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L L.- .i :F “MM? \\\\M\\°\\ll\\\\\\\\\\1\\\\\\\\\\\\\\\\\\ l Michiganmate University This is to certify that the thesis entitled THE PROFITABILITY OF A NEWS SERVICE FOR LOCAL CABLE TELEVISION SYSTEMS presented by Charles Joseph Kidd has been accepted towards fulfillment of the requirements for Master of Arts degree in Telecommunication /// (—2 (Cr-cad V Major professor Date August 10, 1982 0-7 639 ’f' ”5-7-75- MSU LIBRARIES —..—L-_§_ RETURNING MATERIALS: Place in book drop to remove this checkout from your record. FINES will be charged if book is returned after the date stamped below. L." M7 Juuo9'li‘ i 136 DEC 1 2 m; c M; In ._ e ,7“ NOV 319% THE PROFITABILITY OF A NEWS SERVICE FOR LOCAL CABLE TELEVISION SYSTEMS By Charles Joseph Kidd A THESIS Submitted to Michigan State University in partial fulfillment of the requirements for the degree of MASTER OF ARTS Department of Telecommunication I982 ABSTRACT THE PROFITABILITY OF A NEWS SERVICE FOR LOCAL CABLE TELEVISION SYSTEMS By Charles Joseph Kidd The purpose of this study is to determine whether or not a local cable news cooperative can compete with commercial broadcast television local newscasts for advertising revenues. The local cable news cooper— ative is a group of interconnected local cable television systems that produces local newscasts for insertion on an all news channel. The times of insertion coincide with the air times of the local commercial broadcast television newscasts. The “market/station analysis” is the method of evaluation that is used to determine the potential profitability of a broadcast radio or television station or cable television system. The method is modified to evaluate the television market and the local commercial broadcast television news departments. These are then used to determine if a local cable television news cooperative can be profitable within three different sizes of television markets. Through this analysis, the cooperatives in each of the three types of television markets are found to be profitable. Accepted by the faculty of the Department of Telecommunication, College of Communication Arts and Sciences, Michigan State University, in partial fulfillment of the requirements for the Master of Arts degree. Director of Thesis ACKNOWLEDGEMENTS I wish to thank those on the faculty in the Department of Telecommunication for the advise given me during the course of my research. To my thesis adviser Thomas A. Muth, Ph.D., J.D., a special thanks for guidance and understanding throughout my period of study and development of my thesis. I also wish to thank Margaret L. Frey-Kidd for her continuous support and encouragement during my work. My task would have been much more difficult without her help. TABLE OF CONTENTS Page LIST OF TABLES ....................... V LIST OF FIGURES ......................... v111 INTRODUCTION AND STATEMENT OF PURPOSE ............... 1 CHAPTER 1. REVIEW OF LITERATURE . . ................ 3 Introduction . . . . . . ........... . . . . . 3 Cable Television Advertising . . ............ 3 National Cable Television News Services ......... 6 Local Cable Television Newscasts ............ 7 II. METHODOLOGY AND PROPOSAL ................ 12 III. MARKET/NEWS ANALYSIS: DETROIT, MICHIGAN . . . . . . . . 16 Market Analysis .................... . 16 Demographics of the P0pulation ............. 17 Economic Indicators ............. . . . . . . 19 Media Competition ................... . 25 News Analysis ...................... 27 Local Cable News Cooperative .............. 34 IV. MARKET/NEWS ANALYSIS: GRAND RAPIDS, MICHIGAN ...... 42 Market Analysis ..................... 42 Demographics of the Population ............. 43 Economic Indicators . .................. 55 CHAPTER Page IV. (continued) Economic Indicators ................... 48 Media Competition .................... 53 News Analysis ...................... 55 Local Cable News Cooperative .............. 61 V. MARKET/NEWS ANALYSIS: LANSING, MICHIGAN ........ 70 Market Analysis ..................... 7O Demographics of the Population ............. 70 Economic Indicators . . . ................ 74 Media Competition .................... 79 News Analysis . .- .................... 81 Local Cable News Cooperative .............. 86 VI. DISCUSSION AND CONCLUSION . . . ....... . . . . . . 94 NOTES ........................... 97 APPENDICES ........ . . . ................ 109 APPENDIX A: Commercial Broadcast Radio Stations in the Detroit TV Market .............. 109 APPENDIX B: Commercial Broadcast Radio Stations in the Grand Rapids TV Market ............ 112 APPENDIX C: Commercial Broadcast Radio Stations in the Lansing TV Market ............ . . 116 BIBLIOGRAPHY .......................... 118 Table Page 16. Estimated Equipment Expense for the Detroit Local Cable News Co-Op .................. 37 17. Ten-Year Pro Forma Profit and Loss Statement for the Detroit Cable News Cooperative ........... 4O 18. Population Changes in the Grand Rapids TV Market l950- l980,Ranked by County ................ 46 19. 1980 Racial Composition of the Grand Rapids TV Market . . 48 20. Annual BPI of the Grand Rapids TV Market ........ 50 21. Income, Consumption, and Average Propensity to Consume in the Grand Rapids TV Market 1973-1980 ...... 51 22. Annual Average Unemployment for the Grand Rapids TV Market, Michigan and U.S. l972-l98l ........ 52 23. Commercial Broadcast Television Stations Licensed in the Grand Rapids TV Market ............... 54 24. Daily Newspapers Published in the Grand Rapids TV Market ....................... 56 25. TV News Personnel in the Grand Rapids Market ...... 57 26. Estimated Revenues for Local TV Newscasts in the Grand Rapids TV Market ............... 59 27. Annual Estimated Salary Expense for Local TV Newscasts in the Grand Rapids TV Market ........... 6O 28. Broadcast Television Equipment in the Grand Rapids Television Market ................. 62 29. Estimated Advertising Rates and Revenues for a Local Cable News Co-Op in the Grand Rapids Market . . . . 63 30. Proposed Staffing and Estimated News Salary Expense of the Grand Rapids Cable News Cooperative ...... 65 31. Estimated Equipment Expense for the Grand Rapids Local Cable News Co-Op .................. 66 32. Ten-Year Pro Forma Profit and Loss Statement for the Grand Rapids Cable News Cooperative ........ 68 33. Population Changes in the Lansing TV Market 1950- l980, Ranked by County Population Size ....... 72 vi LIST OF FIGURES Figure Page l. Percentage of Detroit TV Market's l980 Population by Age and Sex ............ 20 2. Percentage of Grand Rapids TV Market's l98O Population by Age and Sex ............ 44 3. Percentage of Lansing TV Market's l980 Population by Age and Sex ............ 73 viii INTRODUCTION AND STATEMENT OF PURPOSE The purpose of this study is to determine the feasibility of programming a local cable television news service to compete with local commercial broadcast television stations' newscasts for local, regional, and national advertising dollars. In order to compete, cable systems will have to interconnect with one another and form a local network. The cable newscasts will be inserted into a national news service such as Cable News Network (CNN) or Satellite News Channel (SNC) and fed through an interconnected network to participating cable systems. The measure of success for the cable news service will be whether or not it can make a profit by the tenth year of operation. Three types of television markets will be examined representing the t0p l0, top 50, and second 50 television markets. The markets will be evaluated using the "market/station analysis" modified for application to local news departments rather than television stations or cable systems. The data from each market will be reviewed as to its social and financial stability. Then the economic factors entering into the operation of the local commercial broadcast television news department in each of the three markets will be evaluated. Finally, a decision as to the entry of a local cable television newscast into each respective market will be made. Since cable news programming is a relatively new field, there is a lack of primary sources of information. Therefore this paper cites a number of trade, public and secondary sources. CHAPTER I REVIEW OF LITERATURE Introduction During the late 1940's, broadcast television's popularity began to grow in the United States. However, some communities were prevented by distance or terrain from receiving these broadcast television signals. To solve this dilemma, tuned antennas were placed on mountaintops and wire was connected from the antennas to households in the communities. Thus community antenna television (CATV) was created. The growth of cable television has been sporadic (see Table 1). However in May l982, both the A.C. Nielsen Co. and Arbitron estimated that cable television has penetrated at least 30 percent of the tele- vision households in the United States.1 The number of channels avail— able to subscribers has grown to over 100 channels. In addition, many large multiple system operators (MSOs) are upgrading smaller worn out systems of 5, l2 and 20 channels with systems of 26, 35, and 54 channels.2 Cable Television Advertising Unlike local commercial broadcast television stations, local cable television systems depend on subscriber subscriptions for revenues. Table l. Growth of Broadcast and Cable Television 1952-1981 . TV Total Households Cable Penetration Year Subscribers (Millions) (Percentage of TV HH) 1952 14,000 17.3 0.08 1953 30,000 23.4 0.1 1954 65,000 28.2 0.2 1955 150,000 32.3 0.4 1956 300,000 36.7 0.8 1957 350,000 40.3 0.9 1958 450,000 43.0 1.0 1959 550,000 46.9 1.2 1960 650,000 45.2 1.4 1961 725,000 46.9 1.5 1962 850,000 49.0 1.7 1963 950,000 51.3 1.8 1964 1,085,000 52.6 2.0 1965 1,275,000 53.8 2.4 1966 1,575,000 54.9 2.9 1967 2,100,000 56.0 3.8 1968 2,800,000 57.0 4.9 1969 3,600,000 58.5 6.1 1970 4,500,000 60.1 7.5 1971 5,300,000 62.1 8.5 1972 6,000,000 64.8 9.3 1973 7,300,000 66.2 11.0 1974 8.700.000 68.5 12.7 1975 9,800,000 69.6 14.1 1976 10,800,000 71.2 15.2 1977 11,900,000 72.9 16.3 1978 13,000,000 74.5 17.4 1979 14,100,000 76.3 18.5 1980 16,000,000 77.8 20.6 1981 18.300.000 81.5 22.5 SOURCES: "Estimated Growth of the Cable Industry,” Television Factbook 1981—1982 Edition, (Washington, D.C.: p. 83-a. Television Digest, Inc., 1981, ”Trend of Radio and Television Ownership," Broadcasting Cable— casting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. D-112. While 3,105 cable systems originate programming, only 41 percent of them accept advertising on local origination channels. Rates for advertising range from $5 to $400 for 30 seconds of advertising time (called a spot).3 The 1981 Cable Advertising Directory, published by the National Cable Television Association, reports that 277 cable systems which penetrate 6.5 million homes are ready to make local advertising spots available for both network and local programming. Advertising revenues in 1980 for systems of more than 200,000 subscribers reported average advertising revenues of $10,000 to $25,000. Thirty-second spot advertising rates ranged from $6 to $20 and one-minute spots ran between $10 and $30. Total advertising revenues for the cable systems in 1980 were $14 million.4 One way of making cable television attractive to advertisers is through the interconnection (joining together) of a number of cable systems. Such a system exists in the San Jose-San Francisco, California area. The system, known as the Gill Bay Area Interconnect, links 32 cable systems with 475,000 subscribers through two channels that carry Cable News Network (CNN) and the Entertainment and Sports Programming Network (ESPN). The system works as follows: CNN and ESPN are received in San Jose, California where regional and national advertising are inserted into the programming and transmitted via microwave to the remain- ing 31 stations. As incentives to join the interconnect, cable operators are offered a share in the profits and five cents per subscriber.5 In May of 1982, Viacom International joined the interconnect and announced plans for the adding of two more channels to the interconnect.6 National Cable Television News Services Cable News Network The Turner Broadcasting System's Cable News Network began operating on June 1, 1981. Approximately 172 cable systems representing about 1.7 million households originally subscribed to CNN. Within five months, the network had 550 cable systems serving 4.7 million subscribers. CNN, which offers around-the-clock in-depth news and information, needs an estimated eight million to ten million subscribers to cover $2.5 million in monthly operating expenses.7 As of April 1982, CNN has penetrated 13 million households and has an annual growth rate of 50 percent. Cable systems are charged 20 cents per subscriber if CNN is the only Turner Broadcasting programming they carry and are charged 15 cents if they do carry other Turner programming. Although CNN's revenues for the first quarter of 1982 were $8.4 million, Turner Broadcasting will not predict when the service will become profitable.8 On December 31, 1981, Turner Broadcasting introduced Cable News Network 2 (CNN 2) to some 800,000 subscribers. CNN 2 is a "24-hour headline news service“ that delivers half-hour news segments.9 It gives cable systems six minutes of every half hour for local news and adver- tising. For those systems carrying the Cable News Network (CNN 1), CNN 2 is free. For those not receiving CNN 1, the cost is five cents per subscriber per month.10 In June of 1982, Turner Broadcasting Vice President for Cable Sales and Marketing, Nory LeBrun, said that CNN 1 has over 500,000 new subscribers per month. In addition, he said that CNN 2 has 1.2 million subscribers and expects an increase to 4 million by the end of 1982. Currently, LeBrun said, 150 cable systems and "...about 50 broadcasters are using CNN 2 newsfeeds."11 Satellite News Channels On June 21, 1982, Satellite News Channel I (SNC I) began serving over 2.6 million subscribers.