The Picture Dims

Local TV isn't what it used to be.

If you're under 50, it's likely you've never known a life without television. It's always been there, bringing us entertainment ranging from classic to horrendous, taking us live to news events that reshape our world and our lives and doing its best to keep us informed about what's happening around us.

The television industry has worked hard over the decades to reach out to us just like a friend. It pitches itself as kind, caring, funny, informative and helpful.

But that's only the façade. The hard, cold reality is that television is a business. The commercial stations we watch are there for one reason: to make money for the corporations that own them.

That used to be an easy thing to do. It wasn't too long ago that the joke was if you owned a broadcast license, you owned a license to print money. In the not-too-distant past, television stations in Tucson were money machines. Before cable, before direct broadcast satellite, before the Internet, the local stations ruled the roost.

Go back to 1981. There were just four commercial TV stations in Tucson. Today, there are eight. But in the two decades since, the market has seen huge growth. It jumped from the 87th largest television market in the nation to the 73rd largest. The number of people watching television in the area doubled. But the actual share of the audience the three major network affiliates receive in prime time plummeted from an 83 share in 1981 to a 39 share today.

And for the late news, the picture is just as bad. While the number of potential viewers has skyrocketed in the past 20 years, the actual number of people sitting down to watch the news on the top three channels at 10 p.m. has actually dropped. In 1981, 152,000 people watched the late news on channels 4, 9 or 13. Today, that number is only 141,000.

IT'S THE AUDIENCE that makes television tick. For over-the-air stations, you don't pay any money to watch their programming. (Yeah, you have to buy the set and plug it in, but after that, it's free.) Local TV stations get their money from the barrage of commercials you are forced to endure--paid advertisements. And as more people watch, generally the more money a station can charge for those recurring 30-second slices of life.

But it isn't all profit. It's never been cheap to run a television station, especially if a news department is involved. But television stations here and in other markets around the country historically have made in the range of a 40 percent annual profit margin. That meant that 40 cents out of every dollar the station makes goes to profit. (Most industries survive with profit margins far less. Grocery stores, which must sell large volumes of their products, operate with a profit margin of less than 2 percent.

Jon Ruby just retired from managing KVOA-TV (Channel 4, NBC) for the past 28 years. More than just about anyone else in the industry here, he's witnessed the evolution of television from a money machine to what it is today: just another business trying to make a buck.

The then new local owners of KVOA lured him to Tucson from Chicago nearly 27 years ago. Ruby somewhat affectionately refers to the former owners as "The Dons," even though only two of them were actually named Don. Don Diamond, Don Pitt, Dick Bloch and Jack Gumbin had purchased KVOA in 1972 for less than $3 million. It was close to last in the local ratings. But the influential quartet bought it, Ruby says, because a friend had described television to them as "like owning a slot machine." That friend was Karl Eller, who was just beginning to build a huge media empire.

Ruby had two big jobs when he got here: making KVOA a legitimate player in the market and educating the owners (primarily the two named Don) about the realities of a television station. One thing he had to do was stop them from trying to influence the news product. "I gotta say that for the first two or three years we would have continual in-depth conversations... trying to explain to them the rules by which we operate," Ruby says.

"They'd say 'You can't pick on my buddy,' and I'd have to reply 'Well, your buddy did that so we gotta do that,'" Ruby says. He also acknowledges "The Dons" tried to get the station to publicly back issues they supported.

But if "The Dons" failed in their attempt to use the station as a soapbox, they did realize they had a cash cow. Purchased for less than $3 million, they sold the station for more $30 million 12 years later (having probably pocketed significant profits during that time).

And that illustrates one of television's problems today: the debt created when the price of stations skyrocketed.

Through the late 1980s and 1990s, television stations sold for huge amounts of money. And they mostly sold to corporations. Some distant corporation today owns each commercial television station in Tucson.

Ray Depa first came to Tucson in 1979 as news director at KGUN-TV (Channel 9, ABC). But he left, returned, left again and returned the last time in 1999 as general manager. He agrees the economy of television has changed.

"The old printing press in the basement of the building is worn out," Depa says. "There was a time when people could not escape watching news if they wanted to watch television. There were three, maybe four, television stations in any city and they all did news." But now there are often more than 10 stations in a city, and only a few put on a news product. That has cut the advertising pie into smaller pieces before you factor in cable, satellite or other demands on people's viewing habits.

Depa describes the economic state from which television is just emerging: "Depression, no doubt about it," he says. "We were in the land of milk and honey (in 2000). The politicians were spending, Olympics were on, the economy was riding high and then-kaboom!"

Depa says media buyers and advertising agencies dramatically changed their tune in January 2001. "They demanded we reduce rates and give them more for less," he says.

The numbers support him. It's rare that a television station reveals its individual income or profit margins, but they all report to an independent auditing firm that releases the total numbers for a market. In 2000, with advertising dollars from ballot referendums boosting the bottom line, commercial, non-Hispanic stations in Tucson raked in a total of $63 million. Expenses likely totaled in the $40 million range. So a nice profit went off to the corporate offices.

