Monday, January 3, 2011

KIDK and the future of local TV news

Unrelated recent stories may shed some new light on the decision by Fisher Broadcasting to essentially turn KIDK over to its Idaho Falls competitor, KIFI.

A January 3 article in the Pugent Sound Business Journal reports that Fisher turned down an offer of $211 million from a Canadian real estate firm to buy the company. That price was an 18 percent premium over what Fisher’s stock was trading for. Fisher took only four days to reject the offer, a response so quick that spurned buyer, Huntingdon Real Estate Investment Trust, called it “astonishing,” according to the Journal.

“Equally astonishing is the complete absence in that (Dec. 10) letter of any attempt to explain on what basis the Fisher board reached its conclusion that the proposal is not in the best interest of Fisher and its shareholders,” Huntingdon wrote on Jan. 3, the Journal reported.

The story also reported that Huntingdon officials said they were going public with their buyout plan “so that Fisher shareholders can make their own assessment of the sufficiency of our proposal.”

Whether these are the early salvos of a hostile takeover bid is premature to say, but it might indicate why Fisher was eager to make a deal with News-Press & Gazette Company, the owner of KIFI. The quicker Fisher can improve its bottom line, the less pressure it might get from its shareholders looking for better returns.

The Idaho Falls-Pocatello television market ranks 162nd in size in the country, right between Sherman-Ada, Oklahoma and Biloxi-Gulfport, Mississippi. Such markets comfortably support more than a handful of newspapers (there are three dailies, a four-day and nearly a dozen weekly newspapers in the same market), but it’s long been a struggle for three major network affiliates to make a go in eastern Idaho. 

The over-saturation of the media market here has also held advertising rates down for everyone -- newspapers, radio, TV, billboards, shoppers, etc. You’d think that would be good news for advertisers, but the media-rich environment has also meant that advertisers had to spend money with more advertising outlets than in other markets of similar size.

The worst U.S. recession in 80 years has coincided with technological advances that have changed traditional media forever, particularly newspapers and television. The difficulties faced by newspapers seem to have been well documented, but the trauma in TV may be even more dramatic, and the changes are far from over.

“The Idaho arrangement is not unusual,” wrote reporter Diana Marszalak on tvnewscheck.com. “The combination of network affiliates within markets and the resultant loss of independent local news operations are becoming increasingly common as weaker stations give up their independence in the face of dwindling revenue and rising costs.”

The loss of an independent KIDK will mean less local TV news, as the survivors from KIDK will be managed by KIFI. The long-term future of local TV news, meanwhile, remains unclear.

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