‘ It is a joint venture between Group W Satellite Communications and ABC Video Enterprises. SNC I is a 24-hour headline news service that operates in 18-minute segments and utilizes the resources of ABC News and regional associates. Advertising rates, according to Lloyd Werner, SNC Senior Vice President for Sales and Affiliate Relations, are $5,000 per 30-second spot or $2 cost-per- thousand and the rate will increase with the number of subscribers. The number of SNC subscribers is expected to increase by 4.9 million before the end of 1984.12 Unlike CNN, which charges cable operators on a per-subscriber basis for carriage, SNC has paid each operator 75 cents for signing up with 13 them. Still, CNN 2 and SNC I will both be offering headline news services to cable operators and as CNN's LeBrun said, ”It should be a good little war."14 Local Cable Television Newscasts Both CNN 2 and SNC I, all-news radio, and character generated news all strive to give a synopsis of the news within a limited amount of time. Many cable systems have used the automated character generator to print out news on subscribers' television screens. The automated news can be national or local in scope. Stuart Kaplan reported in a study that of those viewing automated channels at least four times a week, over 60 percent tuned in out of "convenience (e.g., current information is available at all times; several types of information are available “15 Of those viewing the news channel, 84 percent used on one medium). it out of ”convenience," 13 percent for "completeness (e.g., can get more detail than from other media usually available in household)," and 11 percent for "uniqueness (e.g., the desired information is not 16 provided on other media available in the household)." The automated community information channel was watched by 63 percent for "convenience," 27 percent for ”completeness" and 37 percent for "uniqueness."17 Kaplan said that though "...most of the information provided by these channels is available from other media, an important advantage of the automated channels is that the information is available on demand 24 hours a day."18 Some cable systems have already begun to establish locally originated news programs (see Table 2). Many cable Operators are interested in local newscasts, but weekly production costs of about $2,500 for half- hour daily newscasts tend to dissuade them from entering the field.19 Still, those who produce cable news programs are providing a public service which could concurrently become profitable to the cable operator. 'Furthermore, the belief that local cable newscasts could not compete with news produced by commercial broadcast television stations is not necessarily valid.20 For over ten years, Palmer Cablevision of Naples, Florida has produced "The Naples Report;” a daily 30-minute local newscast.21 Table 2. Synopsis of Local Cable Television News as Cited in Chapter 1. System Length of Newscast (Location) (Minutes) Comments Palmer, Cablevision 30 share of 23 (April 1980) in Fort Myers (Naples, Florida) TV market; full time staff of 11, 3 part-time Communication Services 30 25 rating/34 share from 13,000 sub- (Salina, Kansas) scribers; advertising rates run $15 to $20 for :30 spot Jones Intercable 30 newscast live at 5 p.m. and replayed (Alton, Illinois) at 6 p.m.; full time staff of 4; 11,000 subscribers Colony Communications 30 Portuguese language newscast; rates (New Beford-Falls for advertising do not cover $2,500 River, Massachusetts) weekly expenses; projects advertising revenues to reach $20 to $30 per subscriber Cox Cable 30 newscasts at noon and 6:30 p.m. (Denton, Texas) inserted on CNN; $200,000 annual news budget; 6,700 subscribers SOURCES: ”Cable TV: Going After Small Markets,” Broadcasting, December 1, 1980; "Cable Meeting on the Cape," Broadcasting, July 20, 1981. 10 Production Manager Connie Pettit said the newscast has given the network affiliates stiff competition. In April 1980, she said Nielsen reported that "The Naples Report" received a share22 of 23, second only to the NBC affiliate in Fort Myers.23 Communication Services of Salina, Kansas has produced a daily half-hour local cable newscast for over seven years. The newscast has received a 25 rating and 34 share from its 13,500 subscribers and competes with broadcasters in Wichita, Kansas and Kansas City, Kansas. Program Director Rich Weber said that the 12 30-second advertising spots available during the newscast sell on long-term contract from $15 to $20 per spot.24 Jones Intercable of Alton, Illinois produces a daily 30-minute news program serving several small towns totaling 11,000 subscribers. The newscast provides an outlet for local news not carried by the Saint Louis, Missouri stations, reporter Mike Drieth said. Although the system sells advertising, he said, it does not cover expenses.25 Colony Communications of New Bedford and Falls River, Massachusetts produces a 30-minute daily cable newscast in Portuguese for the nearly 26 Colony President 50,000 Portuguese—speaking people in the area. Jack Clifford said that advertising rates are just high enough to cover weekly costs of nearly $2,500. Presently, Clifford said, the system expects to make $30 to $40 per subscriber once advertising becomes established in cable.27 Cox Cable's Denton, Texas franchise is located 40 miles from the Dallas-Fort Worth area and produces two 30-minute daily local newscasts that break into Cable News Network at 12:00 noon and 6:30 p.m. 11 Production Supervisor Paul Bean believes that cable companies producing newscasts in big cities could not compete financially with network affiliates. "It is most appropriate,” he said, "in small towns where the people can't get local news from anywhere else."28 CHAPTER II METHODOLOGY AND PROPOSAL This thesis will be descriptive in nature. By case study, it will determine whether or not local cable newscasts can compete with the newscasts of local commercial broadcast television stations. Three Michigan television markets representing three different sizes of national markets will be individually evaluated in this study. The Detroit market is the seventh largest market in the United States and will represent the top ten television markets; the Grand Rapids market (which includes Kalamazoo and Battle Creek) is ranked 37th and will represent the national television markets ranked 11th through 15th; and Lansing is ranked 96th and will represent the markets ranked 51 through 100.1 A modified form of the ”market/station analysis” will be used to determine if a local cable newscast can be competitive with commercial broadcast television newscasts. The "market/station analysis" was developed at Michigan State University and it reviews trends of the population and economy, competition, and financial soundness of a broad- cast or cable property. A decision can then be made, based on infor- mation gathered in the "market/station analysis" as to the value of the local cable newscasting Operation.2 12 13 In this study, a modified form of the ”market/station analysis" will replace the station or cable system portion with that of the local cable television newscast. In addition, those stations not producing local newscasts are excluded from the study. The market/news analysis will utilize the following steps in evaluation of each market: 1. Review of the market's population. Changes in the population by year, race and age/sex are reviewed to determine any changes in the composition of the market. 2. The market's economic health is measured. Economic indicators such as the Buying Power Index, Effective Buying Income, Total Retail Sales, Average Propensity to Consume, and unemployment as well as media competition are examined. 3. The local commercial broadcast television stations producing local newscasts within the market are analyzed. Length and time of newscasts, advertising rates, staffing, and equipment are factors to be considered. 4. The categories in step three are used to estimate advertising rates, staffing and equipment for the local cable news service. 5. A ten-year pro fernm.statementis created from all the categories in order to estimate whether the local cable news can be a profitable venture.3 Assumptions Cable television is gradually becoming part of the American lifestyle. Broadcast television penetrated 98 percent of all American 14 television households while cable television had achieved just 30 percent national penetration in May 1982.4 Therefore it is assumed that cable television will operate under the following handicaps and that these will decrease over time. First, there is still a lack of an established method for audience measurement of cable television. A.C. Nielsen's Home Video Index Division is commissioned by the Cable Advertising Bureau to test six methods for measurement of cable audiences on 30,000 households with a coincidental 5 The six methods telephone follow-up of an additional 30,000 households. being tested by Nielsen during June 3—16, 1982 involve the use of both diary and coincidental telephone calls. Three diary methods under eval- uation include Nielsen's standard local TV viewers diary; a roster (listing of all available programming) personal daypart diary; and a roster diary measuring the household by daypart. The coincidental tele- phone methods include "seven-day, one-call-per-day recall; one-day-only 'aided'recall;and one-day-only unaided recall.‘I6 Second, since cable television is a new advertising medium, some kind of incentives will be needed to lure advertisers. Most likely, these incentives will be in the form of "discounts” in advertising rates. Paul Kagan and Associates, a respected industry source, has said that adver- tising over local cable systems will increase from $15 million in 1980 to $195 million in 1985 and $575 million by 1990.7 Other assumptions made in this study are: 1. Cable systems located in areas of high population concentration will follow the lead of the Bay Area Interconnect and form similar interconnections. 15 2. Cable systems within these areas will want to compete with commercial broadcast television newscasts for local, regional and national advertising dollars. Due to economies of scale, these systems will take advantage of interconnection to create a cable news cooperative and produce a single cable news service to avoid a duplication of services. 3. The all-news format currently used by CNN or SNC will become the framework in which the c00perative will insert its news programming. 4. Time adjacent to the local newscasts of commercial broadcast television stations will be used by the cooperative to produce a regional newscast. During the local broadcast news prime time, which differs in each market, every half hour of co-op programming will have five minutes of national news, 20 minutes of regional news, sports, and weather, and an optional five minutes for local news. Research Proposal This paper proposes to offer analysis to demonstrate that a local cable news cooperative (co-op) can be profitable within a ten-year period based on capital investment. For the co-op to be profitable, it must not only be able to build an audience but it must be able to attract advertisers. Furthermore to accomplish both of these objectives, the co-op must compete with the local commercial broadcast television newscasts for quality of journalism, audience and in turn, advertisers. If the co-op cannot be profitable within a ten-year period, then it must be considered an undesirable business pr0position. CHAPTER III MARKET/NEWS ANALYSIS—-DETROIT, MICHIGAN Market Analysis Introduction The term "market“ as used in this study refers to the television market. The television markets of the United States are determined by A.C. Nielsen Company and Arbitron. Arbitron defines the television market as “...a geographic design composed of a group of counties ...exc1usive of all others based on measurable viewing patterns."1 The television market defines the boundaries in which the local cable television news cooperative will operate. Geography The Detroit television market is located in the southeastern corner of Michigan's Lower Peninsula and is 6,171 square miles.2 This market is centered around the City of Detroit, Michigan. It is comprised of the following counties: Lapeer, Livingston, Macomb, Monroe, Oakland, St. Clair, Washtenaw, and Wayne.3 16 17 Demographics of the Population Introduction The demographics of a p0pulation reveal trends in the population as seen from different perspectives. The demographic categories of the market's population are: general population, age and sex, and race. This examination discloses changes in the population that can affect a market's economic future. General Population The population of the Detroit television market declined one-sixth of a percent from 1970 to 1980 (see Table 3). However, while the metro- politan area consisting of Wayne, Oakland, and Macomb counties has slowed in its rate of growth, the outlying counties of Livingston and Lapeer have experienced increasing growth rates. Still, the decline in the rate of change of the Detroit market between 1970 and 1980 has dropped below the rates of Michigan and the nation for the first time in 30 years.4 This means that the market is not growing and worse, it is falling behind state and national growing trends. Further the decline indicates the beginning of a reduction in the number of consumers, which leads to a shrinking economy. Age and Sex The age and sex breakdown of the population indicates how the popula- tion is distributed. Those 29 years of age and under make up 51.3 percent of the Detroit market's population (see Figure l). The largest single age group is composed of children age 6 through 13 who represent 13.3 percent of the population. The oldest age groups are also the smallest. .m .a .AommA .eeAeeo mewpeeea peeseee>ou .m.= ”.u.o .eopmeAemezv .AwmA ”.m.= egg to eeeteme< AeewemABeem =.ommp op omAP mme< use cowpmpzaoa= .msmcmu ms» we smmgzm .mugwssou mo pcmspgeamo .m.: ”mm .a .amwmp .mowemo mcwpcwga pcmscgm>oo .m.: u.u.o .copmcwgmmzv .cemwgowz “mpcmpwnech we eweszz .cowpm_:mmm asp $0 movpmwemuumgmgu «cowpmpzaoa we mzmcmu owm_ .mzmcmu esp mo :mmezm .mogwseou mo acmEmeamo .m.: ”momzom 18 Ae._AV www.eom.oNN Ae.mAv Amo.Nom.moN Am.mAv mAA.mmm.mAA wmA.mNm.Am_ .m.= Am.ev on.NeN.m Am.m_v emw._wm.w Aw.NNv ea_.mmm.A 00A._Am.e eemLLUAZ AA.o-v omm.NmA.e Ae.m_v mom.wmA.e Ao.mmv owm.mmm.e Amm.owm.m mAeeoe paste: Aw.mmv mmo.OA Am.emv Aem.mm AA. AAV omm._e emA.mm Leases AA.OAV mm~.oo_ AN.emv Aem.mm AA. mev mmm.mm mNA.e~ eoemm=A>AA Ao.mAv mme.emA Am.AAv mAN.mAA Am. mmv ONA.AOA www.mA mezzo: Am.m_v Now.wm_ AA.NAV mA_.o~_ Ao. AAV AON.AOA mmm..m LAeAQ .em A_.mAV weA.eeN Aw.mmv mo_.emm AA. mmv oee.NAA eoe.em_ zeeeeemez AA.AAV ooe.eme AA. emv mom.mme Ae. mAAV eom.moe Aem.ew_ egoeez Ae.__v mmA.__o._ Am. Amv AAw.Aom Am. eAV Amm.ome Aoo.emm eeeAxeo Am.NA-V Amm.Amm.N AN. 3 mom.OAo.N A. 3 Amm.eee.m mmm.mme.m waxes Aemeeee xv owmA Aemeeee AV OAmA Aemeeee xv Gem. ommA Aeezou eNAm COAAQADQOA Apezou An nexeem .owmA-omm_ emcee: >e queeeo age CA memeego eoABeADQoa .m eAeee 19 Adults 85 and older, for example, make up less than one percent of the total population.5 The population of the Detroit market is young and a young market is one with more consumers entering into it. The sex of the population remains balanced between males and females. However, the difference between the sexes is greatest for adults 65 6 years of age and older (see Figure 1). Still, this difference has an insignificant bearing on the market's economy. Rage The racial makeup of the Detroit market consists of two major groups. The largest group is White, composing 77.5 percent of the population. The largest minority group is Black, representing 19.0 percent of the total population (see Table 4).7 These two groups comprise 96.5 percent of the entire population and it would be adventageous to target these two racial groups for advertising and programming. Economic Indicators Introduction This part of the analysis examines economic trends in the Detroit television market. There are several ways of looking at the past perfor- mance of the economy. The Buying Power Index (BPI) is one indicator that measures ”...the market's ability to buy...