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KAYU vs. KSKN: And the winner is…

April 5, 1987

Is TV ‘war of independents’ over?

By Tom Sowa
The Spokesman-Review

For one Spokane independent TV station, the future arrives tonight. For the other, it’s back to square one.

Spokane’s two independent TV stations, KAYU and KSKN, recently made programming changes that will take them in vastly different directions.

KAYU (Channel 28) tonight launches two new prime-time comedies that are part of the first wave of programs from Fox Broadcasting Company, “the fourth TV network.”

KSKN (Channel 22), by contrast, last week filed for reorganization in the U.S. Bankruptcy Court in Tucson, Ariz.

The two stations – started within a year of each other – had formed an unlikely alliance of two small Davids taking on this market’s three big TV Goliaths, the network affiliates at KREM, KHQ and KXLY.

Throughout the so-called “war of independents,” Robert Hamacher, owner and general manager of KAYU, has deflected any comparisons or associations with KSKN. His point, he’s said a number of times is, “The other independent is not our main concern. We’re in competition with all the other commercial stations in town.”

Now that KSKN seems one step away from ending its 3 ½ year history as a commercial TV station in this market, Hamacher maintains a distant attitude toward its problems.

“All I’ll say,” he commented last week, “is it was destined to happen. It was just a matter of when it was going to happen.”

He’s more inclined to toot his latest horn, tonight’s formal unveiling of “Married…With Children” and “The Tracey Ullman Show.” Both are the first of what will be five brand-new programs created and distributed by Fox Broadcasting.

The five shows – which come into the schedule during the next four weekends – will be added to the first Fox program KAYU acquired, the nightly “The Late Show Starring Joan Rivers.”

The connection with the Fox “network” will leave KAYU-TV in a “tweenie” status. That term applies to all those stations that have joined with Fox in carrying this spring’s lineup of five weekend programs, including the weekly comedy series “Mr. President” starring George C. Scott.

A “tweenie,” according to TV industry wags, describes a station like KAYU that lands somewhere between independent status and full network affiliation.

If the Fox notion proves successful, the plan is to add a night of prime-time programming each year. By 1990, according to Hamacher, the Fox Company backed by media mogul Rupert Murdoch will have five nights per week of prime-time programming.

While TV viewers here try to make sense of another “network” and its impact on their tube-viewing habits, struggling KSKN has moved in a different direction – toward financial reorganization.

KSKN, after a difficult 12 months, has decided to stay on the air, but in a drastically modified version.

Says KSKN station manager Steve Whitehead, “We’re not on the street selling ads right now. We’re only carrying those (ads) that we’ve already had or that come in the door.”

The decision by out-of-town owners to file bankruptcy papers ended a year of uneven performance by KSKN since the death of its second owner, Gene Adelstein, in March of 1986.

According to Chris Hutchings, a representative of KSKN’s investors, the station will “do whatever we need to keep the bills paid.” Essentially, he adds, the station will adopt programs that it pays nothing to receive and which generate enough income to pay bills.

KSKN, says Hutchings, won’t sell local or regional advertising and won’t continue carrying movies twice a day.

Last week the station began carrying four hours per day of “home shopping” programs. KSKN receives a fee from America’s Shopping Place to run the programs, said Hutchings by phone last week.

Hutchings says the station likely will increase home shopping programs soon. It also probably will add a number of religious programs – similar to the evangelical programs already seen on cable and on other local stations, including KAYU.

KSKN already carries “The PTL Club” – the new version of the Jim and Tammy Bakker show – on weekday mornings and Sunday nights.

The TV preacher shows also count as “specialty” programs and cost KSKN nothing to carry, other than the cost of station transmission and staffing.

Another part of the station’s programming – daytime and afternoon children’s shows and early evening comedies like “I Dream of Jeannie” – won’t remain, according to Hutchings.

The decision to go to specialty programs was forced upon the station, adds Hutchings, a securities analyst at Columbus Securities, a Phoenix firm that represents about half the 65 limited partners in the station.

“A lot of people in the market are after blood,” Hutchings says. “Several people would rather see us fall and then they’d pick up the station license at auction.”

To stay afloat KSKN will “downsize and reformat,” says Hutchings.

Beyond the programming changes, KSKN will cut overhead by moving office staff and equipment from its East Broadway office building to KAYU’s South Regal office.

KSKN has signed a lease with Hamacher to use not just office space but the transmitter tower of its former competitor, KAYU.

