TV Takeover

This is an open letter to anyone buying, or considering buying, one or more TV stations, particularly if you are part of a private equity group. This can be a moneymaking venture for you.

Full disclosure: I work for a company that has been the target of buyout offers from private equity firms. As of this writing it appears those offers will be turned down.

I don't know much about private equity firms, but the prevailing fear is that they simply want to buy something, cut costs to a bare minimum to make the bottom line look good, then sell it, either whole or in pieces. The problem with that approach is that most local TV stations are lean operations already. Anything you cut could hurt the value of your station.

If you want to make money via financial tools, local TV is probably not the business for you. If you want to make money operating TV stations, you should know it is a changing business and that change creates opportunity.

I'm sure there are many ways to make a lot of money by investing in local TV. Here's one of them:

Buy a group of underperforming (ratings-wise) stations in the same region, in small to medium markets.

There may actually be a few ways to cut costs, but in general, you'll need to spend money. Provide these stations the infrastructure to create and produce good local programs. News is one of those programs, but there are many other programs waiting to be created.

The stations may be able to share some elements of their programs. Or better yet, create a program at one station. If it works, use that program as a blueprint for other stations.

One goal should be to reduce or eliminate syndicated programming in favor of locally-created programs.

There's a good fiscal reason to do this: for every syndicated program on your air, you pay thousands of dollars to the syndicator. You also give up much of the advertising time to that syndicator. For every local program you produce, you save the syndication fee and get to sell all of your advertising time. A local show with moderate ratings can be as financially successful as a syndication hit--and let's face it, there aren't many new syndication hits.

The other reason is exclusivity. Many syndicated shows also appear on cable or satellite. Your potential audience with those shows is immediately reduced. You could also spend years and lots of money building an audience for that syndicated program, only to have another station outbid you for it next year and take that audience from you.

Now if you're in the lucky position of owning the rights to syndicated hits like Oprah or Wheel of Fortune, I'm not saying you should dump them. Stick with what works. But don't buy any new shows.

It's much smarter at this stage of the game to control your own destiny with your own programs. You'll create a new identity for a struggling station. You'll build a great reputation in the local community. And you'll make a lot of money. There are risks, but the rewards are much greater.