(and it is expressed) 8 Two other measures of the as a percentage of the U.S. potential.“ economy's past performance are the Effective Buying Income (EBI) which is gross income less payroll deductions and Total Retail Sales (TRS) which represents total sales make to consumers.9 The average household's 20 xnv cmmwzowz ”cowpmpsaom mo mzmcwu ommp .mzmcmu esp we :mmgzm .mogwssou mo “cwsugmqmo .m.: xmm\mm< >3 cowumngoa omm_ m.pmxcez >H pwocpwo $0 mmmpcwocwa mm< emu: gmupo um an em om um uu um mm um NA ma u: use mm um“ 1mm -ou -mm -mv -mm -om 1mm -w_ .u_ -o P33 39 mpmzll £95“. .PmmA gmnswomo o_ .<_ «Fwd mam» memeszm .m50wwoeowz .Axuczou ”momaom ._ weaned 3 m m r OWQNKDLDVMNI— _? fi‘ + fi‘ T I LO V m N l— O H H 1—1 H :— v—i 21 Table 4. 1980 Racial Composition of the Detroit TV Market Racial Group Percentage of the Total Population White 77.5 Black 19.0 Spanish 1.6 Other 1.9 TOTAL 100.0 SOURCE: U.S. Department of Commerce, Bureau of the Census, 1980 Census of Population and Housing: Michigan, Final Population and Housing Units Counts, (Washington, D.C.: U.S. Government Printing Office, 1981), pp. 14-24. EBI and TRS are used to estimate the Average Propensity to Consume (APC). The APC is a ratio of each dollar of income that is spent on consumer goods and it is one measure of consumption habits of the average house— hold.10 The unemployment rate of the market indicates how many people are out of work. The higher the rate is, the less dollars there are going into the market. In addition, a review of the market's five largest employers gives an indication if a market is dependent upon a particular type of industry. By combining all of these economic indicators, a general picture arises as to the trends of the Detroit television market's economy. An economy that shows little or no growth is an important factor to be 22 weighed in the final decision of whether or not a cable television news co-op can be profitable. Buying Power Index The BPI of the Detroit television market has failed to exceed its 1974 high of 2.57 percent (see Table 5). After dropping to 2.45 percent in 1975, the BPI has averaged 2.46 percent and fluctuated only one one-hundreth of a percent from 1975 through 1979. However, in 1980 the market's BPI fell over a full tenth of a percent. It appears very doubtful that the Detroit television market will ever recover its 1974 share of the U.S. economy.11 Income, Consumption, and Average Propensity to Consume Trends in the average household income and consumption are important indicators to retailers and manufacturers who might consider advertising their products over commercial broadcast television or cable television. Moreover, if any portion of income remains after consumption, then the balance can conceivably be used for additional consumer purchases. The income of the average household in the Detroit market has increased annually from 1973 through 1980 (see Table 6). The average household consumption increased from 1973 through 1979 but declined in 1980.12 The Average Propensity to Consume (APC) is a ratio of how much of each dollar of net income was spent on retail goods. In the Detroit television market, the average mean APC dropped from 1973 to an eight—year low of .4400, the APC in the following years was still above the mean average (see Table 6).13 23 Table 5. Annual BPI of the Detroit TV Market BPI Year (% of Total U.S. Economy) 1973 2.5134 1974 2.5651 1975 2.4520 1976 2.4747 1977 2.4612 1978 2.4684 1979 2.4650 1980 2.3397 SOURCE: ”Annual Survey of TV Markets," Sales and Marketing Management, Survey of Buying Power Part II, October 1974 through October 1981, c 1981 S&MM Survey of Buying Power II. Table 6. Income, Consumption, and Average Propensity to Consume in the Detroit TV Market, 1973-1980 Average Average Average Household Household Propensity Year EBI ($) Share of TRS ($) Balance ($) To Consume (APC) 1973 16,115 7,696 8,419 .4776 1974 17,115 8,382 8,733 .4897 1975 18,156 8,700 9,456 .4792 1976 19.787 9,639 10,148 .4871 1977 22,218 9,775 12,433 .4400 1978 23,561 11,920 11,641 .5059 1979 25,693 13,802 11,891 .5372 1980 26,801 13,480 13,321 .5030 Note: The average household income and consumption were based on figures found in "Annual Survey of TV Markets,“ Sales and Marketing Management, Survey of Buying Power Part 11, October 1974 through October 1981. S&MM Survey of Buying Power II. c 1981 24 Unemployment and Employment During the past five years, the Detroit market has had annual average unemployment rates higher than either Michigan or the nation (see Table 7). In 1981, for example, the market's annual unemployment rate was 13.6 percent which was one percent higher than the Michigan 14 This high unemploy- rate and six percent higher than the national rate. ment rate has been a result of the market's dependence on the domestic automobile industry. Table 7. Annual Average Unemployment in the Detroit TV Market, 1972-1981 Detroit Michigan U.S. Year (% Unemployment) (% Unemployment) (% Unemployment) 1972 8.0 7.0 5.6 1973 6.5 5.9 4.9 1974 9.6 8.5 5.6 1975 13.2 12.5 8.5 1976 9.7 9.4 7.7 1977 8.7 8.2 7.0 1978 7.0 6.9 6.0 1979 8.4 7.8 5.8 1980 14.7 12.6 7.1 1981 13.6 12.3 7.6 SOURCES: "Michigan Employment Security Commission, Research and Statistics Division, Labor Analysis Section, "Civilian Labor Force and Wage and Salary Employment Estimates, 1971-1981; U.S. Department of Labor, Bureau of Labor Statistics, “Employment Status of the Noninstitutional Population 16 Years and Older, 1947 to Date,” Employment and Earnings, January 1982, p. 9. 25 The five largest employers in the market with 10,000 or more employees are: General Motors, the City of Detroit, the Detroit Board of Education, the U.S. Government and Chrysler. Four of the top 20 employers are either auto manufacturers or auto parts suppliers. 15 It should be Another: 4 of the 20 are state or local governments. noted that the various bodies of government are dependent on the tax base generated by the automobile companies and their suppliers. Media Competition Introduction Commercial broadcast radio and television stations, and daily newspapers compete for advertising dollars in the Detroit market. Local cable operators, while competing with broadcast television for audience (especially with pay cable channels), do not compete with local broadcast television stations for advertisers. Rather, the various cable networks compete with the national television networks for adver- tisers. For the most part, local cable operators have yet to exploit advertising. The Bay Area Interconnect and a few other similar arrangements have recognized this deficiency.16 However, cable penetration in the Detroit television market has reached 8.2 percent of the television house- 17 holds and much greater penetration is needed before an interconnect can even be considered. Television There are eight commercial broadcast television stations serving the Detroit television market (see Table 8). Two of the eight switch to pay television programming in the evening.19 A license for television 26 Channel 38 in Warren, for which there is one applicant, is yet to be assigned.20 Table 8. Commercial Broadcast Television Stations Licensed in the Detroit TV Market City of License Call Letters Channel Licensee Affiliation Ann Arbor WIHT 31 Satellite Television Systems STV Detroit WDIV 4 Post-Newsweek Stations NBC WGPR 62 International Free and Accepted Modern Masons IND WJBK 2 Storer Broadcasting CBS WKBD 50 Field Communications IND WXON 20 WXON-TV STV WXYZ 7 American Broadcasting Co. ABC Windsor CBET 9 Canadian Broadcasting Corp. CBC SOURCE: "Facilities of Television,” Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), pp. 8108-8109; ”Subscription TV Stations,” Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. B148. 3221.19. The Detroit market has 48 commercial broadcast radio stations. Twenty-four of these are AM stations and 24 are FM stations. Rates for a 30-second advertising spot range from $185 at WJR-AM in Detroit to $6 at WDEY-AM-FM in Lapeer and WTGV-FM in Sandusky (see Appendix).21 27 Newspapers 23 There are eight daily newspapers in the market. The Detroit News and Detroit Free Press each have a circulation of over 500,000. Subsequently, either one has a greater circulation than the six other dailies combined. Only the Detroit Free Press is delivered in the morning while the remaining seven are delivered in the evening. Advertising rates per line range from $5.26 at The Detroit News to $.44 at The Ypsilanti Press. The rates are contingent, in part, on circulation and The Detroit News has the highest with 630,573 daily. The Ypsilanti Press' circulation of 15,703 daily is the lowest of the eight dailies (see Table 9).23 News Analysis Introduction This section will examine cable television's direct competitior; commercial broadcast television. Specifically, the news departments of commercial broadcast television stations will be evaluated in the following categories: personnel, revenues, expenses, and equipment. There are three broadcast television stations in the Detroit market producing competitive local newscasts: WDIV, WJBK, and WXYZ (all licensed in Detroit). WDIV is owned by Post-Newsweek Stations and is assigned to Channel 4. WJBK is owned by Storer Broadcasting and is assigned to Channel 2. WXYZ is owned and operated by the American Broadcasting Company (one of the three major broadcast television net- works) and is assigned to Channel 7.24 The staffing of the three news departments ranges from 64 employees 25 at WDIV to 83 employees at WXYZ (see Table 10). It is unclear why there 28 Table 9. Daily Newspapers Published in the Detroit TV Market City of Publication Circulation Newspaper Publisher Daily/Sunday Ann Arbor The Ann Arbor News Booth Newspapers 42,161/47,08l Detroit Detroit Free Press Knight-Ridder Newspapers 604,062/557,067 The Detroit News Evening News Association 629,598/829,24O Monroe Monroe Evening News Monroe Publishing Co. 27,131/ ------- Mount Clemens The Macomb Daily Panax Newspapers 51,547/ ------- Pontiac The Oakland Press Capital Cities Communica- 73,295/75,010 tions Port Huron The Times Herald Gannett Newspapers 30,845/35,79O Royal Oak The Daily Tribune Tribune Publishing 47,096/ ------- Ypsilanti The Ypsilanti Press Harte-Hanks Communications 16,370/16,097 SOURCE: "Daily Newspapers Published in the United States," Editor and Publisher International Yearbook 1981, (New York: Co., Inc. 1981), pp. 1130-1139. Editor and Publisher 29 exists such a disparity in the staffing of these news departments. One possible explanation might be that WXYZ is owned by a network and it may have responsibilities to the network in the gathering of national news. The three stations also appear top-heavy with supervisory personnel. Table 10. TV News Personnel in the Detroit TV Market Number of Employees Position onv WJBK* wxvz MEAN Supervisory 18 22 l3 l8 Anchorperson 6 6 7 6 Sportscaster/Weathercaster 7 7 8 7 Reporter 11 11 14 12 Writers 3 4 12 6 Cameraperson/Technician 19 3O 24 24 Miscellaneous -- -- 5 -- TOTAL 64 80 83 73 SOURCES: Interview with Robert White, News Director, WXYZ-TV, 22 March 1982; personal letter from Mike VonEnde, News Director, WJBK-TV, 23 March 1982; personal letter from Bob Warfield, News Director, WDIV—TV, 7 April 1982. *Estimates made from general categories. Revenues Revenues are generated by a news department through the sale of time to advertisers (see Table 11). In the Detroit market, two of the stations broadcast a local midday newscast on weekdays. The length of the late afternoon local newscasts range from one hour at WDIV 30 to two hours at WXYZ.26 The estimated cost per 30-second advertising spot is based on the fixed rate, which is the maximum rate charged to advertisers. The rate a station charges is influenced by the program rating that the newscast receives. WXYZ, the leader in ratings, charges a higher price for advertising spots than either of its two competitors. Expenses Salary Expense. Salary expense is divided into two categories: news salaries and advertising commissions (salaries) for the selling of newscast time to advertisers. Policy concerning sales commissions varies with each television station. The annual news salaries calculated in Table 12 are based on a survey of weekly news salaries by Vernon A. Stone for the Radio and Television News Directors Association. The questionnaires were mailed to 690 commercial broadcast television stations and 449 or 65 percent of those returned were usable.27 Eguipment. The cost of broadcast television equipment, as shown in Table 13, is very expensive. The single most expensive item is the live remote van. All three of the television news departments in the Detroit market have at least two of the vans. The expense of the equipment appearing in Table 13 is estimated from current prices for broadcast quality equipment. 31 .em-o_ .aa .Amwm_ .x:masoo cmmpmwz .u. mocmemwmm QH> cmmewz =.mmmmgw>< Ewgmogae .Nmm_ seem: mm .>»-N>x3 .emmmcmz mmpmm Fmgwcmo .coccmu emu Eogm gmppmp chomema .Aummo_ucm ugmu mummv Nwm_ Agesenmd NF .>H-xmu3 .memcmz mmme quoA .:o>:m¥ .4 mmgomw Eocw emppmp Fecomcmm .Aummorucm ugmu mummy Nmmp seem: N .>h->Ho3 .mxoogm .< cmmsm soc» mepmA Pacemgma “mmumuom ooo.omn.wm Ax3 oo~.mHH.om AHoz mem;m\m:wwmm Amv Amv xmm3\mxmo pmmomZmz Aev pmwomZmz mo weep mmmcm>< Ammz mscm>mm mscw>mm mo causaz mpoam\.omm om wumm umxwd cowumum .+e_=z <20 Aesee< AAAooz eo Longs: pmxemz >H uwogpoo asp cw mummomzmz >H Amoou Low muzcw>mm umumswpmm .F— m_amp 32 .mewgemeuee Aegecem Eecw mums wepeswpmm k. .m_-eA .aa .AeeA LeeEoooe .eoeeowezesoe .NwmA Awea< A .>w ->Aoz .Loeooewo mzoz .erwwtez pom soew LoeeoA Aecomeoa .NwmA eoeez mm .>w-¥mez .eoeooewe mzoz .oeemeo> oxwz seew toeeoA Aeeomtea .NemA cote: NN .>w-~>x3 .eoeooewe mzoz .oewez eeoeom new; 3ow>eoeeA ”mmemeem Nam.fimo.m wmm.mmo.m «mm.owfl.m Aeee=m mewgewem chcemwee mewgewem weccemcee mmwcewem Feccemwee va :ewuwmee Peecc< we Lensez weecc< we Lensez Peecc< we Lensez agewem xwxeez N>x3 wxmuz >Ho: pexeez pwegpeo exp cw mucuspceeeo mzez >w weeeu Lew emceexm Age—em uepeewpmm Feecc< .NH eweew 33 .eme .e .AAwmA ..oeA .emoewe eowmw>vow “.e.o .eoeec_;mezv .cewpwum NwoP-mew xeeuueed cewmw>epew =._wm_ pceEeweem :ewwepm :ewmw>ewew Fewewmsseo .m.:= mmwmw xwzu m .ewceewwweu .mmwemc< we; .>wo .umz poeuege pmeeueogm xcem .AePXew exwww< sew: 3ew>xmpcw eceueewew ”He-em .ee .Nwm_ .m_ Fwwe< .mcwpmeeueegm =.mmeeze;m geeseweem meweEH uce mcewpe>eccH= ”mmomuom eee.eNA.N eee.eme.