News Makers

Is there an audience for a CNN-style cable channel devoted exclusively to Texas? The state’s reigning media conglomerate hopes so.

January 1999By Comments

DONALD F. “SKIP” CASS, JR., the general manager of Texas Cable News, walked into a cavernous warehouse that once held giant rolls of newsprint for the Dallas Morning News. It was the middle of October. Naked steel beams supported a recently added second story, and the bare concrete floor was littered with debris. Men in plaid work shirts and hard hats were threading their way through the place. High above them, someone was welding a metal stairway together. The crew was building the set of a new statewide cable news channel (think of a Texas-specific CNN) that goes on the air January 1. As a plume of orange sparks fell behind him, Cass—a soft-spoken man with black hair, pale skin, and brown eyes—unrolled a blueprint and described his vision of the newsroom being created. “We’re standing where the anchor’s desk is going to be,” he said. Pointing to the spot where the sparks had landed, he added, “The producers’ cubicles are all over there.”

The downtown Dallas warehouse is located in the heart of the print and broadcast empire known as the A. H. Belo Corporation, the most powerful media conglomerate in Texas. It’s within walking distance of the company’s seventeen-floor glass and granite headquarters, and it’s just a few blocks from the sober gray limestone building where The Dallas Morning News, Belo’s flagship daily newspaper, is published. The Morning News remains the company’s single largest asset—analysts estimate its annual revenues are nearly $462 million—though Belo owns five other papers as well: The Eagle in Bryan—College Station; The Providence Journal in Providence, Rhode Island; The Press-Enterprise in Riverside, California; The Gleaner in Henderson, Kentucky; and the Messenger-Inquirer in Owensboro, Kentucky. Still, Belo has become much more than a newspaper publisher. On another nearby corner, an array of white satellite dishes tilts skyward beside a huge red-and-white signal tower emblazoned with the call letters WFAA. Belo bought the TV station, its first, back in 1950, and the purchase signaled a change in the company’s direction. Today Belo owns seventeen stations in cities across the nation, from Tucson, Arizona, to Charlotte, North Carolina, giving it access to 14 percent of the nation’s households with TVs. In 1997 the broadcast division’s revenues were just under $581 million.

Lately, however, the hegemony of traditional television has been threatened by cable and the Internet, which explains the genesis of Texas Cable News, or TXCN. Spearheading the venture is Ward L. Huey, Jr., who is the vice chairman of Belo’s board, the president of its broadcast division, and one of several people at the company who at one time or another had the idea to start a Texas cable news channel. “I’m from Dallas, and I grew up listening to the Texas State Radio Network,” says Huey, a lanky man with white hair and blue eyes. “Regional news has always been extremely popular in this part of the country.”

Before Cass visited what will be the TXCN set, Huey assembled a group in his plush white office to flesh out Belo’s plans. Present were Cass, Belo vice president Harold Gaar, and Steven Ackermann, a veteran of the network news business who will serve as TXCN’s executive news director. Huey began by saying that the main reason Belo had given the go-ahead for an all-news channel was that the company had finally amassed a critical number of news-gathering properties in Texas, and had a unique opportunity to consolidate the resources of its television stations and newpapers throughout the region. In addition to its two papers, Belo now owns three TV stations around the state: WFAA in Dallas, KHOU in Houston, which was purchased in 1984 from Dun and Bradstreet, and KENS in San Antonio, which was acquired from Scripps-Howard in 1997 in a swap for the Television Food Network. Belo plans to put a TXCN reporter at each of these five properties to facilitate an exchange between the cable channel and its sibling news-gathering operations. The Morning News is expected to contribute heavily to TXCN by allowing its staff to serve as house pundits: The paper’s resident experts will be regularly interviewed by the channel’s reporters.

In that sense TXCN constitutes the next stage in an ongoing Belo experiment aimed at mixing ideas and information between the publishing and broadcast sides of the company, the goal of which is to bring more depth to television reports and more exposure to newspaper stories. Almost two years ago, for example, Belo consolidated the Washington, D.C., bureaus of its newspaper and television properties. Now the D.C. staff of the Morning News helps put together Capital Conversations, a weekly political talk show that airs on WFAA. “It’s a way to utilize the expertise and knowledge of the Morning News to augment the television stations,” says Carl Leubsdorf, the paper’s D.C. bureau chief. “The advantage is that we can show off on TV, and hopefully people will make the connection that if they are interested in a subject, they can read more about it the next day in the paper.” Ralph Langer, who retired as Morning News editor in December 1998, says simply, “It’s our news content transmitted through a different medium.”

The second factor that influenced Belo’s decision to start the cable news channel was the proliferation of such programming elsewhere in the country. Over the past ten years, at least thirty regional cable news channels have started up around the U.S. Few actually make money, but they attract a loyal base of viewers, and they serve as promotional vehicles for the companies that run them. “What drives the decision to start one of these things is the desire to become a dominant player in local news,” says Craig Marrs, the chairman of the Association of Regional News Channels. “Around the country, television stations and other news organizations are seeking another platform from which they can shout their brand name. You need to think of this as brand extension.”

Belo has been involved in three of these ventures. The company wandered into cable news in 1994, when it acquired WWL, the CBS affiliate in New Orleans. At the time, WWL was rebroadcasting its evening news show on a cable channel owned by Cox Communications (the project was a joint venture between WWL and Cox). The station’s decision to do so went against conventional wisdom, which held that a newscast would pirate its own viewers if it was shown again at other hours. Instead, WWL found that it attracted separate viewers who couldn’t catch the news at its regular time. “It was serving an unfulfilled need,” Huey says. Though NewsWatch Channel 15, as the show was called, repeated verbatim what had aired a few hours before, its ratings were better than respectable and even exceeded CNN’s in the local market.