But for the first time anyone can remember, the numbers for 2001 were down. Way down. Last year Tucson stations brought in only about $55 million. Lots of money to be sure, but for an industry that has grown accustomed to double-digit annual increases, any decrease is bad news.

And while insiders privately admit the profits sent off to corporate headquarters are less, the biggest impact has been on employees at local stations and the product you watch.

EVERY TELEVISION market in the country is ranked according to the number of homes in it that have at least one television. New York City is the number-one market. Tucson is currently number 73 and rising. That includes Pima, Cochise and Santa Cruz counties, and it's considered a medium-sized market.

That's good news and bad. Good because you can generally recruit people from smaller markets and pay them more than they were making there. Bad because you are always losing your good people to larger markets that can pay more. That's the reason you frequently see a revolving door of on-air people in this market, primarily in local news. If you could see through that door, the personnel shifts among people you don't see on the air is even more dramatic.

But last year at two local stations, people were laid off in Tucson television. Overtime was reduced. Salaries were cut. Purchases of needed equipment were delayed.

"You have to look at somebody and tell them they are no longer employed," Depa said. "You look at someone who has been at a station for 17 years and yes, they perform an important function, but that function can be done by someone else. That hurts. Very, very painful."

The people who lost their jobs were "behind the scene" drones who help make things tick. When you eliminate positions like that, things don't tick as well. And when good people move on to better and higher paying jobs, the economy dictates that stations replace those people (if they are replaced at all) with less experienced people who can't demand higher salaries.

Nobody will go on the record on this issue, but it's easy to see that at least a couple of local stations have hired new on-air reporters who could have used a bit more work in the 140th market. When budgets are tight and someone who is making $40,000 a year moves on, the pressure is strong to hire someone at half that amount.

But isn't that just shooting yourself in the foot? Couldn't a green reporter who makes on-air mistakes chase away viewers, thus lowering advertising revenue and costing the station more in the long run?

"The thing I fear the most is that we will chase good people away from our business," Depa says. "We've always had a difficult time attracting good people to our business and it's going to get worse."

The man who back in the 1970s was "Sunny" Jim Arnold on KCUB radio agrees. Today he runs KOLD-TV (Channel 13, CBS). Arnold claims recruiting good people is the top issue facing television today. But he acknowledges the reason is simple: "We don't pay properly."

He's right. People graduating today from college with a degree in broadcast journalism generally have to go to the small markets to find that first job. And that job frequently calls for long hours and an embarrassing salary. But Arnold also points the finger at the educational institutions coughing out those graduates. "I personally think the education system for radio and television is pretty poor," he says. He's a graduate of the University of Arizona and claims he "didn't learn squat" about the business end of television. He remembers he learned how to produce a radio drama at the UA, and then realized after he graduated that about five people made their living doing that.

Not every station assumes the costs of producing local news. KMSB (Channel 11, Fox) did a local newscast years back, but dropped it. KMSB boss Diane Frisch admits there are plans afoot to once again produce news in Tucson. Fox has been putting pressure on its affiliates to get into the news game. And KMSB's owner, the Belo Corporation of Dallas, wants its stations doing news.

Frisch admits that September 11 "derailed" immediate plans to launch the effort, but says it could happen "possibly this year." The question is whether the newscast will be produced here or at sister station KTVK in Phoenix. Frisch would only say that any newscast her station puts on would "use all the resources available to it through Belo," but wouldn't say definitively the effort will be produced in Tucson.

If KMSB does try to do local news from out of Phoenix, the other stations will have fun pointing out where the newscast originates. "Sun Devil News" is how one local TV exec says they'll label it. They will do anything they can to defend their news operations because news programming can account for upwards of 40 percent of a station's revenue.

It can also account for a huge portion of the station's expenses (and also expensive lawsuits if not well-managed). But it can mold an image of a station difficult for others to achieve. Insiders doubt adding another newscast will increase news revenue in Tucson. Instead, it will just make all the slices of the pie smaller. Frisch disagrees, saying a quality product will bring in quality dollars.

So, revenue is up and down, and corporations are taking their share of what is left. Any good news out there for Tucson television? Not much. Even though the economic situation for local stations is improving this year), other big expenses loom.

FIRST IS HIGH DEFINITION television (HDTV). The Federal Communications Commission (every station in the country operates under a license from the FCC) mandated that stations in this market size begin broadcasting their programming on a totally separate channel by May 1, 2002. Nobody here met the deadline.

When it does finally appear on at least two stations later this year, the picture you'll be able to see will be remarkably clearer than what you get now. It will approach motion picture screen quality. And the sound will dramatically improve as well.

But the negatives are many. The sets you'll need to view the new signals cost anywhere from $3,000 to more than $12,000 (they'll come down eventually). And even after rolling out the product in larger markets, there are still ongoing discussions about which format to use. (Remember VHS versus Beta in the early days of video?)

Plus, the cable television industry, which fought hard against having to devote just one place on its dial to a local station without some form of compensation, isn't in the mood to devote two (the separate signal requires a separate frequency). So after you buy that expensive set, you'll have to go down to Radio Shack and pick up a rabbit ear antenna.