~ eee.NwA.A Aqwew eee.emA eee.emA eee.emH eee.emA mzooceAAoomwz eee.eem eA eee.eem e eee.eem eee.em Nw> sew; eweseu wzm wpeeea eee.eee.A m eee.eee N eee.eee eee.eeN ee> oposom o>we eee.eeA e eee.eeA w eee.Nm ooe.mA ANw>V L828$ oeew oeew> .eAN eee.eNe e eee.eeA e. eee.eeN eee.eN eLoEee oweeem Aev .oz Aev .02 Amy .oz Ame emee Aeeow emoe Aeeow emoe Aeeow emee ewe: ecosawsew N>x3 xmez >Aez uexwez cewmw>ewew pwecpea ecu cw pceseweem :ewmw>ewew pmeeueewm .mw ewnew 34 A Local Cable News Cooperative Introduction Figures from the previous section will be used to generate estimates of revenues and expenses for the local cable news c00perative. The co-op is an interconnected group of local cable systems that will program local newscasts for insertion over a national cable news channel. The insertions will coincide with the local commercial broadcast television newscasts, allowing the co-op to compete for advertisers. The goal of the co-op is to offer quality programming at a profit. Revenues The sole source of revenues for the cable news co-op is the sale of time during newscasts to advertisers. Broadcast and cable television differ from radio and newspapers in that they deliver audio-visual infor- mation into households. Therefore cable's only competition, from this perspective, is broadcast television and rates for the local cable news cooperative will be based on those of the local commercial broadcast television newscasts. The co-op, being a new source of local news, cannot deliver as large of an audience to advertisers as can the broadcast television stations. This means that advertising rates for the C0-Op will have to be lower and initial discounts will have to be offered to attract adver- tisers. Thus the co-op will base its rates on 50 percent of the average fixed rate of the three Detroit broadcast television stations (see Table 14). 35 .NwmA seem: mm .>w-N>x3 .cemecez meAem Aeweceu .ceccew we; seew AeppeA Aecemwee .AuemeAecm ueeu epemv NwmA Ageeened NA .>w-¥mu3 ,Lemecez mewem Aeeeu .cezcmg .A emeeea EeLw weapeA Aecemeee .Auwmepecm ugeo epemp.mwmw :eLez N .>w->Ao3 .mxeegm .< cemem Eegw Amppmw wecemgee Ammomuom eee.eeA.NA 4em Ae» ewwee>em mAAe>< Aev AAA N>x3 eeez >Aez AeoAzeoeoe eseev A < Ag 3 gee: meeem Aev eeeem coweeem eeww eo-eu mzez eAeeu we xom cemz Aexeez Aweeeoe eee CA ee-ee ezez eAeeo AeeeA e Lew mmecm>em uce mepem mcwmwpge>u< umpeewpmm .eA mAeew 36 Expenses Salary Expense. Salary expense is divided into advertising sales commissions (salaries) and news salaries. In order to cover the adver- tising commissions and expenses related to sales, 20 percent of gross revenues will go to the advertising sales department. News salaries are based on the number of employees, their positions, and the amount each is paid. By trimming the staff down from the average staff size of three Detroit television stations, but keeping the pay competitive, the co-op can hire a quality staff. Weekly salaries for the C0-0p are based on a survey of 449 commercial broadcast television stations by Vernon A. Stone for the Radio and Television News Directors Association (see Table 15).28 Table 15. Proposed Staffing and Estimated News Salary Expense of the Detroit Cable News C00perative Number of Individual Annual Position Employees Weekly Salaries ($) Salaries ($) Supervisory 10 790 410,800 Anchorperson 6 1,296 404,352 Sportscaster/ Weathercaster 5 743 270,452 Reporter 12 649 404,976 Cameraperson 19 415 410,020 TOTAL 52 1,900,600 SOURCE: Vernon A. Stone, "Moderate Gains in News Salaries," RTNDA Communicator, December 1981, pp. 16-19. 37 Eguipment. The equipment needs of the cable news c00perative are similar to that of broadcast television news. All three broadcast television news departments in Detroit have live remote capability. Therefore, if the cable news cooperative is to compete with the broadcast television newscasts, it will have to acquire similar equipment. Since live remote vans are made to order, the co-op will purchase two vans (see Table 16). Table 16. Estimated Equipment Expense for the Detroit Local Cable News Co-Op Equipment Unit Cost ($) Number Needed Total Cost ($) Studio Camera 70,000 4 280,000 Video Tape Recorder (VTR) 3/4” 13,000 2 26,000 Pr. VTRs with Edit. 3/4“ 32,500 2 64,000 1/2" to 3/4" VTR Unit 40,000 1 40,000 Live Remote Van 200,000* 2 400,000 Remote ENG Camera with Portable VTR 1/2'I 50,000 7 350,000 Pr. VTRs 1/2" with Edit. Deck 40,500 2 80,000 Miscellaneous 150,000 TOTAL 1,390,000 SOURCE: "Innovations and Improvements: NAB Equipment Showcase," Broadcasting, April 19, 1982, pp. 34-41. * o Est1mate. The expense of the equipment, less a salvage value of 20 percent, will be depreciated over a sixeyear span. The sum-of—the-years-digits 38 method of depreciation, which allows large tax deductions early in the equipments'life-span, will be used to help lower the amount paid 29 The total equipment expense is $1,390,000 less a salvage in taxes. value of $278,0001eaving $1,112,000 to be depreciated over the six years. The equipment, to be replaced in the seventh year of operation, is expected to increase in cost by an annual rate of ten percent. By the seventh year of operation, the new equipment will cost $2,462,468 with a salvage value of $492,494 and leaving $1,969,974 to depreciate. Other Expenses There are other expenses not covered in the aforementioned categories. The expense of running a news operation must be accounted for. There are various costs such as: fuel costs for motor vehicles, maintenance and repair costs for equipment, and costs for studio equipment. These and other costs are difficult to estimate, therefore, all of these costs will be combined under ”Administrative and Miscellaneous Expenses" that will be increased annually by ten percent. Besides revenues and expenses, there is a tax of 25 percent to be paid on any income remaining after depreciation.3O Pro Forma The ten-year pro forma profit and loss statement combines all revenues and expenses to discover whether or not the local cable news c00perative can be profitable (see Table 17). A ten-year period is used in the pro forma so that the projected performance of the co-op can be viewed over a period of time. The pro forma examines the finances of a given year. Annual revenues, less annual expenses, leaves an operating 39 income for that year. If expenses are greater than revenues, then there is a loss in operating income and depreciation and taxes do not apply. However if revenues are greater than expenses then there is a profit in operating income. Assuming there is a profit in operating income, the depreciation allowance is substracted from the operating income with the taxable income remaining. If the amount to be depreciated is greater than or equal to the operating income, 25 percent of it is paid in taxes leaving a net income for the co-op. 4O Aueecwpceev mme.oow.w AeA.NNo.m moA.emN.n nom.omm.e A¢N.NNm.e eseecA pez www.mmm.m emo.e~e.~ emo.mAe.N ome.mmA.N mAm.mNe.A mexew wmm.mAw.AA mAm.eme.oA eeA.Nwe.m mem.mmu.w eme.mom.o meeecA eAeexew mom.moA mmm.wmA ko.AAm Nem,eem eAN.AAm cewpeweeeeeo mew.mAm.AA mno.mmw.oA ome.mwm.a mom.wmm.w wem.Amw.e eseecA mcwpegeeo wa.wem oom.~om oow.NAA ooo.eeA ooo.ooA meeece—Aeemwz use m>wpewpmwcwsu< -- -- -- -- ooo.omm.A Aceseweem 0mm.~mm.m Nmo.wmm.m omA.mwo.m Amm.wow.m www.mmm.m mcewmmeEeu meAem mee.mmm.m www.mmm.m omm.mmm.m oeo.omo.m oom.oom.A eewgeAem mzez memceexm mNA.mwe.wA NeA.omm.eA Noe.mee.mA eme.Aeo.eA oem.een.NA meece>em NwmA ewmA mwmw ewmA mmmp e>wpegeeeeu mzmz eAeeu Awewpeo esp Lew AceEeAeAm mmeu uce wwwece eEAeA eee Aee>-cew .NA eAeew 41 eww.uoo.eA mAw.mme.NA omo.mme.AA Nem.mom.w mm¢.m~n.m eEeecA pez mmm.mue.e wmm.Amm.e Ame.emw.m eAA.mmw.N mme.wmm.m mmxew mNA.NNe.wA Amm.emm.eA Awe,mmm.mA mee.oem.AA emm.mmo.mA eseecA eAeexew mNe.Aw~ mmm.mwm Aeo.mee omw.mem www.mm :ewpeweeweeo eoe.wmm.wA ewA.oom.mA mNm.eeA.mA mAm.mom.AA eem.ewo.mA meeecA mcwpeweeo emA.mAe wflm.mAm Nwm.mme wAm.mmm wmm.wmm meeeceAAeemwz uce e>wpeepmwcw5u< -- -- -- www.mee.m -- Aceseweem www.mmo.e mem.mu¢.m mmo.mmm.e Amm.mmm.e mAe.AAA.e mcewmmweseu meAem oAm.Awe.e ooA.emo.e wmu.mox.m emo.~em.m mmm.oeo.m mewLeAem mzez memceexm oAA.mmo.om Amw.mem.um NmN.mww.¢N eom.mAe.NN emo.mmm.om meece>em NmmA AmmA ommA mwmA mwmA Aeezewecoov .NA eAeeA CHAPTER IV MARKET/NEWS ANALYSIS--GRAND RAPIDS, MICHIGAN Market Analysis Introduction This section of the study evaluates the characteristics of the Grand Rapids television market. This market serves as a representative of television markets that are ranked 11 through 50 by A.C. Nielsen and Arbitron. The television market will serve as the boundaries in which the local cable news cooperative will operate. Arbitron defines the television market as "...a geographic design composed of a group of counties...exclusive of all others based on measurable viewing patterns.1 Geography The Grand Rapids market, encompassing 8,690 square miles, is located in the southwestern part of Michigan's Lower Peninsula.2 The following 14 counties embody the Grand Rapids television market: Allegan, Barry, Branch, Calhoun, Ionia, Kalamazoo, Kent, Mecosta, Montcalm, Muskegon, 3 Newago, Oceana, Ottawa, St. Joseph, and Van Buren. Major cities in the market are: Grand Rapids, Kalamazoo, Muskegon, and Battle Creek. 42 43 Demographics of the Population Introduction The demographics of the population represent different ways of describing the people. The demographics to be examined in this study are: general population, age and sex, and race. By following changes within each category, trends can be seen that could impact the market's economy. General Population The population of the Grand Rapids television market increased 10.4 percent from 1970 to 1980 (see Table 18). The counties where the major cities are located (Calhoun County-~Battle Creek; Kalamazoo County--Ka1amazoo; Kent County--Grand Rapids; and Muskegon County-- Muskegon) are among the areas that experienced the least growth in population. On the other hand, those counties outside the major population centers, with one exception, had growth rates of at least 13 percent. The Grand Rapids market growth rate over the past 30 years is similar to the state and national rates. In 1980 the market was just below the national population growth rate but above the Michigan rate by 5.9 percent.4 The market's population reflects national population trends and this assures a rate of consumer growth consistent with the nation. Age and Sex Age and sex breakdowns give the population characteristics as to the composition of the market. Those 29 years of age and younger make up 52.9 percent of the total population (see Figure 2). The largest age group is young adults, age 18 through 24,1Wu1compose14.3 percent of 44 ”momzom .AmmA Leeseeeo oA .w muweem ucegw we emepceegee em< Lmuwe em en em mm em we em mN eN NA NA use use mm -mn -mo -oo -mm -m¢ -mm -om -mN -wA -eA -o m . . . . . . . . _ . . _ _ T A T N - m - e - m - e - A e - w o. e - m .o u. o - OH o. .. IA 0 G O O .. m .NA 0 ...... e 0.. A.¢A - mA Aewew 0: flex 1 ewesed... 45 the market's population. The smallest age group, adults age 85 5 The population and older, make up one percent of the population. of the Grand Rapids market is weighted towards the younger age group, which is a good indicator of future economic growth. There are over ten percent more females than males in the market (see Figure 2). The number of females in relation to the number of males has remained within 0.3 percent through age 64. But the number of females increases over males by at least 0.5 percent for those age 6 65 and older. Still, the sex differences in the population are insign- ificant and should not have an effect on the economy. Rgp§_ There are two major racial groups in the Grand Rapids television market. The largest group, White, composes 90.6 percent of the population (see Table 19). The Black racial group makes up the largest minority group representing 5.6 percent of the population.7 The racial composition of the population is predominantly White with a small Black minority. This information will be a determining factor in the making of adver- tising and programming decisions in the market. 46 Aueecwpceev e.e eeA.ee e.e eee.Nm e.eA mee.em e.eA NON.em eoeeee e.eN AeN.ee e.eN eeA.em N.AN emN.Am e.eA meA.eN Aeeee e.eA eee.Ne e.eA eee.ee e.eA emN.ee e.e mAe.Am EAeeroz e.NA eAe.Ae m.e eee.ee e.mA NNA.me e.e eeA.em eAeeA e.eA mee.ee e.NA Nem.Ne A.eN Nmm.Ne e.eA AAe.em eeeeoe .em e.eA eAe.ee A.eA MNA.ee e.eN eem.ee e.AA eeA.ee cease =e> e.NN eee.Ae e.eA eNe.ee e.AN eNN.Ne e.eA mee.Ne eeeeAA< e.e- Nee.AeA N.N mee.AeA e.eA eee.emA e.NN meA.eNA ezeeAee e.NN eNA.NeA e.eN AeA.eNA e.ee eAA.ee e.eN AeN.MN ezeeee A.e eee.NeA e.e eNe.NeA e.eN mee.eeA e.eN eee.ANA eoeoxezz e.e eNm.NAN e.eA eee.AeN e.em NAA.eeA e.eN NON.eNA eeNeEeAe¥ A.e eoe.eee N.eA eee.AAe e.eN NeA.mem e.AA NmN.eeN Aeee Aeeeeeo NV eeeA Aoeeeeo NV eNeA Aeeeeeo NV eeeA Aeeeeeo NV eeeA seesee oNAe eereAzaoa Aeezee Ae eoxeem .eeeA-eeeA Aexeez >A eeweem eeeee eee CA meeeeee :eAAeAseoa .eA eAeeA 47 .eewwwo mcwpcwee p:eE:ge>ew op eeNA eoe< eee eeAeeAzeea, mcwpcwge Acescem>eo .m.: .m.: “.e.e .coeecweeezv .AeeA .e .a .AAeeA ”.m.: ecu we peegpmn< Aeowpmwpepm emomm— .eemceo use we eeewem .eegesseo ue pcesueeeeo .m.: ANN .e .anmA .eewwwo AmpcepwaescA we geesez .cewpeweeee use we A.e.e .eoeeeAemezv .eemAeoAz mewpmwgepeeeegu .cewpeAeeee we mzmcwu meF 3&5ch 05.... $0 :mezm .wULwEEOU ..vo chEuLman .m.D ”mmombom e.AA m.u N.oH m.NN e.Nm me.uom.moN m.mA wmo.NoN.m m.mA wmm.Aom.H N.mA Noo.NN m.w Amm.om o.mm amo.Nom.mom m.wH on.wa,w w.NN oom.mH¢.A ©.mm «mm.wfi m.N Nmm.wN e.AA mmH.mNm.mnH m.uA umA.MNw.m N.AN Huo.NmN.H «.mfi num.wfi m.w Pmo._N N.NH eeN.eNm.AeA .e.= eeN.ANm.e :eeweowz mmm.NAo.— mweHOH uexwez moH.mH ecemoo wom.ww eumoowz Aemcece NV owmA Aemcece AV owmfl Awmcegu NV ommA Ammcezo NV ommH Auczoo Aeezeweeoov .eA eAeeA 48 Table 19. 1980 Racial Composition of the Grand Rapids TV Market Racial Group Percentage of the Total Population White 90.6 Black 5.6 Spanish 1.8 Other 2.0 TOTAL 100.0 SOURCE: U.S. Department of Commerce, Bureau of the Census, 1980 Census of Population and Housing: Michigan, Final Population and Housing Units Counts, (Washington, D.C.: U.S. Government Printing Office, 1981), pp. 4-23. Economic Indicators Introduction This section of the paper is an evaluation of the economic indicators of the Grand Rapids television market. The economic health of the market can be evaluated by reviewing the economy's past performance. One indicator that is used is the Buying Power Index (BPI) which measures "...the market's ability to buy...