LOCAL TOUCH WINS ADVERTISERS, BUT NATIONAL $$ STILL SPARE: VIEWERS CAN'T GET ENOUGH NEWS OF NEIGHBORHOOD

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Local all-news cable channels are starting to get respect from local network affiliates, which are keeping a wary eye on the phenomenon of CNN-style local news coverage.

In about 30 markets across the U.S., cable TV subscribers can now get megadoses of local news, with 24-hour coverage on storms, traffic and crime and local sports reports so detailed they often include high-school track and swim meet results.

Despite its saturation in local trivia and heavy reliance on recycled news events, the local cable TV news formula is nevertheless catching on with some hard-core viewers.

A handful of entrenched local cable news players in major cities are finally earning profits, and advertisers are learning the value of reaching an extremely local audience.

EVEN SMALLER MARKETS

Industry forecasters say the next phase of the local cable news evolution will bring the formula to smaller markets, as local news becomes an increasingly competitive genre on the cable dial.

The trend has obvious advantages for local advertisers. But the next hurdle is attracting national advertisers that benefit most from sending their messages far and wide.

"It's the blue-chip advertisers we're trying to go after," says Deborah Cuffaro, senior VP at New York-based Regional News Rep, which sells commercial time on all-news cable TV programs.

Since January, the rep firm has focused its resources exclusively on attracting clients for regional cable news providers, after seeing an emerging opportunity.

So far, the most successful all-news cable channels have taken hold in major metropolitan areas such as New York and Chicago.

STARTED IN 1986

One of the first examples was News 12 in Long Island, N.Y., a project launched in 1986 by Rainbow Media, a subsidiary of Cablevision.

"We basically invented the regional news service," says Rainbow spokesman Chris Levesque.

Aside from spawning a new species of cable news providers, News 12 can boast four other operations in the Tri-State area. The most recent channel was launched in the Bronx last year.

Norm Fein, senior VP of news development for Rainbow, claims 30% of the potential market watch News 12 daily. Two years ago News 12 Long Island saw its first profit, he says.

"People watch it and they watch it more than they watch broadcast stations," Mr. Fein says.

Allen Blum, senior VP of Time Warner's New York 1, says the cable provider hopes to expand from its current operations into other markets of all sizes throughout the U.S.

"All the focus groups say that's what people want," Mr. Blum says.

While broadcast stations naturally reach a larger audience, their news coverage tends to be spread thin, often covering dozens of communities, he says. Cable news providers can deliver local news all day to their specific audiences. Half-hour slots of broadcast news can't compete.

NY1 IN 1.1 MILLION HOMES

New York 1, which came on the air in 1991, now is in 1.1 million homes in New York. Time Warner also has 24-hour news operations in Rochester, N.Y., Orlando and Tampa-St. Petersburg, Fla. The company has plans to start a station in Austin, Texas, this summer.

Steve Paulus, senior VP-general manager for New York 1, says the station's staff of about 30 reporters specializes in education issues, the local theater scene and the New York subway system. Many viewers stay tuned in for the frequent traffic and weather updates, he says.

Obviously, the idea is taking hold, Mr. Blum says. He predicts similar stations and competitors likely will come on the air at a rate of four or five a year for the next few years.

USES NEWSPAPER STAFF

Chicago's CLTV all-news cable channel started in 1993, backed by the Tribune Co.

The station cross-promotes and augments the reporting of its own staff with on-air appearances of columnists from its sister property, the Chicago Tribune, and also its WGN-AM radio operation. CLTV is also cross-promoted at Wrigley Field, where the Tribune's Cubs play baseball, and on the Tribune's Internet Web sites.

"We can be like the CNN of Chicago," says CLTV Director of Sales Teresa Rix.

CLTV is in 1.7 million homes in the station's designated market area, up from 600,000 homes in 1993. "Every year we've grown a little bit," Ms. Rix says.

Advertisers are mostly local; one example would include O'Brien's restaurant, which advertises to reach to an all-local audience during baseball games and also during political campaign seasons, says Jennifer Tremblay, O'Brien's manager.

The cable provider saw its first profits in 1997. Ms. Rix says no other 24-hour regional news provider has become profitable so quickly.

As part of the Tribune family, CLTV benefits from cross-promotion opportunities through the media companies' sister properties, and also promotes the newspaper and radio coverage on its broadcasts as well, Ms. Rix says.

For local cable media buying agency RNP, the challenge is to get national advertisers to advertise on it, says Ms. Cuffaro.

CONVINCING ADVERTISERS

But, she asks, how do you persuade an automaker in Detroit-a market without regional cable news-that its message is best conveyed by a local cable TV news station in Tampa, Fla.?

"In many of these markets, the regional news channel is new," Ms. Cuffaro says. But RNP has seen meaningful successes in recent months.

RNP recently picked up an advertising contract with Kmart Corp. for all of its client stations, and is now going after airlines, credit-card marketers, telecommunications companies and utilities.

John Mansell, a researcher with Paul Kagan Associates, which studies the cable industry, says many operators don't disclose revenue figures, but he estimates more cable news providers soon will begin seeing the successes of stations like News 12 Long Island.

"It probably takes five or six years to become profitable," Mr. Mansell says.

SUBSCRIPTION-DRIVEN

In the early stages, the stations will get the lion's share of their revenue from subscription fees and allocations from cable operators.

Most start-ups will see less than 20% of their revenue come from ad sales, he says; larger markets may expect 30%-35%. Mr. Mansell says mature stations like News 12 Long Island probably get 50% of their revenue from advertising. Those numbers are likely to grow, he says.

Ms. Levesque agrees. As 24-hour cable news formats catch on, they will become a more accepted media for advertising. And there's just no denying the concept is catching, she says.

"As the world gets increasingly global, people will seek to identify themselves

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