But then you've got to factor in the Tucson terrain. HDTV signals aren't good at going around mountains. In fact, they're not good at going around anything. With regular television, you can (if you want) sit and watch a marginal signal. With HDTV, there's no such thing. You either get it or you don't. Feast or famine.

And decades ago, the people who made decisions for the local television stations decided to put their transmitting towers on Mount Bigelow in the Catalina Mountains. That covers much of central and eastern Tucson well, but does nothing for the foothills or the booming northwest areas of the city. So you end up with the reality that the people most likely to be able to afford one of the HDTV sets won't be able to get the signal.

But the biggest hit is on the stations. They will have to purchase transmitting equipment to send out the signal on that separate channel. It will likely cost each station in Tucson in the vicinity of $3 million to $4 million just for the hardware--more if they buy more transmitters to try to cover other areas. And it will add thousands more to each station's power bill each month.

"It's an expensive situation for which there is no business plan and no return on investment," says Ruby. The broadcasters are hoping there will be thousands of sets out there by the time they flip the switch, but it's more likely to be hundreds. Why would a business spend millions of dollars to provide a service to hundreds of people who don't pay them a dime?

It's the law. It's likely that non-commercial KUAT (Channel 6, PBS) may be the first on the air with HDTV in Tucson thanks to legislative largess and active fundraising. KVOA should be close behind.

The other big expense looming for Tucson television is something called meters. We've all heard of the Nielsens. That's the company that four times a year sends out a few hundred books (called diaries) to television viewers and, based on what they write in those books, determines television viewership. Those are the numbers (accurate or not) stations use to sell advertising.

Nielsen is slowly moving through the television markets offering a new service. It doesn't replace the books sent out four times a year, but it provides a much quicker snapshot view of who's looking. Like overnight. Every night.

The way it works is that Nielsen would put electronic meters in a few hundred homes in and around Tucson. Those meters collect data on when the television set is on and what station it is tuned to. (It has no idea if anyone is actually watching.) Late at night, that meter uses your phone line to call a computer in Florida, and by the time the TV folks hit their desk each morning, they have a printout of the alleged viewership for all the stations in the market yesterday.

While the people at Nielsen will never admit their book method is faulty, they argue the meter method is more accurate. And it costs more. Much more.

Again, the numbers are private, but you can count on a local station today paying maybe $3,000 or $4,000 a month to Nielsen for the current four reports a year. With meters, that cost could go up 10 times. And we've seen around the country that the day the meters click on it's generally good news for smaller independent stations (like KWBA, Channel 58, WB, or KTTU, Channel 18, UPN, here in Tucson) and bad news for the network affiliates.

That's because when people are sent the books to write down what they watch for an entire week, some people (generally older) do it religiously and send them back. Others (generally younger) forget about them and hurriedly write down what they thought they watched for the past week. Some people consider the Nielsen books a "vote" where they can cast their ballot for their favorite station-whether they are watching it or not. The younger viewers frequently watch Fox, WB and UPN. Thus, they will likely be the stations to pay Nielsen's tab and get the meters to Tucson within the next couple of years.

And just as the economy is picking up this year and the future is looking better, other huge expenses hit. Forest fires have been a double-whammy on local news operations. Not only has extensive special coverage wiped out thousands in income from canceled commercials, but also the unexpected expense of putting a small army of people to cover the fire has crippled budgets.

Local TV bosses all agree that it's not as much fun doing their job today as it used to be. And the economy is the prime issue causing the grief.

"Corporate" puts pressure on them and they need to respond. That response frequently means going to the troops and asking for more.

"I keep telling my people every day, 'Yeah, it's hard. You're right, you need a new camera. You're right, we need another photographer. You're right, we need another reporter,'" Depa says. But he can't deliver. The optimist in him feels that his people will be better for all this in the end.

And while others may agree, Ruby is glad he won't be around. "If I never have to go through another budgetary process again, that will be fine with me."

"My timing would have been good if I got out last year.," says Ruby, who identifies November 2000 as when the economy "started turning to crap.".

"If I was the brightest man in the world, I would have hung it up then."

AS TELEVISION passes middle age, it's dealing with a crisis. It has evolved from the prestigious industry that created something called the "Tiffany Network," among others, to nothing better or worse than the corner gas station. It needs to produce every day to earn a buck. And it sends a big portion of that buck to a bean counter in a corporate office far away.

Who's to blame? Certainly the corporations that thought it was worthwhile to spend hundreds of millions of dollars to buy stations at exorbitant prices and go deep into debt because of it. And those same people share the blame on another level for spending through the good years, but then laying off people when the economy soured.

The people who program television share some of the blame for opting to go for the lowest common denominator in what they think we will watch. That chased people to cable and other programming that either didn't gross them out or did gross them out and they liked it.

But whoever is to blame, the reality is local TV will never be the same again. The technology will improve, but the content will sparkle less. People will continue to watch, but economic pressures will mean reduced resources, less local content (including news) and even more condensed corporate ownership.

Bruce Springsteen was right when he lamented, "Fifty-seven Channels and Nothing's On." The good friend we grew up with is gone.