(and it is expressed) as a percentage of the U.S. potential."8 There are two other methods of evaluating the economy. The Effective Buying Income (EBI) is gross income less payroll deductions and Total Retail Sales (TRS) which represents total sales made to consumers.9 In addition, the EBI and the TRS are estimated 49 for the average household in the market and used to estimate the Average Propensity to Consume (APC). The APC is a ratio of each dollar of income that is spent on consumer goods and it is a measure of the consumption habits of the average household.10 Finally, the employment status of the market is reviewed through the evaluation of unemployment rates and major employers in the market. Unemployment rates measure the strength of the economy by estimating how many people are out of work. As the unemployment rate grows, more people are without jobs and therefore less money is being spent in the marketplace. In addition, the top five employers in the market will be reviewed to discover if there is a dependency on a specific industry for employment. By combining the aforementioned economic indicators, an overview of the Grand Rapids market can be formed. Knowledge of economic trends is essential to deciding whether a market can support a local cable news cooperative. If, for example, the indicators signal a faltering economy, than it may be wise to wait or even consider another market for estab- lishing a cable news co-0p. Buying Power Index The Grand Rapids BPI has climbed out of a low of .6120 percent share of the national economy in 1977 to set all time highs in 1978 of .6419 percent and .6495 percent in 1979. Although the BPI declined to .6395 percent in 1980, it has remained higher than any year's BPI 11 The Grand Rapids market has maintained its share previous to 1978. of the American economy (see Table 20) and even shows some signs of economic growth. 50 Table 20. Annual BPI of the Grand Rapids TV Market Year (% of TotETIU.S. Economy) 1973 .6353 1974 .6305 1975 .6203 1976 .6339 1977 .6120 1978 .6419 1979 .6495 1980 .6395 SOURCE: ”Annual Survey of TV Markets," Sales and Marketing Management, Survey of Buying Power Part 11, October 1974 through October 1981. c 1981 S&MM Survey of Buying Power 11. Income, Consumption, and the Average Propensity to Consume This section is an examination of the trends in an average household's net income and consumption. This is important information for businesses interested in advertising their products. For example, if the average household in a market has no money remaining after making everyday purchases of consumer goods, he or she cannot be expected to make additional purchases. The average household income (average household EBI) in the Grand Rapids market has risen annually from 1973 to 1980 (see Table 21). Average household consumption (an average household's share of the TRS) has also grown annually from 1973 to 1979. But in 1980, consumption fell 4.7 percent from the 1979 level.12 Since income rose in 1980, a loss of income cannot be the reason for the drop in consumption. Rather, this 51 decline is attributed to consumer caution due to the state of the economy. Table 21. Income, Consumption, and Average Propensity to Consume in the Grand Rapids TV Market 1973-1980 Average Average Average Household Househoid Propensity Year EBI ($) Share of TRS ($) Balance ($) To Consume (APC) 1973 12,713 7,835 4,787 .6163 1974 13,215 7,987 5,228 .6044 1975 14,073 8,242 5,831 .5857 1976 14,942 8,861 6,081 .5930 1977 16,499 9,021 7,478 .5468 1978 16,852 10,399 6,453 .6171 1979 18,347 11,614 6,733 .6330 1980 19,766 11,067 8,699 .5599 SOURCE: ”Annual Survey of TV Markets," Sales and Marketing Management, Survey of Buying Power Part II, October 1974 through October 1981. c 1981 S&MM Survey of Buying Power 11. Both income and consumption of the market's average household are used to estimate the household's Average Propensity to Consume (APC). The APC is a ratio of how much of each dollar of net income is spent 13 The average household in the Grand Rapids market has on retail goods. used, from 1973 to 1980, an annual average mean of 59.45 percent of each dollar of net income for consumption (see Table 21). The APC has dropped below the average mean by 4.77 percent in 1977 and 3.46 percent in 1980. These years represent the largest downward fluctuations in the eightfiyear period. Still, throughout the eight years, the percentage of each dollar of net income going towards consumption has been at least 54 percent.14 52 Unemployment and Employment The annual average unemployment rate for the Grand Rapids market has been higher than the national rate for the past ten years (see Table 22). The market's rate has been below the Michigan unemployment rate from 1977 to 1981. However, the difference between the market and state unemployment rates has ranged from 0.1 percent in 1977 to 1.4 percent in 1980.15 Still, this difference is attributed to the fact that there is less of a dependency on the auto industry for employ- ment than in other markets in the state. Table 22. Annual Average Unemployment for the Grand Rapids TV Market, Michigan, and U.S. 1972-1981 Grand Rapids Michigan U.S. Year (% Unemployment) (% Unemployment) (% Unemployment) 1972 .3 7.0 5.6 1973 5.3 5.9 4.9 1974 7.3 .5 5.6 1975 13.9 12.5 8.5 1976 9.9 9.4 7.7 1977 8.1 8.2 7.0 1978 6.7 .9 6.0 1979 7.0 .8 5.8 1980 11.2 12.6 7.1 1981 11.5 12.3 7.6 SOURCES: Michigan Employment Security Commission, Research and Stat- istics Division, Labor Analysis Section, "Civilian Labor Force and Wage and Salary Employment Estimates, 1971-1981;" U.S. Department of Labor, Bureau of Labor Statistics, "Employment Status of the Noninstitutional Population 16 Years and Older, 1947 to Date," Employment and Earnings, January 1982, p. 9. 53 The five largest employers in the market are: General Motors with 10,615 workers; Upjohn with 6,800 workers; Steelcase with 6,000 workers; Kellogg with 5,000 workers; and Amway and Hownet Turbine 16 Components, both with 3,000 each. Eight of the 20 largest employers in the market are either automobile manufacturers or auto parts suppliers.17 However, only 31.0 percent of the total workers of the twenty companies work in auto related industries. Although the market does have automobile related industries, it is not completely dependent upon them for jobs. Media Competition Introduction In the Grand Rapids television market there are broadcast television and radio stations and daily newspapers competing for the advertising dollars. Although local cable operators are in competition with broad- cast television for audience, most leave it to the cable networks to compete for advertising with the national broadcast television networks. Few local cable operators have seriously considered competing for advertising revenues and are more interested in subscriber fees as a source of revenue. However, the Bay Area Interconnect is an example of how local cable operators can, through interconnection, attract 18 Cable penetration of the Grand Rapids television market advertisers. is 36.3 percent19 and the possibilities of forming an interconnect should be explored by local cable operators. Television The Grand Rapids television market is the 37th largest market in the 20 United States. There are five commercial broadcast television stations 54 in the Grand Rapids market (see Table 23). There are presently two channels within the market that have yet to be licensed by the Federal Communications Commission. There are two applicants for Channel 64 21 This in Kalamazoo and two applicants for Channel 54 in Muskegon. market is unique in that it contains two ABC affiliated stations. The geographic size of the market is such that the Grade B television signals of WUHQ and WZZM overlap five counties: Allegan, Barry, Ionia, Kent and Ottawa.22 Table 23. Commercial Broadcast Television Stations Licensed in the Grand Rapids TV Market City of License Call Letters Channel Licensee Affiliation Battle Creek WUHQ 41 Channel 41, Inc. ABC Grand Rapids WOTV 8 Time-Life Broadcasting NBC WWMA 17 TV 17, Ltd. IND WZZM 13 WOMETCO West Michigan TV ABC Kalamazoo WKZO 3 Fetzer Broadcasting CBS SOURCE: ”Facilities of Television,” Broadcasting Cablecasting Year- book 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), pp. 8108-8109. Radio The Grand Rapids market has 63 radio stations (see Appendix). Thirty-six of these are AM stations and 27 are FM stations. Rates are for a one-minute advertising spot range from $159 at WOOD-AM in 55 Grand Rapids to $6 at WKPR-AM in Kalamazoo.23 Daily Newspapers Fifteen daily newspapers are published in the Grand Rapids market (see Table 24). All of the newspapers are published for evening delivery with the exception of the newspapers located in Big Rapids, Ionia, and South Haven which are delivered in the morning. Each of the four newspapers in Battle Creek, Grand Rapids, Kalamazoo, and Muskegon publish Sunday editions. Advertising rates are based on rate per column inch for daily editions and range from $1.39 in the Grand Rapids Press to $.19 in the Big Rapids Pioneer.24 News Analysis Introduction This section will review commercial broadcast television newscasts which are the local cable television co-op's principal competitors. In particular, analysis will be made of the commercial broadcast television news departments of local stations. The following criteria will be used in the evaluation: personnel, revenues, expenses and equipment. There are three broadcast television stations in the Grand Rapids market producing competitive local newscasts: WKZO in Kalamazoo, WOTV and WZZM, both in Grand Rapids. WKZO is owned by Fetzer Broad- casting and is assigned to Channel 3. WOTV is owned by Time-Life Broadcasting and is assigned to Channel 8. WZZM is owned by WOMETCO West Michigan and it is assigned to Channel 13.25 Table 24. 56 Daily Newspapers Published in the Grand Rapids TV Market City of Publication Circulation Newspaper Publisher Daily/Sunday Albion Albion Evening Recorder Albion Evening Recorder 4,085/--- Battle Creek Enquirer and News Gannett Co. 32,915/40,80l Big Rapids The Pioneer Conine Publ. Co. 5,028/--- Coldwater Coldwater Daily Coldwater Reporter Reporter Company ‘ 8,596/--- Grand Haven Grand Haven Tribune Grand Haven Publ. Co. 9,921/—-- Grand Rapids The Grand Rapids Press Newhouse/Booth Newspapers 127,601/150,395 Greenville The Daily News Greenville News Inc. 7,811/--— Holland ‘ The Holland Sentinel Stauffer Communications 17,394/—-- Ionia Sentinel-Standard Ionia Sentinel-Standard 4,307/—-- Kalamazoo Kalamazoo Gazette Newhouse/Booth 60,542/67,237 Marshall Chronicle Marshall Chronicle 3,167/--- Muskegon The Muskegon Chronicle Newhouse/Booth 44,577/48,259 South Haven South Haven Daily South Haven Daily Tribune Tribune Co. 2,705/--- Sturgis Sturgis Journal Gannett Group 10,278/—-- Three Rivers Three Rivers Commercial Three Rivers Publ. 4,615/--- SOURCE: and Publisher International Yearbook 1981, (New York: Publisher Co., Inc. 1981), pp. 1130-1139. "Daily Newspapers Published in the United States," Editor Editor and 57 Personnel The news departments of two of the three Grand Rapids market television stations are staffed with approximately the same number of employees (see Table 25). The news department of WOTV has more supervisory personnel and camerapersonsifiuu1either of the other two news departments. WOTV has a total news staff that is over 70 percent greater than the news staffs of WKZO or WZZM. Five freelance camera- persons are used by WKZO in Kalamazoo. Freelance personnel are usually hired for two reasons. First, freelancers are available to work at pre-arranged times that save the station from juggling work schedules. Second, freelance personnel are paid on a per-assignment basis. This saves the station from paying a staffperson for overtime. Table 25. TV News Personnel in the Grand Rapids TV Market Number of Employees Position WKZO WOTV WZZM Mean Supervisory 3 14 2 6 Anchorperson 2 * 2 3 Sportscaster 1 1 1 Weathercaster 1 1 1 Reporter 11 11 15 12 Cameraperson 2 14 7 8 Freelance Cameraperson 5 -- -— -- TOTAL 25 48 28 31 SOURCES: Telephone interview with Fred Douglas, News Director, WKZO- TV, 6 May 1982; Telephone interview with Jack Hogan, News Director, WZZM-TV, 6 May 1982; WOTV-TV, Federal Communications Commission, Equal Employment Opportunity, EEO-l, Exhibit No. VII 8, March 27, 1982. * News Anchorperson/Reporter 58 A major drawback to relying on freelancers is that if none of them are available to take an assignment, the news department is left without coverage on a story. Revenues The revenues of a news department are derived from the sale of time to advertisers (see Table 26). Both WOTV and WZZM produce midday newscasts on weekdays. WOTV is the only station in the market with an hour-long newscast in the early evening. The other two stations have early evening newscasts of one half-hour in length.26 The rates for a 30-second spot are based on the fixed rates, which are the maximum rates charged to advertisers. The audience rating (which is a method of audience measurement) that a newscast receives influences the advertising rate. The three stations within the Grand Rapids market that produce news are very close in the ratings. Advertising rates for the late evening newscasts, for example, lie within a $50 range of one another because of the ratings. Salary Eapense Salary expense is composed of two parts: news salaries and advertis- ing commissions for the selling of newscast time to advertisers. The annual news salaries in Table 27 are based upon a survey of weekly news salaries conducted by Vernon A. Stone. Questionnaires were mailed to 690 commercial broadcast television stations and a return rate of 65 percent was achieved. The survey was made for the Radio and Television News Directors Association.27 Advertising commissions include salaries to salespeople, commissions to national media representatives, and other expenses that occur from the selling of advertising for newscasts. .xeez Lee eLe mAwe>e >wo: AA eecewewem eA> cemwewz =.memege>< Segmewez .NwmA Ageeceu mA .>w-2NN3 .uweu epem .Auemewecm ueeu epemv Nmmw Ageecaew mA .>w->wo3 .Lemecez mmAem Aegecew .peeww .< uLegewm Eeww gmpuew Aecemgee .Auemewucm eeee eeeme NeeA Aeezeeeu eA .>A-eN¥3 .eoeecez merm .Aewwee .z ereeee soee eoerA Aee0meea ”meemeee 59 eee.eNN.m Aqwew OMAm eee.Aee.A eee.ee A eA eAN .e.e em AA .e co AA eN\N eee.eNA eee.N A eA eeA .E.e eenN .a emue eNAe eee.eeA eee.N A eA eNA .e.e emne .e oene Am\eA eee.eeA.A eee.NN e eA eNN .e.a emne .e eene eAAe eee.eeN eee.e e eA ee .s.e em” .e co NA ZNNZ eeN.emA.e AAe3 eeN.eee.N e< Awe: eece>mm eece>em we Lensez \mpeem .emm om euem uexwe :ewueum -AeAsz w muweem ucegw esp cw memeemzez >w AeeeA Lew mmecm>mm ueueswpmm .eN ownew 60 .A-omm .»uwcepweeeo pcmsxeAeEm Aeeem .cewmeweseo mcewueewcesaeu Aegeuee .>w->wo2 .Lepeegwo mzez .ceme: xeeu new: 3ew>empcA .NwmA zez e .>w-o~x3 .Lepeewwo mzmz .meAmeeo ueww gpwz 3mw>gepcA Aepceeem\:emgeegecec< mZmz N mueswpmmA .NwmA .NN guwez .m AA> .oz pwnwcxm .NwmA NA4...: o .