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The War of Independents

December 22, 1985

KAYU and KSKN battle for survival in the TV market

By Tom Sowa
The Spokesman-Review

A gasoline war it isn’t. Spokane’s two independent TV stations – KAYU and KSKN – both say they’re not engaged in a battle or even a minor skirmish.

But a confrontation in area living rooms has begun. Between the two, there’s action – as at 4:30 p.m. weekdays, when one station airs “G.I. Joe” vs. “Batman” on the other.

And adventure (“Police Woman”) vs. comedy (“Diff’rent Strokes”) at 6 p.m.

And comedy (“The Jeffersons”) vs. more comedy (“The Odd Couple”) at 7:30 p.m.

In a market not especially large – ranked No. 76 nationally in number of viewers – Spokane benefits from a head-to-head contest between six hungry TV stations: the two independents, three network affiliates (Channels 2, 4 and 6) and a Public Broadcasting Service affiliate (Channel 7).

Three years ago, before the two independents came on the air, Spokane’s TV battle was more of a family affair, with each station carving out its niche of viewers and advertising revenue. There were occasional squabbles over territory between the three commercial stations, but the overall battle plan was acceptable to all involved.

That changed when KAYU (Channel 28), the first of Spokane’s two independents (non-affiliated stations), came on the air in October 1982. Bob Hamacher, the station’s general manager and one of its owners, brought to Spokane strategies he had learned while working at KSTW, Tacoma’s highly competitive independent TV station.

Following the pattern of independent stations around the country, Hamacher used the “counterprogramming” tactic: When the affiliates carry the network prime time shows, he carries old movies. When they carry evening news, he offers an alternative of comedy and syndicated action/adventure. When they carry sports, he tries comedy specials.

In late 1983, KSKN, the city’s second UHF independent station, started broadcasting on Channel 22; after a shaky first 18 months, KSKN has reorganized its battle plan and turned the four-way commercial TV fray into a five-station fracas.

To most TV viewers, the distinction between the independents, the three network affiliates and the PBS station is a fuzzy one. But, aware or not, most TV viewers in the Spokane market have seen vast changes in the sorts of shows available to them, and much of that has come about because of the two independents.

And viewers – those without cable, too – now regularly can see twice as many movies on television as they did three years ago. Both independents have also generated considerable hours of area sports coverage – some of it direct, some tape-delayed (as with KAYU’s replay of Gonzaga Prep’s State AAA football championship game).

The independents have not distinguished themselves with their repeated showings of paid religious programming and by devoting early morning and early afternoon “kid hours” to second-rate children’s shows.

But there are bright spots. Movie buffs, for instance, can applaud KSKN because it is the only Spokane station to carry the popular “At the Movies” show. Broadcast Sundays at 5:30 p.m., it allows viewers to enjoy the bantering of film critics Roger Ebert and Gene Siskel.

Those same fans can find satisfaction also in the selection of films shown regularly by KAYU: Offerings vary over the year, but the station has carried a trove of old favorites and recent hits, from “Grand Hotel” to “Raggedy Man” and “The Man Who Would Be King.”

And music fans have been rewarded equally: KAYU carries the popular first-run show “Solid Gold” every week; KSKN, under new management since October, has adopted a Sunday night film series devoted to great musicals.

The two independents have produced another less visible, but economically important ripple in the business community. That effect, according to Dennis Williamson, general manager of KREM-TV (the local affiliate of CBS) has been a gradual lowering of advertising costs paid by area businesses and merchants.

Since 1982, when there were just three competing commercial stations, the total pie of viewers has been sliced into smaller segments. Some of the pie has gone to viewers who now turn to cable offerings – such as ESPN or WTBS out of Atlanta. But many more viewers are now watching either KSKN or KAYU.

Explains Williamson: “With that fractionalization (of the watching audience), the individual station spot rates go down for the advertiser.”

To put that into layman’s language: In a gas war, the consumer sees a lowering of per-gallon prices. Since 1982, that same principle has affected the Spokane television market, resulting in a gradual lowering of advertising rates.

Yet, adds Williamson, that situation benefits both his station and the other two affiliates.

“The plus side is that it’s made more advertisers interested in using TV. Because of the lower ad rates charged per minute by the independents, advertisers who used to think they could only afford radio are now converting to TV.”

If nothing else, the stations can find encouragement in seeing more total money being spent in Spokane than three years ago.

In 1982, approximately $19 million in advertising revenue was spent locally. Currently, with two more stations (and a few other minor players, like Cox Cable of Spokane) engaged in the game, the total pie for 1985 advertising dollars is, according to Williamson and Hamacher, nearly $30 million.

