Peter Liguori, the head of Tribune Co., has opted for a strategy that comes naturally to the former TV programmer: more original content.
As the media company prepares to shed its print business, Mr. Liguori sees its future resting on new shows such as "Salem," which premiered last month on Tribune's WGN America cable network. WGN for years has subsisted on old sitcoms and Chicago sports coverage. In an interview, he ticked off the benefits of airing original shows on the station.
"You get an increase in your ratings, higher ad rates because advertisers want originals, and a rise in the brand profile of your cable network to get more distribution," the 53-year-old CEO said. "All of that is critical to TV."
The pilot of "Salem" was seen by 3.4 million people in the seven days after its broadcast, according to Nielsen. That was a success in the eyes of Mr. Liguori, who didn't set ratings targets for the fledgling programming effort -- making him an exception among numbers-minded TV executives.
"I didn't want to sit there and write down any numbers," he said. "I didn't think it would have been good for overall morale to put a specific number out there.
Among Mr. Liguori's tasks, however, front and center is the need to get wider distribution for WGN, which is carried in only 72 million homes. Better-known cable networks such as TBS and FX are close to 100 million, according to SNL Kagan.
In addition to getting more licensing fees from pay-TV providers, a larger audience helps draw the attention of brand advertisers, who care as much about a show's prestige as its ratings.
"When we did testing asking people where `Salem' premiered, we kept getting responses like HBO, Showtime, AMC," Mr. Liguori said. "WGN America didn't even make the list. People had no idea about our network -- their response was, 'What's that?' and, `Where is it?'"
Mr. Liguori has renewed "Salem" for a second season, and WGN plans to air a new series this summer -- "Manhattan," about the Manhattan Project, the top-secret U.S. effort to build the atomic bomb. He's betting the original shows will increase awareness of the revamped network, which is still largely unknown, according to Tribune's research.
$137.8B U.S. ad spend for top 200 advertisers
"How do we go from 72 million households to 100?" Mr. Liguori asked. "Originals."
Not through originals exclusively, of course; that's an expensive area where competition is only growing, driving prices up further still. The network has also struck deals to rerun hit programs such as CBS crime dramas "Person of Interest" and "Elementary."
The other tool is Tribune's local broadcast affiliates, whose signals pay-TV companies must pay to carry, just like cable networks. The contracts Tribune's local broadcasters have with cable and satellite companies come up for renewal on the same schedule as WGN's. That's key for WGN, which only gets about 6 cents per pay-TV subscriber each month, much lower than other cable networks such as TBS, which receives 62 cents, according to SNL Kagan. When it's time to renegotiate, WGN may be able to pry more from distributors by leveraging their desire to keep highly rated local broadcasters in their channel lineups.
Mr. Liguori, a former Fox Broadcasting executive, has been busy building up Tribune's once-meager TV unit,spending more than $2.7 billion in 2013 to acquire local broadcasters and increasing the company's tally of TV stations to 42. After the middle of this year, when Tribune plans to spin off its newspapers including the Los Angeles Times and Chicago Tribune, the company will be entirely driven by TV, with WGN as its lone national cable network.
Tribune is now the largest owner of local broadcasters in the U.S., putting it among a roster of companies including Media General, Gannett and Sinclair Broadcasting Group that have acquired such assets to give them negotiating leverage with advertisers and cable providers.
It's a far cry from a few years ago, when Tribune was better known for its struggling newspaper business. Not long after real-estate billionaire Sam Zell's leveraged buyout in 2007, the company began to fall apart, saddled by massive debt and mismanagement. Tribune emerged from bankruptcy at the end of 2012 with creditors Oaktree Capital Management LP, JPMorgan Chase & Co. and Angelo, Gordon & Co. in control.
Mr. Liguori joined Tribune in January last year, replacing Eddy Hartenstein, who led the company during bankruptcy. He's been guiding the transition to TV ever since, echoing media giants such as Time Warner, which will spin off its magazine unit in a few months, and Rupert Murdoch's News Corp., which last year cleaved off its newspaper division from its more profitable TV group.
This year, the broadcast-TV industry will see a 14% bump in sales to $27.5 billion, according to research firm SNL Kagan.
~ Bloomberg News ~