>H-2NN3 .mA-eA .ee .AwmA Leaseeeo .wepeew::EEeu ”mmumuom omm.eme Nmm,ANm,A emA.eme Aeea=m mwwAeAem Aeccemgee mewLeAem Aecceewee mewweAem Aecceegee Amy :ewpwmee Aeecc< we weusez Aeecc< we weusez Aeecc< we wensez AweAem AAxmez ENNz >woz ONxz pexwez muweem ucecw esp cw mpcespweeeo maez >w AeeeA Lew emceexm AgeAem uepeswpmm Aeecc< .NN eAeew 61 Equipment In terms of overall cost, the equipment represents the largest single expense for a television news department. There is only one television station in the Grand Rapids market that possesses live remote 28 capability; WOTV. The expense of broadcast quality equipment for the three stations is estimated in Table 28. A Local Cable News Cogperative Introduction This section will utilize information from the previous section to estimate revenues and expenses for the local cable news cooperative. The co-0p is an interconnected group of local cable systems that will program local newscasts for insertion over a national cable news network. News programming from the co-op will be inserted during the same times of day as local broadcast television newscasts appear. This will allow the cable news cooperative to compete for advertisers using local broad— cast television newscasts. The co-op is interested in delivering the news at a profit. Revenues The sole source of revenues for the cable news co-op is the sale of time to advertisers. Broadcast and cable television compete with broadcast radio and daily newspapers. Television, however, is unique in that it reaches a household with both audio and visual information. From this perspective, cable television's only competitor is broadcast television. Therefore, advertising rates for the local cable news cooperative will be based upon the rates of local broadcast television newscasts (see Table 29). 62 .eme .s .AAeeA ..osA .eeeer eeAeA>erw ".e.o .soeeswseezv .sewpwum NmmA-AwmA xeesuees sewmw>eAmw e.AmmA usesewuem sewpeum sewmw>eAew Aewesesseu .m.:= mANA: AAeu e .ewssewwAeu .meAems< meA ..>wo .pmz peeuese Ameeueesm Asem .seAAew ewaw< sew; 3ew>seusw eseseeAew AAs-em .ee .NmmA .mA Awse< .mswpmeeueesm e.emeezesm Asmseweem mesesA use msewue>essA= Ammumuom eee.Nee eee.eNe eee.eNe Aswew eee.eeA eee.eeA eee.eeA eee.oeA msoeeeAAeomws oee.eeA eee.eeA m eee.eeA m eee.ee mw> spwz esmseu wzm mpeamm oee.eeN A - eee.eeN se> eeosee e>Ae eee.Ne eee.eN e eee.em N eee.mA Asw>v eeeeooes esew eeew> ,eAm eoe.eAN eee.eee oeo.oeA oee.ON esesee ewesee Aev Aev Aev Aev eeee Aeeow emee Aeeew eeoe Aeeew Amoe ewe: Acessezee eNss uexsez sewmw>mAew muweem usesw esp sw usesewzem sewmw>eAew pmeeueesm .mN mAsew 63 .NeeA Aseeeee eA .>w-zNN3 .eeee eees .AuemeAesm useu epemv NwmA Ageesses mA .>w->woz .semesez meAem Aesesew .peesw .< usesewm Eesw seAAeA Aesemsws .AueeeAesm useo epemv NwmA xseesnes 0A .>w-o~x3 .smmesez meAem .Aewwem .s eAeseee sesw eeeeeA Aeseeeee ”weeseem eee.NNe.A Aswew Ae s: ->e se eNA.NeA eee.eA eA emA NeN eAN eeN ONN .s.e Mm ”A-ms.eeeesWA he s: -Ae s: e eeA.eeA see.N eA ee eeA NeA eeA eeA .sAe We w-.see wemw xe -> so eNN.eee eee.e eA eNA NeN eAN eeN eeA .s.eAeewmes.meeesW ze A; ->e so eee.eeA eeN.m eA ee es ee ee - .E.M em N“-.seequA Amv meesm>em Amy mmesm>em mAwe>< va va ZNNZ >woz ONxz AumAeuwsem exeov Aeessq AAxewz see: mopem Amy wepem sewpepm mew» ee-ee maez eAeee we Nee eeez uexsez muweem usesw esp sw eo-eo exez eAseu AeeeA e sew meese>em use mepem mswmwpse>u< umueswpmm .mN eAsew 64 The co-op will be handicapped in that initially, its audience will be smaller than those of local broadcast television newscasts. Thus, in order to draw advertisers to the co-op, advertising rates will be 50 percent lower than the competition's mean fixed rates. The co-op's advertising rate of 50 percent below the fixed rate of the broadcast stations is chosen because it will be an attractive price to advertisers. It will allow the co-op to meet expenses and, at the same time, make a profit. Expenses Salary Expense. Salary expense is divided into advertising sales commissions and news salaries. In order to cover the cost of sales commissions to local salespersons and national media representatives as well as other expenses created in the process, the advertising department will receive 20 percent of the total (gross) revenues. The staffing of the news department for the co-op is based, in part, on the mean number of employees in each position. The salaries are based on the Radio and Television News Directors Association study conducted by Vernon A. Stone. The co-op's news salary expense appears in Table 30. 65 Table 30. Proposed Staffing and Estimated News Salary Expense of the Grand Rapids Cable News Cooperative Number of Individual Annual Position Employees Weekly Salaries ($) Salaries ($) Supervisory 2 773 80,392 Anchorperson 2 903 93,912 Sportscaster 1 573 29,796 Weathercaster l 573 29,796 Reporter 13 477 322,452 Cameraperson 7 250 91,000 TOTAL 26 647,348 SOURCE: Vernon A. Stone, "Moderate Gains in News Salaries," RTNDA Communicator, December 1981, pp. 16-19. Eguipment. The equipment requirements of the local cable tele- vision news co-op resemble those of the local broadcast television news departments. There is only one station using a live remote van in the Grand Rapids market; WOTV in Grand Rapids. WKZO broadcasts from Kalamazoo and covers the Grand Rapids metro area and nearby counties through its Grand Rapids news bureau.29 While only one station in the market has a live remote van, it would give the co-op an advantage over the others to have one. Therefore, a live remote van will be included in the equipment purchase (see Table 31). The equipment is valued at $848,000 and has a salvage value of 20 percent of the original cost of$169,600. This leaves $678,400 to be depreciated over a six-year period. The co-op will use the straight line method of depreciation. By using this method, the co-op can evenly distribute this tax deduction over six years without the fear of a large 30 portion of it going to waste because of a loss. The cable news co-op 66 Table 31. Estimated Equipment Expense for the Grand Rapids Local Cable News Co-Op Equipment Unit Cost ($) Number Needed Total Cost ($) Studio Camera 70,000 3 210,000 Video Tape Recorder (VTR) 3/4" 13,000 2 26,000 Pr. VTRs with Edit. 3/4" 32,000 1 32,000 1/2" to 3/4" VTRs with Edit. Deck 40,000 1 40,000 Live Remote Van 200,000 1 200,000 Remote ENG Camera with 1/2" VTR 50,000 3 150,000 Port. Pr. VTR 1/2" with Edit. Deck 40,000 1 40,000 Miscellaneous 150,000 TOTAL 848,000 SOURCES: ”Innovations and Improvements: NAB Equipment Showcase," Broadcasting, April 19, 1982, pp. 34-41; Telephone interview with Ailika Taylor, Sony Broadcast Product Mgt. Div., Los Angeles, California, 6 July 1982. should anticipate the replacement of its equipment in the seventh year of operation. Further, the cost of the equipment can be expected to increase by an annual rate of ten percent to $1,502,282 with a salvage value of $300,456. Other Expenses Additional expenses to operating a news department include furniture, telephones, motor vehicles, repair and maintenance of equipment, and the cost of equipping and maintaining the studio. All of these individual expenses are combined under "Administrative and Miscellaneous Expenses." 67 This category will be increased by ten percent annually. In addition, a tax of 25 percent of the operating income less depreciation, must be paid on any income remaining after depreciation is taken.31 Pro Forma All of the projected revenues and expenses are combined in the ten year pro forma profit and loss statement (see Table 32). The purpose of the statement is to determine whether the local cable news co-op can be profitable within a ten-year period. For a given year, each category of expenses is subtracted from the annual revenues with the operating income left over. A negative operating income indicates a loss, in which case depreciation and taxes do not apply. Assuming, however, that there is a positive operating income, the depreciation amount is deducted leaving a taxable income. The taxable income less 25 percent for taxes leaves a net profit for the local cable news co-op. 68 Aueeswuseev eee.eee eeN.Nee eeN.eem eee.meN Aeem.Nmmv Aeeeev eseesA Aez NNe.eeA eeN.emA eAe.eAA eee.Ne --- mexew Nee.NNe eee.mee ANe.eee eeA.eem --- eseoeA eAeexeA eAe.ee eAe.ee eAN.eNA eNe.AeA eNe.meA eeweeweeseee Nee.eee eNe.eme eee.eee eAN.Aee Awem.Ammv eseosA esweeseee eem.NeN see.NNA eee.eeA eee.eNA eee.eeA eeeeseAAeoewz use e>wuespmwswsu< --- --- --- --- eee.eee AsoEeAeee eee.eee eee.eAe eee.eem eee.eem eee.eAm esewmewssee eeAem eeN.Nee eAe.Aee eeN.meN Nee.NAA eem.Aee mewseAee ezez memseexm eNe.Nem.N Nee.Nee.N eNA.Nee.A eeN.eNA.A eee.NNe.A weese>es NeeA eeeA eeeA eeeA meeA e>wpesmeeeu mzez mAseu muweem usesw esp sew pseEmAeAm ewe; use pwwese eases ese see>-sew .Nm eAsew 69 eeA.eee eee.Nee AeA.eee AANe.eANv eeN.eNe Aeeeev eseoeA eez eee.eeA NNe.NeA eee.eeA --- Aee.eNA eexew eNN.NeN Nee.eee ANe.eee --- eNm.NeA eseoeA eAeexew ewe.ANA eAe.NNN eeA.eeN eNm.mem eem.Nm eeweeweeseee eee.MNe eee.eNe AAe.Aee AAAe.eAAV eme.meN eseeeA eeweeseee Nee.eAe Nee.eNe eAm.eeN eee.eeN Nee.eeN eeeeeeAAeeeAs use e>wpespmwswsu< --- --- --- NeN.Nee.A --- Aceseweee MAe.AeA eeA.eNe Ase.NAe eeA.Aee eee.eee eeeAmewssee mere Nee.eNe.A mee.Aem.A eee.AeN.A mAe.eeA.A eee.Nee.A eeAeeAee exez memseexm Nee.NeN.m eeN.eNm.m eem.eee.m ANN.eeA.N eNe.Nme.N eeeee>om NeeA AeeA eeeA eeeA eeeA Aeeesweseev .Nm eAeeA CHAPTER V MARKET/NEWS ANALYSIS--LANSING, MICHIGAN Market Analysis Introduction This section of the study evaluates the characteristics of the Lansing television market. This market is used to represent the television markets ranked 51 through 100 by A.C. Nielsen and Arbitron. The television market will serve as the boundaries in which the local cable news cooperative will operate. Arbitron defines the television market as “...a geographic design composed of a group of counties... exclusive of all others based on measurable viewing patterns.“1 Geography The Lansing market is located in the south—central part of Michigan's Lower Peninsula and covers 3,020 square miles.2 The following counties make up the market: Clinton, Eaton, Hillsdale, Ingham, and Jackson.3 Demographics of the Pqpulation Introduction The demographics describe the characteristics of the population. 70 71 The areas to be examined are: general population, age and sex, and race. By reviewing the variations in the p0pulation, trends that could affect the market's economy can be evaluated. General Pqpulation The population of the Lansing market has increased by 9.7 percent from 1970 to 1980 (see Table 22). The two counties with large urban populations (Ingham County-Lansing and Jackson County-Jackson) have experienced the least amount of growth in the market. On the other hand, the population of the rural counties (Eaton, Clinton, and Hillsdale) has grown by at least 13 percent. Although all of these counties have experienced population increases, only Hillsdale County had a higher rate of growth in population from 1970 to 1980. The four remaining counties' rates of population growth declined, following state and national trends.4 Age and Sex The age and sex breakdown of the population indicates the distribution of the population. Persons under 30 years of age make up 55.5 percent of the market (see Figure 3). The single largest age group is those 18 to 24 years of age making up 17.2 percent of the total population. Those 85 years of age and older are the smallest age group, representing less than one percent of the population.5 There are nearly an equal number of males and females in the Lansing market (see Figure 3). But a difference does appear in those age 65 and older. The number of females to males increases by 0.6 percent for ages 65 to 74 and .04 percent for ages 85 and older.6 72 amUPWWO OCPuF-Tbm PC¢ECLG>OG .W.D mswpswse psmEswe>ew .m.: .e .e .AAeeA ”.e.e .seeeswsmezv .AeeA ”.m.= ese we eeeseees Aeeweeweeee ..eeeA ee omwA eew< use sewAeAeeeee .meeseu esp we eeesem .eeweeseu we usespseeeo .m.: ANN .e .anmA .eewwwo u.e.e .eeeeswseeze .eeeweowz ”museuwsessA we sensez .sewpeAeeee esp we mowuwwgquMmeu ecomumngon— ..._.o mama—mu mep .mzmcmu 059 $0 :mmgzm .wULmEEOU “v0 acmEHLmamo .m.D ”mmumzom e.AA eNe.eee.eNN e.NA Ame.Nem.meN e.eA eNA.mNm.eNA e.eA eew.eNm.AeA .e.= e.e ewe.NeN.e e.mA eNe.Aee.e e.NN eeA.mNe.N N.AN eeA.Awm.e eeeweewz N.e eAm.eAe e.eN eee.eee e.AN eme.eee e.NN eee.eem mAeAew uexsez N.NA AAe.Ne e.N ANA.NN e.e New.em N.e eAe.Am eAeemAAw: e.eA mee.ee N.AN Nee.ee N.AN eee.we e.AA eeA.Am eeeewAe N.eN Amm.ee A.em Nee.ee A.eN eee.ee e.AA MNe.ee eeeee N.e eee.AeA e.e eNN.meA N.NN eee.AmA e.eA eNe.AeA semxeee e.e eNe.eNN e.eN eme.AeN N.NN eeN.AAN e.Nm Aee.NNA seseeA Aeeeeee Ne eeeA Aeeeese NV eNeA Aeeseee Av eeeA Aeesese NV eeeA Aeseee erm seweeAeeee seeeee Ae eexees .eeeA-eeeA Aexsez >w eewesee eee ew eeesese seweeAeeee .mm eAeew 73 "sewAeAeeee we memseu owmA .memseu esp we :eewem .eoseEEeo we usespweeeo .m.: xem\em< As sewpeAaees ommw m.pexwez >w mswmseA we emeuseeses .AmmA seseeoeo oA . eesesewem eA> semAewz =.memese>< Eesmese: .NwmA Aseessee eA .zAuz .useu eAem .AeeeeAesA ecee eeesw,NeeA Aceecees A .>A-XAA3 .eeAem AA .eceewe Aces eecw ceeeeA Aeseecee ”eeeseem oom.oee.m A< Aeez eese>em esse>em we sesEez mpeem\.eem\om euem uexww sewuepm -wAA:z <29 Aeess< xAxeez uexsez >A eswmseA esp sw mpmeemZez >A AeeeA sew messe>em uepeswpmm .Ae eAsew 85 Table 42. Annual Estimated Salary Expense for Local TV News Departments in the Lansing Market Weekly WILX WJIM Salary Number of Annual Number of Annual Position ($) Personnel Salaries Personnel Salaries Supervisory 567 3 88,452 2 58,968 Anchorperson 581 3 90,636 4 120,848 Sportscaster 417 2 43,368 2 43,368 Weathercaster 417 1 21,684 2 43,368 Anchor/ Reporter 375 5 97,500 -- --- Reporter 363 7 132,132 8 150,800 Cameraperson 237 5 61,620 6 73,944 TOTAL 535,392 491,296 SOURCES: Telephone interview with Jan Allen, News Director, WJIM-TV, 6 May 1982; Personal letter from Howard Lancour, News Directir, WILX-TV, 1 April 1982; Vernon A. Stone, "Moderate Gains in News Salaries," RTNDA Communicator, December 1981, pp. 16-19. Eguipment. The cost of broadcast television equipment represents the largest single expense of a news department. The live remote van represents the most expensive item of equipment. The only broadcast television station with a live remote van in the market is WJIM. The expense of the equipment that is listed in Table 43 is estimated from the current prices for broadcast quality equipment. 86 Table 43. Broadcast Television Equipment in the Lansing TV Market Unit WILX WJIM Total Cost Total Cost Equipment ($) No. ($) No. ($) Studio Camera 70,000 4 360,000 4 360,000 3/4” Video Tape Recorder (VTR) 13,000 6 78,000 5 65,000 Live Remote Van 200,000 - --- 1 200,000 Remote ENG Camera With VTR 50,000 6 300,000 2 100,000 Miscellaneous 150,000 150,000 150,000 TOTAL 888,000 875,000 SOURCES: "Innovations and Improvements: NAB Equipment Showcase," Broadcasting, April 19, 1982, pp. 34—41; Telephone interview with Ailika Taylor, Sony Broadcast Product Mgt. Div., Los Angeles, California, 6 July 1982; "U.S. Commercial Television Station Equipment 1981,'' Television Factbook 1981-1982 Edition. (Washington, D.C.: Television Digest, Inc., 1981), p. 43a. A Local Cable News Cooperative Introduction The figures generated from the previous section will be used to estimate revenues and expenses for a local cable news co-op. The co-op is composed of a group of interconnected local cable systems. The co-op will program local cable newscasts for insertion over a national cable news network. The programming will appear during the same time that local broadcast television newscasts are scheduled. This will allow the co-op to compete with the local television newscasts for advertisers. The goals of the cooperative are to be profitable and produce quality local news programming. 