh /Durham, N.C. /29Fresno, Calif. /55Flint, Mich. /63Toledo, Ohio/66777671311301213Allbritton Communications Co.WashingtonJoseph L. Allbritton, chairmanRobert L. Allbritton, president/C00FCC coverage:StationWJLA-TVWHIM -TVWJxx(TV)KATV(TV)KTUL(TV)wsEr -TVwCN(Tv)WCFT -TV4.2 %/10 stationsTotal coverage: 4.8%DMA/RankWashington/8Harrisburg, Pa. /45Jacksonville, Fla. /54Little Rock, Ark. /56Tulsa, Okla. /58Lynchburg/Roanoke, Va. /68Charleston, S.C. /117Tuscaloosa, Ala. /187727257813433LMAs with optionsBrunswick, Ga./Jacksonville, Fla. /54 21WJSU -TV Anniston, Ala. /20140wnsG -IVUnity Motion to launch MDIV this weekBy Glen Dicksonhas secured thesatellite distrib-rights to 15other motionpictures fromutorSony,Start -upHDTVUnit%Motion is planning itsfirst national broadcast of HDTV programming Tuesday(June23).St.Louis based UnityMotion will uplink aasUnity's HDTV satellite demo will includethe movie 'Jumanji.'Ku -band signal from Washington International Teleport in Alexandria, Va., anddistribute it via the GE Americom Telstar 5 satellite. Downlink sites in Seattle.Los Angeles and St. Louis will demon-strate the programming -which willinclude both ATSC -standard 10801 and480P contenthome theater dealersand select customers.According to Sean Henry, UnityMotion vice president of sales and marketing, programming demonstrated willinclude a full - length screening of theSony Pictures movie "Jumanji" and a-tomix of prerecorded documentary.sports and news footage. Unity Motion12Henrysays; the titleswill be disclosedBROADCASTING & CABLE / JUNEUnity Motionrolls them outduring its promotionthissummer. Henryisn't discussing the price Unity Motionpaid for "Jumanji," either, citing anondisclosure agreement between thecompany and Sony. But he says thatSony charged "half of one percent" ofwhat Unity Motion had budgeted forthe Robin Williams flick.Unity Motion, which has secured private investor funding through MarionBass Securities, plans its official launchfor late September. The company willuse transponder space on either the Tel star 7 or 8 satellite, according to Henry.Consumer hardware required for theservice includes a DBS -type dish,which will range between 18 inches and22,1098www.americanradiohistory.com30 inches in its final specification. Signals will be decoded by a Samsung built IRD and displayed on a multisyncmonitor made by Princeton Graphics.The monitor shows each ATSC formatin its native mode. The Samsung IRDalso will have a built -in 8 -VSB decoderto handle terrestrial DTV signals from aseparate off-air antenna.The equipment. which will go on salein late September, will cost 2,495 for thedish and IRD and 6,995 for the monitor.Unity Motion won't charge anything forits programming until second quarter1999, Henry says. It will then charge 35 50 per month for its service, which itviews as complementary to a consumer'sexisting cable or DBS provider."We make no pretensions that anybody is going to replace their cable,Primestar or DirecTV for this," Henrysays.Unity Motion will begin shippingdemo systems to dealers in mid -Julyand will run a series of in -store demonstrations throug
Jun 22, 1998 · Primestar are considering selling their entire interest in the DBS service to overcome Department of Justice objections to Primestar's pro- posed takeover of American Sky Broadcasting. Primestar and MSO executives have grown extremely skeptical that a less radical change i