Two years later, Huey hired away the general manager of NewsWatch Channel 15, Skip Cass, to test his hunch that there was an audience for a cable news channel in Texas. Cass found there was indeed a hunger for regional news: Because of the deep roots that many Texans have and the degree to which Texans travel around the state, they’re far more interested in knowing what’s going on in Texas than in Hollywood or New York. “The market research firm we hired said the appetite for local and regional news in Texas is beyond anything they had seen before,” Cass says.

In 1997, while plans in Texas were being hatched, Belo helped launch a local news cable channel in Norfolk, Virginia, where it owns WVEC, an ABC affiliate. That operation, called Local News on Cable (LNC), is a joint venture between WVEC; Norfolk’s paper, the Virginian Pilot; and Cox Communications, which owns the channel. LNC primarily rebroadcasts the latest WVEC newscasts but also offers some original news programming, and the latter revealed a trend that Belo found particularly interesting: Single copy sales of the Pilot typically rose when LNC’s anchors mentioned that a more in-depth report would appear in the paper the next day. That started Belo executives thinking about the advantages of cross-promotion.

The same year, Belo acquired the Providence Journal Company, thereby gaining a Pulitzer prize—winning newspaper, nine TV stations, and NorthWest Cable News (NWCN), one of the most sophisticated regional cable news shows in the country. Launched in December 1995, NWCN is available to 1.9 million households in six states: Washington, Oregon, Idaho, Alaska, Montana, and California. Unlike Belo’s New Orleans or Norfolk operations, NWCN airs only original news programming, and it has found a large and loyal audience: It consistently draws more viewers than CNN Headline News, and during periods of breaking regional news or extreme weather, it sometimes even beats the local network affiliates as well. “This was another confirmation of our sense that there is a huge appetite for regional news,” Huey says. “We said, ‘Let’s do it first, and let’s do it right.’”

So, on January 1, Belo will begin broadcasting 24 hours of Texas news, sports, and weather. Like NWCN, TXCN will offer only original programming. Cass and Ackermann plan to hire a staff of one hundred that will be, on average, younger than that of a typical Belo TV station. “It isn’t true that we’re hiring all rookies,” Cass says, “but certainly, in some cases, we are looking at people who have a different set of skills and background than someone at WFAA, KHOU, or KENS might have. Producing news that is always on is a different business.” Two thirds of the staff are expected to hold jobs in the newsroom, giving the channel an unusually large ratio of news to business staff; Belo’s theory is that by offering a better product, it will be able to attract a larger audience, and therefore more advertising.

But what audience? Belo intends to target Texans from age 18 to 54. “They’ll be somewhat younger, interested in news, and live a lifestyle busier than most,” Ackermann says. “They are on the go.” And while cable channels in other parts of the country are in urban markets and have therefore focused almost exclusively on urban viewers, TXCN will go after rural viewers as well, given the state’s population mix. To achieve that goal, Belo has signed agreements with two cable operators—TCI and Marcus Cable—that will bring TXCN to more than 1 million cable subscribers, or approximately one third of all subscribers in Texas. And it hopes to sign additional agreements that will boost that percentage even higher. At the moment no deal has been struck with the state’s largest cable operator, Time Warner, which serves more than one million subscribers in Texas, primarily in the cities of Austin, Houston, and San Antonio. Time Warner has several reasons not to carry TXCN: It is the corporate parent of CNN, which will be one of TXCN’s main competitors, and it recently announced plans to start its own news channel to serve Austin and Round Rock. The company already runs four such channels in other parts of the country, including New York and Orlando. According to Kirk Varner, the corporate vice president for Time Warner Cable, Austin was chosen as the site of its latest venture because of the city’s rate of growth and the technical capacities of the cable infrastructure there—not because of Belo’s decision to start TXCN. “We’ve had this in the hopper for over a year,” he insists.

Competition notwithstanding, one of the greatest challenges to Belo is going to be keeping up with technological advances. Lately the business of television has gone through a transformation in the way video news is produced. The set that Belo is building will be state-of-the-art, filled with equipment that went on the market only in the past year or two. (Belo plans to invest around $15 million on capital costs and an equivalent amount on operating costs before it sees a profit, which may take five years.) Essentially, TXCN’s newsroom will be entirely digital, giving its editors the ability, for instance, to call up any video image from a computer server rather than having to fast-forward through reams of tape to find the shot they’re looking for. The new equipment will also allow two or more editors to work on the same images simultaneously instead of having to go through the clumsy process of tape duplication. Ackermann—who had spent most of his career at CBS during the era of multiple tapes and all the confusion they caused—gets really worked up when he talks about these new capabilities. “This was unheard of!” he cries. “We can do things we never did before!”

Even so, for the most part TXCN’s newscasts will follow a predictable format: the day’s big stories, then secondary stories related in a little more depth, then weather and sports. (In general, viewers will never be more than ten minutes away from an update on the weather.) There may also be area-specific inserts of news deemed too local to appeal to the entire state. During breaking news, however, TXCN will devote great amounts of time to covering events as they unfold. Good thing too: That’s how CNN transformed itself from the Chicken Noodle Network into an establishment powerhouse. “If Jessica McClure was stuck in a well today,” Huey promises, “we would own that story.”

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