87 Revenues The sale of time to advertisers is the only source of revenues for the local cable news cooperative. While broadcast and cable television compete with radio and newspapers for advertisers, only television communicates an audio and visual message. Taking this into account, the local cable television news co-op's only rivals are local commercial broadcast television news departments. The co-op will initially operate at a disadvantage because it will not, in the beginning, be able to draw as large of an audience as the broadcast television newscasts. Since rates are based, in part, on audience size, the co-op's rates to advertisers will have to be lower than those of the established television newscasts. There- fore, the co-op's advertising rate is 50 percent less than the mean advertising rate of the broadcast newscasts. This figure is chosen because it will be an attractive price to advertisers and it will allow the co-op to make a profit (see Table 44). Expenses Salary Expense. Salary expense is divided into advertising sales commissions and news salaries. The advertising sales department will receive 20 percent of the total revenues to cover commissions of the sales department and national media representative and other expenses incurred in making sales. The news department sales are based on research by Vernon A. Stone for the Radio and Television News Directors Association. The survey was sent out to 690 commercial broadcast television stations and 65 percent of the returned questionnaires were 30 usable. The news salary expense for the co-op appears in Table 45. 88 .epeswpmmw .NeeA Aseecees eA .>A-2Ae3 .eeee eees .AeeeersA ecee eeeme NeeA Aeeecees A .>A-XAA3 .meAee AA .mceewm Aces eecw ceAeeA Aesemcee ”meeseem Aem va meese>em mAwe>< Amv Amy Aeess< AAAeez seez mepem eo-eu mzez eAseu we Aom seez oom 0mm 0mm oom sooA mA zAuz XAAz Awe eeeem seweeee AueAeuesem exeov eEwA Aexsez mswmseA esp sw eo-eu mzez eAeeu AeeeA e sew messe>em use mepem mswmwpwe>u< ueAeEwAmm .ee eAsew 89 Table 45. Proposed Staffing and Estimated News Salary Expense of the Lansing Cable News Cooperative Number of Individual Annual Position Employees Weekly Salaries ($) Salaries ($) Supervisory 2 567 58,968 Anchorperson 4 581 120,848 Sportscaster 2 417 43,368 Weathercaster 1 417 21,684 Reporter 7 363 132,132 Cameraperson 5 237 61,620 TOTAL 438,620 SOURCE: Vernon A. Stone, "Moderate Gains in News Salaries," RINDA_ Communicator, December 1981, pp. 16-19. The number of employees in a given position are estimates from the mean number of employees hired by the two broadcast television departments. Eguipment. Equipment requirements for the local cable news co-op are like those of local broadcast television news departments. Although WJIM is the only station with a live remote unit, it will be necessary for the co-op to have similar equipment if it is to be competitive. Therefore the co-op will purchase a live remote van (see Table 46). (Price estimates are for broadcast quality equipment.) 90 Table 46. Estimated Equipment Expense for the Lansing Cable News Co-Op Equipment Unit Cost ($) Number Needed Total Cost ($) Studio Camera 70,000 3 210,000 Video Tape Recorder (VTR) 3/4" 13,000 2 26,000 Pr. VTRs with Edit. 3/4” 32,000 1 32,000 1/2” to 3/4” VTRs with Edit. Deck 40,000 1 40,000 Live Remote Van 200,000 1 200,000 Remote ENG Camera with 1/2" VTR 50,000 3 150,000 Port. Pr., VTR 1/2" with Edit. Deck 40,000 1 40,000 Miscellaneous 150,000 TOTAL 848,000 SOURCES: "Innovations and Improvements: NAB Equipment Showcase," Broadcasting, April 19, 1982, pp. 34-41; Telephone interview with Ailika Taylor, Sony Broadcast Product Mgt. Div., Los Angeles, California, 6 July 1982. The depreciation allowance is estimated by deducting the salvage value from the total cost of equipment. The salvage value for the equipment is 20 percent of the total cost. The equipment expense for the Lansing cable news co-op is $832,000 less a salvage value of 20 percent or $166,400 leaving $665,000 to be depreciated. The amount will be depreciated over six years using the swn—of—the-years-digits methods of depreciation. This method allows the co-op to depreciate more of the total in the early years of operation which helps to lower taxes and increases net profits. It allows a high depreciation allowance in the first year which gradually decreases in each of the following years.31 ID 91 Other Expenses There are additional costs in running a news department. These include office furniture and supplies, support personnel, repair and maintenance of equipment, and motor vehicles. All of these items are covered under ”Administrative and Miscellaneous Expense." This category has been given an annual increase of 20 percent. In addition taxes are to be estimated as 25 percent of income after the depreciation allowance has been taken.32 Pro Forma The ten-year pro forma profit and loss statement combines revenues and expenses that are projected over a ten-year period (see Table 47). Annual increases of ten percent are added to revenues, salary expense, and equipment expense. A 20 percent annual increase is added to administrative and miscellaneous expenses. In a given year, revenues are deducted from the various expenses leaving an operating income. Next, taxable income is determined by deducting the annual depreciation allowance from the operating income. If the depreciation allowance is greater than the operating income, then no taxes are paid. However, if there is taxable income, then 25 percent of it is deducted leaving a net profit for that particular year. 92 Auesswuseev meA.mmm woo.Nmm wmm.mwA NmN.mme NAN.weA eseesA pez weN.mmm emm.AmN mmN.meN AAo.AmN -- mexew mmm.Nmm.A eem.mmA.A AmA.mmo.A mom.eNm -- eeeesA eAsexew er.se «Am.em mAN.mNA eNm.AeA mNm.mmA sewueweeseeo moe.Amm.A me.ewN.A eAe.NmA.A mmw.mwo.A NAN.weA eEeesA mswpeseeo oem.AON oow.NAA ooo.eeA ooo.ONA ooo.ooA mzeeseAAeemwz use e>wuespmwswsu< -- -- -- -- ooo.wew useseweem ANA.Aem mAA.oAm ANN.ses on.NNe NOA.mmm msewemweseu meAem mwA.Nse mow.mwm omA.omm Nme.Nwe ONe.wme mewseAem exez memseexm mmm.wom.N eAm.mmm.N mme.ANm.N emm.oAA.N oem.mAm.A messe>em AwmA owmA mwmA ewmA mmmA e>wpeseeeeu mzez eAseu mswmses esp sew AseEepeum wees use Awwese eases ess see>-sew .Ae eAsew 93 mee.NNe.A eeA.eeN.A mee.eAA.A eNA.AeA NeN.mAA.A eseesA Aez AeN.eAe AMA.NNe eme.NAm --- Aee.AAm eexew eNA.Aee.A eNe.eee.A AAA.Aee.A --- mNm.eee.A egeesA eAeexeA eee.AAA eAe.eNN eeA.eeN eAm.mem eem.Nm seweeweecees eAe.eee.N eee.eAe.A Ame.AAA.A eNA.AeA eNe.eAe.A eseosA esweeceee eAe.eAe Nee.eNe eAm.eem eee.eeN Nee.eeN meeeseAAeeewz use e>wpewpmwswsu< --- --- --- NeN.Nee.A --- eseseweee NeA.eee AAe.NNe eMA.AeA NeA.eAe eee.AAe eseweeAEEee eeAee eeN.eme.A eAN.eee eeA.eee Aee.AAA Aee.eeA eeweeAem esez memseexm AAe.mNe.e eee.NAA.e ewe.emA.m eee.eem.m eNe.eee.m messeses NeeA AeeA eeeA eeeA eeeA Aeeesweeeev .Ae eAeeA CHAPTER VI DISCUSSION AND CONCLUSION In each of the three markets studied, the highest population growth was experienced by counties outside the major metropolitan areas. Low rates of growth were reported by all the counties containing major urban centers. It does not appear that this trend will be reversed in the foreseeable future. All of the three markets have young populations with individuals under age 30 making up over 50 percent of the population in each of the markets. However, the rate of growth at the market, state, and national levels is slowly declining. If this trend continues, the youthful majority of the 1980's could become the middle age majority in the 1990's. Therefore, programming and marketing will eventually have to appeal to an older p0pu1ation. The racial composition of the three markets shows a predominantly White population. The Black minority in the Detroit market makes up nearly 20 percent of the population. However, the Black minority in the Lansing and Grand Rapids markets remains under 6 percent. Particularly in the Detroit market, it will be advantageous to direct programming and marketing at the large Black minority. Economically speaking, none of the three markets are healthy. The Detroit market's share of the national economy has dropped dramatically 94 95 over the past few years. In addition, the recent annual unemployment rate of the Detroit market has been higher than Lansing, Grand Rapids or the state rate. The Lansing market has also lost its share of the national economy and like Detroit, it has high unemployment. The Grand Rapids market has been least affected by the economic recession. It has the lowest unemployment of the three markets. The Grand Rapids share of the national economy has actually grown and sur- passed gains of previous years. The market also has a greater variety of employers than either the Lansing or Detroit markets indicating less of a dependence upon the auto industry. There is no doubt that Grand Rapids has the healthiest business environment. In examining the pro formas for the news co—ops, all three can be considered profitable. Both the Detroit and Lansing cable news co-ops had net profits in the first year of operation. Detroit and Lansing co-ops both made annual net profits of over $1 million during the ten- year period. But Grand Rapids could match them only half way. The local cable news co-op in Grand Rapids had losses in two of the ten years, due to equipment purchases. But the equipment expense was the same for both Lansing and Grand Rapids co-ops. There are two reasons for the losses and smaller profits. First, the advertising rates of the commercial broadcast television newscasts are lower in Grand Rapids than in Lansing. This is attributed to the three-way competition for the local newscast audience. In Lansing, there are only two local commercial broadcast television stations with newscasts and there is also less media compet- ition. Second, the news salary expense for Grand Rapids is nearly one- and one-half times as large as it is for Lansing. Cutting the staff 96 is not a solution if there is a danger in lowering quality. The Grand Rapids co-op could raise its rates but there is also the risk of losing advertisers if rates go too high. Although all three co-ops are profitable, the question remains as to whether they can be money-makers in these markets. Under the current economic conditions, it would be unwise to establish a co-op in Detroit and would probably be difficult going in Lansing and Grand Rapids. However, while the markets that are used in this study may not currently be choice locations, this process can be applied to any market within the given market rankings. For example, the co-op may not be right for Lansing but for another market ranked between 51 and 100, this could be an ideal time to establish a local cable news cooperative. In conclusion, the local cable news cooperatives could be profitable in all three markets. The co-ops in Detroit and Lansing have profits in all ten years of Operation. The Grand Rapids co-op shows profits in eight of the ten years with losses in the first and seventh year. The co-ops prove that they can compete at half the mean advertising rates of the commercial broadcast television newscasts and still show a profit. This is achieved without reductions in personnel or equipment. The interconnection of local cable systems is necessary for the cable news co-op concept to work. As mentioned earlier, the Bay Area Interconnect is already inserting advertising on CNN. The next logical step in such a network would be to introduce the local cable tele- vision news co-op on a news network, such as CNN to compete with the local commercial broadcast television newscasts. NOTES 97 NOTES--CHAPTER 1 1Alan M. Levy, ”Cable Penetration Tops 30 Percent: Nielsen, Arbitron," Multichannel News, June 14, 1982, p. 1. 2Sylvia Hack, "Rebuilds, Upgrading Alter Nation's Cable Landscape,‘ Cable Age, November 16, 1981, pp. 6-9. 3"A Short Course in Cable: 1982," Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. G-3. 4"Ad Vantage: Cable Avails," Broadcasting, July 27, 1981, p. 12. 5”Cable Interconnects: Making Big Ones Out of Little Ones,” Broadcasting, March l, 1982, pp. 59-62. 6Stweart Schley, "Gill, Viacom Join to Expand Bay Area Cable Interconnect," Multichannel News, May 3, 1982, p. 4. 7Allen Green, ”Ted Turner's Dream, One Year Later," Washington Journalism Review, June 1981, p. 40. 8“Good News, Bad News for Turner's Cable TV,” Business Week, June 14, 1982, pp. 35-36. 9Stewart Schley, "Turner Launches CNN 2,” Multichannel News, January 11, 1982, p. 1. 10Ibid. 11Alan M. Levy, "Group W, ABC Launch Satellite News Channel,‘I Multichannel News, June 11, 1982, p. 57. 12Ibid., p. 1. 13Ibid., p. 57. 14 Ibid. 98 15Stuart J. Kaplan, "Impact of Cable Television Services on the Use of Competing Media," Journal of Broadcasting, 22 (Spring 1978): 160. 161bid., 161. 17Ibid., 162. 18Ibid. 19"Cable Meeting on the Cape,” Broadcasting, July 20, 1981, p. 54. 20"Cab1e 1v: Going After the Small Markets," Broadcasting, December 1, 1980, p. 78. 21Howard Polskin, "The Top Local Cable Systems in America," Panorama, January 1981, p. 46. 22The National Association of Broadcasters define a rating as ”...the percentage of television households...that is estimated to be in a program's audience over a specified time. A share "...is the percentage of households using a television...that are estimated to be in the audience of a given...program." National Association of Broadcasters, Standard Definitions of Broadcast Research Terms, (New York: National Association of Broadcasters, 1967), pp. 24, 26. 23"Cab1e 1v," Broadcasting, p. 79. 24Ibid., p. 80. 25Ibid. 26 Ibid., PD. 80, 82 27”Cable Meeting,” Broadcastiag, p. 54. 28"Cable TV,” Broadcasting, p. 84. 99 NOTES--CHAPTER TWO 1Arbitron Television, 1981-1982 Universe Estimate Summary, (New York: The Arbitron Company, 1981), pp. 1-2. 2John Abel, Mike Wirth, and Bob Yadon, Handbook on Broadcast Station Management 2nd ed., (East Lansing, Michigan: Michigan State University, 1978), p. 2. 3These steps represent the methodology that is utilized in the ”Market/Station Analysis." See Abel, John et a1., Handbook on Broadcast Station Management, pp. 2-4. 4Alan M. Levy, ”Cable Penetration Tops 30 %: Nielsen Arbitron," Multichannel News, June 14, 1982, p. 1. 5"Cable Audience Test Survey to be Unveiled in June," Broadcasting, March l, 1982, p. 98. 6Ibid. 7“More Ads for Cable TV," Sales and Marketing Management, April 6. 1981, p. 14. 100 NOTES--CHAPTER THREE 1Arbitron Television, 1981-1982 Universe Estimates Summary, (New York: The Arbitron Company, 1981), p. i. 2U.S. Department of Commerce, Bureau of the Census, 1980 Census of Population,,Characteristics of the Population, Number of Inhabitants: Michigan, (Washington, D.C.: Government Printing Office, 1982), p. 8. 3Arbitron Television, Summary, p. 12. 4U.S. Department of Commerce, Census, Inhabitants, p. 8. 5U.S. Department of Commerce, Bureau of the Census, 1980 U.S. Census of the Population: Michigan (by county). Microfiche, Summary Tape File 1A, 10 December 1981. 6Ibid. 7U.S. Department of Commerce, Census, Inhabitants, p. 8 8"Annual Survey of TV Markets,” Sales and Marketing Management: Survey of Buying Power Part II, October 26, 1081, p. 160. 