Of that total, a little more than half will come from regional and national advertisers; about $7.7 million will be spent by local advertisers; the rest will come from various sources, including an amount paid back to the affiliates from the major networks.

Notably, however, about half of the nation’s independent UHF stations lose money. KAYU, during its first two years, lost money and will make a profit financially this calendar year, says Hamacher. The 39-year-old Spokane native declines to divulge KAYU’s net income, but admits it’s beyond $2.5 million.

“Spokane is a good television market,” Hamacher adds, but he contends the city’s limited advertising base and size (326,000 TV homes) can’t support another independent TV station, either newcomer KSKN or the yet-unfilled third channel that might become another independent in the future.

The proof that Spokane can’t support another UHF independent, he says, is what happened to KSKN.

At nearly the same time after KAYU came on the air, a California businessman named Lee Schulman acquired the license to KSKN. About a year later, after finding equipment and finishing the tangle of technical requirements that precede starting broadcast, Schulman launched the station.

Schulman admits today that he never had the necessary capital to push the station through the difficult first three years of operation. Without the investment of backers who pulled out at the last minute, Schulman saw his plans founder.

Poor programming choices, technical problems, power disruptions and inadequate staff all produced meager audience ratings. KAYU’s audience, meanwhile, continued to grow.

Earlier this year Schulman filed for financial reorganization and then sold KSKN to a Tucson TV station owner, Gene Adelstein. Adelstein and his wife Ellen, who took over the station in October, say they’ve got the goods and resources to carve out a fair share of the market.

“I certainly think there’s room for another independent station here. We’ll make it fly,” says Adelstein. “We’re going to put our money where our mouth is.”

In two months, he adds, advertising revenue has exceeded his estimates. The station now employs about 30 full-time employees and may add more next year.

Hamacher, for his part, pays homage to Schulman for one reason: KSKN, under Schulman’s direction, at least helped improve KAYU’s credibility. “Before, people here had no yardstick to measure us against. So then they had a chance to compare us, and what we were doing started looking pretty good.”

Hamacher and Adelstein admit they can’t hope to compete for a large viewing audience between 8 and 11 p.m. – the network-provided prime time block of major releases.

Yet big prime time ratings aren’t essential. The independents don’t receive major blocks of programming from the networks. They have to buy more programs from syndicates around the country, but at the same time there are distinct advantages in their independence: The independents get to keep all the advertising they can sell during their programs.

The network affiliates, on the other hand, receive only a portion of the advertising money spent (by national, regional and local businesses) during the 8 to 11 p.m. time block. The lion’s share goes to the networks themselves, which later cough up a token percentage and give it back to the affiliates.

Adelstein also admits he’s going to borrow a page or two from Hamacher’s counterprogramming playbook. Schulman, for personal reasons, didn’t actively seek out the two major sources of outside advertising for independents: religious and kids’ programming. Religious programs are attractive to independents for two reasons: They fill up programming time at difficult hours of the day, and they come from the producer with a check, accounting basically to non-stop advertising paid to the station. The kids’ shows, similarly, cost the station nearly nothing to carry. Generally they are carried by the station as a barter – with the station splitting the advertising time with the show’s producer or syndicator.

Since October, KSKN has shifted gears and picked up blocks of pre-paid religious programs – though nothing as lucrative or popular as KAYU’s “700 Club” or “The Jimmy Swaggart Hour.”

While the two independents claim they offer bona fide alternative television for the area, it happens sometimes that the two stations lock onto the same program. Last week, for instance, each carried the same religious program at the same time Sunday morning.

Adelstein, who previously owned two independent TV stations in Arizona, says he plans to make kids’ programs equal in priority with area sports coverage.

“Our first priority,” he adds, “will be the ‘early fringe’ period (from 4 to 6 p.m.) and weekend afternoons.”

Williamson at KREM acknowledges the fact that competition will be the standard operating guideline between all five commercial stations from this point. That competition, he notes, has already produced an increase in prices for the programs each station must buy to fill its programming. Like first-run movie theater operators bidding on the big movies of the year, local program managers have to bid with each other for popular shows made available for re-release – such as “M*A*S*H” or “Magnum, P.I.” reruns.

“It used to be, if you had a TV station in Spokane, you’d have to be blind to lose money. Now it’s more difficult; you have to know your audience and you have to know what you’re buying. It’s just not as easy as it used to be,” he says.

Adds Adelstein: “This is a better TV market than Tucson, and a lot better than if you just looked at the population here. It’s a big regional market.”

And, he adds, the competition between the affiliates and the independents will continue indefinitely.

“Between the two independents here, viewers are going to get a stronger package (of programs) than can be found in much bigger markets.”

Sunday, December 22, 1985

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From → KAYU, KSKN

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