9Ibid. 10John Maynard Keynes, The General Theory of Employment, Interest, and Money, (New York: Harcourt, Brace and Co., 1935), p. 96. 11"Survey of TV Markets,” Buying Power II, October 1974 through October 1981. 12Ibid. 13Keynes in General Theory, APC = Consumption/Income, p. 96. 101 14Michigan Employment Security Commission, Research and Labor Statistics Division, Labor Analysis Section, "Civilian Labor Force and Wage and Salary Employment Estimates," 1971-1981; U.S. Department of Labor, Bureau of Labor Statistics, "Employment Status of the Noninstitutional P0pu1ation 16 Years and Older, 1947 to Date," Employment and Earnings, January 1982, p. 9. 15Michigan Department of Commerce, Office of Community Development, "Community Profile: Detroit," May 1982. 16”Cable Interconnects: Making Big Ones Out of Little Ones," Broadcasting, March 1, 1982, PP. 59-62. 17U.S. Department of Labor, Employment, p. 9. 18"Facilities of Television," Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), pp. B108-B109. . 19"Subscription TV Stations," Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. B148. 20"Pending Television Station Applications,“ Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. B189. 21Standard Rate and Data Service, Inc., Spot Radio Rates and Data, March 1, 1982. 22"Daily Newspapers Published in the United States," Editor and Publisher International Yearbook 1981, (New York: Editor and Publisher Co., 1981), pp. 1130-1139. 23Ibid. 24”Facilities of Television," Broadcasting Yearbook. PP- 3110-3112- 25Personal letter, Mike VonEnde, WJBK-TV, 23 March 1982; personal letter, Bob Warfield, WDIV-TV, 22 March 1982; telephone interview, Robert White, WXYZ-TV, 7 April 1982. 26Ibid. 27Vernon A. Stone, ”Moderate Gains in News Salaries," RTNDA Communicator, December 1981, pp. 16-19. 102 28Ibid. 29John Abel, Mike Wirth, and Bob Yadon, Handbook on Broadcast Station Management 2nd ed. (East Lansing, Michigan: Michigan State University, 1978), pp. 13—15. 30Ibid., p. 42. 103 NOTES--CHAPTER FOUR 1Arbitron Television, 1981—1982 Universe Estimates Summary, (New York: The Arbitron Company, 1981), p. i. 2U.S. Department of Commerce, Bureau of the Census, 1980 Census of Population,Characteristics of the Population, Number of Inhabitants: Michigan, (Washington, D.C.: U.S. Government Printing Office, 1982), p. 8. 3Arbitron, Summary, p. 14. 4Bureau of Census, Inhabitants: Michiga_, p. 8. 5U.S. Department of Commerce, Bureau of the Census, 1980 U.S. Census of the Popglation: Michigan (by county). Microfiche, Summary Tape File 1A, 10 December 1981. 6Ibid. 7U.S. Department of Commerce, Bureau of the Census, 1980 Census of Population and Housing: Michigan, (Washington, D.C.: U.S. Government Printing Office, 1981), pp. 4-23. 8"Annual Survey of TV Markets," Sales and Marketing Management: Survey of Buying Power Part II, October 26, 1981, p. 160. 9Ibid. 10 John Maynard Keynes, The General Theory of Employment, Interest, and Money, (New York: Harcourt, Brace and Co., 1935), p. 96. 11”Annual Survey of TV Markets," Sales and Marketing Management: Survey of Buying Power Part 11, October 1974 through October 1981. 12"Survey of TV,” Buying Power, P: 160' 13Keynes in General Theory, APC = Consumption/Income, p. 96. 14"Survey of TV," Buying Power, October 1974 through October 1981. 104 15U.S. Department of Labor, Bureau of Labor Statistics, "Employment Status of the Noninstitutional Population 16 Years and Older, 1947 to Date," Employment and Earnings, January 1982, p. 9; Michigan Employment Security Commission, Research and Statistics Division, Labor Analysis Section, "Civilian Labor Force and Wage and Salary Employment Estimates," 1971-1981. 16Michigan Department of Commerce, Office of Community Development, ”Community Profile: Battle Creek, Grand Rapids, Kalamazoo, and Muskegon," 1981-1982. l71bid. 18"Cable Interconnects: Making Big Ones Out of Little Ones," Broadcasting, March l, 1982, pp. 59-62. 19“Nielsen Co. Estimates of Cable Penetration," Multichannel News, April 19, 1982, p. 91. 20Arbitron Television, Summary, pp. 1-2. 21"Pending Television Station Applications," Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. B189. 22"U.S. Television Station Directory,“ Television Factbook 1981-1982, (Washington, D.C.: Television Digest, Inc., 1981), pp. 434b, 448b. 23Standard Rate and Data Service, Inc., Spot Radio Rates and Data, March 1, 1982. 24"Daily Newspapers Published in the United States,” Editor and Publisher International Yearbook 1981, (New York: Editor and Publisher Co. , 1981), pp. 1130-1139. 25"Facilities of Television," Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. 08. or: 26Personal letter, Richard A. Groat, WOTV-TV, 15 February 1982; personal letter, Jerrold M. Raffel, WKZO-TV, 16 February 1982; Rate card, WZZM-TV, 15 January 1982. 27Vernon A. Stone, "Moderate Gains in News Salaries,‘I RTNDA Communicator, December, 1981, pp. 16-19. 105 28Telephone interview, Fred Douglas, WKZO-TV, 6 May 1982. 29 n ' ll Stone, News Salar1es, pp. 16-19. 30 John Abe1, Mike Wirth, and Bob Yadon, Handbook on Broadcast Station Managament 2nd ed. (East Lansing, Michigan: Michigan State University, 1978): pp. 13-15. 31Ibid., p. 42. 106 NOTES--CHAPTER FIVE 1Arbitron Television, 1981-1982 Universe Estimates Summary, (New York: The Arbitron Company, 1981), p. i. 2U.S. Department of Commerce, Bureau of the Census, 1980 Census of Population, Characteristics of the Population, Number of Inhabitants: Michigan, (Washington, D.C.: U.S. Government Printing Office, 1982), p. 8. 3Arbitron Television, Summary, p. 12. 4Bureau of Census, Inhabitants: Michigan, p. 8. 5U.S. Department of Commerce, Bureau of the Census, 1980 Census of the Population: Michigan (by county). Microfiche, Summary Tape File 1A, 10 December 1981. 6Ibid. 71bid.‘ 8"Annual Survey of TV Markets,“ Sales and Marketing Management: Survey of Buying Power Part 11, October 26, 1981, p. 160. 9Ibid. 10John Maynard Keynes, The General Theory of Employment, Interest, and Money, (New York: Harcourt, Brace and Co., 1935), p. 96. 11”Sruvey of TV,‘I pri g Power 11, October 1974 through October 1981. 12Ibid. 13Keynes in General Theory, APC = Consumption/Income, p. 96. 14 Ibid. 107 15U.S. Department of Labor, Bureau of Labor Statistics, "Employment Status of the Noninstitutional Population 16 Years and Older, 1947 to Date,” Employment and Earnings, January 1982, p. 9. Michigan Employment Security Commission, Research, and Statistics Division, Labor Analysis Section, "Civilian Labor Force and Wage and Salary Employment Estimates," 1972-1981. 16Michigan Department of Commerce, Office of Community Development, "Community Profile: Lansing," November 1981. 17Telephone interview, Dorothy Cramer, Michigan Department of Civil Service, 11 May 1982. 18Michigan State University, Division of University Relations, ”This is Michigan State University 1982,” January 1982, p. 31. 19Michigan Department of Commerce, Profile: Lansing. 20Greater Jackson Chamber of Commerce, ”Jackson, Michigan: Major Employers,” January 1982. 21Ibid. 22Arbitron Television, Summary, p. 2. 23”Pending Television Station Applications," Broadcasting Cable- casting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. B189. 24Standard Rate and Data Service, Inc., Spot Radio Rates and Data, March 1, 1982. 25"Daily Newspapers Published in the United States,“ Editor and Publisher International Yearbook, 1981, (New York: Editor and Publisher Co., 1981), pp. 1130—1139. 26"Facilities of Television," Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), p. B109. 27Telephone interview, Jan Allen, WJIM-TV. 5 May 1982; personal letter, Howard Lancour, WILX-TV, 1 April 1982. 28Ibid. 108 29Vernon A. Stone, ”Moderate Gains in News Salaries,” RTNDA Communicator, December 1981, pp. 16—19. 30John Abe1, Mike Wirth, and Bob Yadon, Handbook on Broadcast Station Management 2nied. (East Lansing, Michigan: Michigan State University, 1978), pp. 13-15. 31Ibid. 32Ibid. p. 42. APPENDICES APPENDIX A City of License Call Letters (AM/FM) 109 COMMERCIAL BROADCAST RADIO STATIONS IN THE DETROIT TV MARKET Licensee Ann Arbor Birmingham WMCJ (FM) Dearborn WNIC (AM) WNIC (FM) Detroit WABX WCXI (FM ( WTWR ( ( ( 1 AM) FM) FM) FM) WDRQ WGPR WJR (A M) WJR (FM) WJZZ (FM) WLLZ (FM) WLQV (AM) wczv (FM) WMUZ (FM) WMZK (AM) WJLB (FM) WAAM Broadcasting Co. Lake America Communications Co. Washtenaw Broadcasting Co., Inc. Washtenaw Broadcasting Co., Inc. Greater Michigan Radio, Inc. Renaissance Communications, Inc. Renaissance Communications, Inc. Century Broadcasting Corporation Golden West Broadcasters, Inc. Golden West Broadcasters, Inc. Chartcom, Inc. WGPR, Inc. Capital Cities Communications, Inc. Capital Cities Communications, Inc. Bell Broadcasting Co. Doubleday Broadcasting Co. Gannett Broadcasting Gannett Broadcasting Crawford Broadcasting Booth American Co. Booth American Co. Format ”MOR Top 40 MOR Soft Rock Contemporary Adult Contemporary Adult Contemporary AOR Country All Hits Top 40 Black Diverse Beautiful Music Jazz Album Rock Inspirational APR Religious Black Black City of License 110 Call Letters (AM/FM) Licensee Detroit (continued) WOMC (FM) WQRS (FM) WWJ (AM) WWJ (FM) WWWW (FM) WXYZ (AM) WRIF (FM) Howell WHMI (AM) WHMI (FM) Inkster WCHB (AM) Lapeer WDEY (AM) WDEY (FM) WMPC (AM) Livonia WCAR (AM) Marine City WSMA (AM) Monroe WHND (AM) WVMO (FM) Mount Clemens WBRB (AM) WLBS (FM) Metromedia, Inc. The Outlet Co. Evening News Association Evening News Association Shamrock Broadcasting ABC Owned Stations ABC Owned Stations B &H Broadcasting Co. B &H Broadcasting Co. Bell Broadcasting Co. WTHM Broadcasting Co. WTHM Broadcasting Co. Calvary Bible Church Wolpin Broadcasting Co. Sommerville Broadcasting Co. WQTE Broadcasting, Inc. Monroe Broadcasting Co. Radio Station WBRB Inner City Broadcasting Format APR Classical All News Beautiful Music APR Talk AOR MOR MOR People Power Easy Listening Easy Listening Religious Talk C&W Oldies C&W Talk Progressive 111 City of License Call Letters (AM/FM) Licensee Pontiac WPON (AM) Michigan Cablevision & Radio Co. Port Huron WHLS (AM) Wismer Broadcasting, Inc. WSAQ (FM) Wismer Broadcasting, Inc. WPHM (AM) Enterform, Inc. Royal Oak WEXL (AM) Sparks Broadcasting Co. Saline WMIC (AM) Lake America Communications, Inc. Ypsilanti WSDS (AM) Koch Broadcasting Corporation WYFC (AM) WYFC, Inc. Format C&W Adult Contemporary MOR MOR Inspirational Modern Country Modern Country MOR SOURCE: "Facilities of Radio," Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), pp. C115—C124. APPENDIX B 112 COMMERCIAL BROADCAST RADIO STATIONS IN THE GRAND RAPIDS TV MARKET City of License Call Letters (AM/FM) Licensee Albion WALM (AM) Battle Creek WBCK (AM) Wolverine Broadcasting Co. WDFP (FM) WVOC, Inc. WKNR (AM) Engineering Investment Corp. WKNR (FM) Engineering Investment Corp. WWKQ (AM) Television Thirty-Six Big Rapids WBRN (AM) WBRN, Inc. WBRN (FM) WBRN, Inc. Coldwater WTVB (AM) Tri-State Broadcasting WNWN (FM) Tri-State Broadcasting Fremont WSHN (AM) WSHN, Inc. WSHN (FM) WSHN, Inc. Grand Haven WGHN (AM) WFMG (FM) WALM, Inc. Community Broadcasters, Inc. Community Broadcasters, Inc. Format MOR MOR Religious Top 40 MOR Oldies MOR Oldies MOR Contemporary Country Mellow Contemporary Mellow Contemporary MOR Easy Going City of License Call Letters (AM/FM) 113 Licensee Grand Rapids WCUZ (AM) WCUZ (FM) WFUR (AM) WFUR (FM) WJFM (FM) WMAX (AM) WOOD (AM) WOOD (FM) WWN(MD WLAV (FM) WXQT (AM) WGRD (FM) WZZR (FM) Greenville WPLB (AM) WPLB (FM) Hastings WBCH (AM) WBCH (FM) Holland WHTC (AM) WHTC (FM) WJBL (AM) WJBL (FM) WZNC (FM) WION (AM) Federated Media Federated Media Kuiper Stations Kuiper Stations John E. Fetzer Stations Salem Media of Michigan WOOD Broadcasting, Inc. WOOD Broadcasting, Inc. Shepard Broadcasting Corp. Shepard Broadcasting Corp. Regional Broadcasters of Michigan Regional Broadcasters of Michigan Liggett Broadcasting Hat River Broadcasting Co. Hat River Broadcasting Co. Barry Broadcasting Co. Barry Broadcasting Co. Holland Broadcasting Co. Holland Broadcasting Co. Ottawa Broadcasting Co. Ottawa Broadcasting Co. West-State Broadcasters, Inc. McPherson Broadcasting Co. Format Modern Country Modern Country N/A Beautiful Music Contemporary All News MOR Beautiful Music Talk AOR Music of your Life Top 40 Soft Rock' MOR C&W Modern Country Modern Country Diversified Beautiful Music Beautiful Music Religious C&W MOR 114 City of License Call Letters (AM/FM) Licensee Kalamazoo WKMI (AM) Steere Broadcasting Corp. WKPR (AM) Kuiper Stations WKZO (AM) John E. Fetzer Stations WQLR (FM) Fairfield Broadcasting Co. WYYY (AM) Williams Broadcasting Corp. Kentwood WKWM (AM) Richard Culpepper Marshall WELL (FM) Triad Stations, Inc. Muskegon WKBZ (AM) Reams Broadcasting Corp. WMUS (AM) Greater Muskegon Broadcasters, Inc. WMUS (FM) Greater Muskegon Broadcasters, Inc. WQWQ (FM) TSPS Broadcasting Co. WTRU (AM) Regional Broadcasters Muskegon Heights WKJR (AM) Muskegon Heights Broadcasting Co. WKJR (FM) Muskegon Heights Broadcasting Co. Otsego WOAM (AM) Allegan County Broadcasters, Inc. WAOP (FM) Allegan County Broadcasters, Inc. Portage WBUK (AM) Radio Michigan Rockford WJPW (AM) Jack Lee Payne South Haven WCSY (AM) Spartan Broadcasting, Inc. Format Contemporary Religious MOR Beautiful Music MOR Black Diversified MOR/01d Contemporary Country Contemporary Country Beautiful Music Adult Contemporary Religious Religious Big Band C&W Solid Gold, Contemporary Farm, talk, MOR MOR 115 City of License Call Letters (AM/FM) Licensee Format Sturgis WSTR (AM) Water Wonderland Broadcasting Co. MOR WSTR (FM) Water Wonderland Broadcasting Co. MOR Three Rivers WLKM (AM) Voice of Three Rivers, Inc. MOR WLKM (FM) Voice of Three Rivers, Inc. MOR Whitehall WCNF (FM) Blueberry Broadcasting, Inc. C&W WPBK (AM) Pyramid Broadcasting Co. Diversified, C&W Wyoming WYGR (AM) Donna Broadcasting Co. Contemporary Christian SOURCE: "Facilities of Radio," Broadcasting Cablecasting Yearbook 1982, (Washington, D.C.: Broadcasting Publications, Inc., 1982), pp. C115-C124. APPENDIX C City of License Call Letters (AM/FM) 116 COMMERCIAL BROADCAST RADIO STATIONS IN THE LANSING TV MARKET Licensee Charlotte WGWY (AM) WMMQ (FM) East Lansing WFMK (FM) WVGO (AM) WVIC (FM) Hillsdale WCSR (AM) WCSR (FM) Jackson WILS Sharon Broadcasting Co. Mid-America Broadcasting Co. Ligett Broadcasting Group Goodrich Broadcasting, Inc. Goodrich Broadcasting, Inc. WCRS, Inc. WCSR, Inc. North Shore Communications, Inc. Patten Communications Corp. Patten Communications Corp. Booth American Co. Booth American Co. Lansing Broadcasting Co. Lansing Broadcasting Co. Mid-West Family Stations Mid-West Family Stations Gross Telecasting, Inc. Gross Telecasting, Inc. Format Contemporary Christian Adult Contemporary MOR Black Black Diversified Beautiful Music Modern Country MOR AOR C&W Top 40 MOR AOR Modern Country Modern Country MOR Beautiful Music 117 City of Licensee Call Letters(AM/FM) Licensee Format St. Johns WQTK (AM) Chase Broadcasting Co. MOR WQTK (FM) Chase Broadcasting Co. 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