The station will run on a staff of fewer than five employees. At one time, when Adelstein took over, its work force grew to nearly 30.

The reorganization in U.S. Bankruptcy Court in Tucson last Monday is the second time KSKN has had to bite the chapter 11 bullet. In April of 1985, the station’s first owner, Lee Schulman, filed bankruptcy here and sold the station’s assets to Adelstein, an Arizona TV station owner and businessman.

Schulman had put KSKN on the air in October 1983, about a year after Hamacher and his partners launched KAYU, the first UHF independent here.

From the first, however, shortage of capital, weak programming and technical difficulties hampered Schulman’s effort. According to Dennis Williamson, general manager of KREM-TV, the first bankruptcy and eventual sale to Adelstein could have been predicted within months after KSKN’s sign-on.

Once Adelstein took over in the summer of 1985, KSKN made strides forward and seriously offered competition to the other affiliates and to KAYU. Steve Whitehead, KSKN’s station manager, said Adelstein’s television experience infused life and energy into the station.

When Adelstein died of a heart attack at age 45 last March, KSKN’s woes resurfaced, Whitehead says. Adelstein’s wife, Ellen, took over as the station’s general manager, while the other 60 to 65 limited partners waited to see if the station could recover its momentum.

Last spring Adelstein’s son Evan took over as station manager and failed to stop the station’s hemorrhage, says Whitehead.

“He was only 23 and didn’t have a good idea of how to run the station. He destroyed morale here,” says Whitehead, who moved from general sales manager to station manager in November.

According to Hamacher, even Gene Adelstein wouldn’t have saved Channel 22. “It’s a simple matter of economics. The industry formula says you need something like $35 to $40 million in total advertising revenue spent in any market before two independent stations can survive. And we only recently reached $27 million.”

Without Adelstein in charge, Whitehead said the station quickly went adrift. “Without Gene, we didn’t have the brains and inside knowledge that was needed to buy programming and make sure there were ways to pay the bills that were coming in.”

Instead of paying the bills, KSKN started accumulating even higher debts. The largest cost was for acquiring, from a number of production and distribution companies, the two movies it carried daily.

Last month, after one of the film companies filed suit against the station for $221,000 in unpaid program bills, Hutchings and the Arizona owners started searching for solutions to keep the station from going dark. Other creditors were showing similar signs of impatience with past due accounts.

The station’s owners made tentative plans to adopt religious and home-shopping programs in March, then hesitated when contracts with program providers couldn’t be signed quickly. At the time Whitehead watched while the limited partners and Hutchings continued negotiating with Ellen Adelstein to reach agreement on the station’s future.

At that time no one knew which course KSKN was going to take. “It could go dark and close completely, I don’t know,” Whitehead said in March. “They’re shaking dice in Phoenix and I’m waiting to see who wins.”

Whitehead insists KSKN’s future is still subject to revision. “I’m still trying to find ways to pursue the option of gearing up a local sales staff. I’ve begun getting Hutchings to understand that if we’re not a local station, we’ll never be able to come back and compete in the market.”

If Hutchings and his limited partners convince Adelstein to relinquish her control and go to specialty programs, Whitehead predicts he’ll leave the station.

“I’d probably leave, since the best part of independent television is the sales. If we go to specialty, all I’d be is a bill collector.”

The fall of KSKN toward a bargain-basement operation fits a nationwide pattern of general decline felt by many of the country’s 270-some independent TV stations.

Brokers and investors estimated at the end of 1986 that more than 70 commercial independent stations were up for grabs.

KREM’s Williamson points out the three main factors that left KSKN on the ropes in competition with its healthier opponents:

•”First, the costs of any programming are going sky-high.” Any independent station can’t rely on a national network to fill most of its day with programs. It ends up spending between 33 and 50 percent of its total budget to buy the programs it carries.

•”Second, this is an expensive business to be in. The costs of operating and paying salaries go up every year.”

•”And third, the revenue in this market has not maintained the 10 to 12 percent annual growth (in advertising) it used to see. Instead, we’re seeing no growth. It’s more or less flat here in recent years.”

Add the continuing fractionalization of the TV audience due to cable and the home video market, and it’s no surprise KSKN did not survive as a commercial station, Williamson concludes.

The same economic factors came to play in KAYU’s decision to hitch its wagon to the bold, expensive Fox Network experiment.

Hamacher says the Fox affiliation move makes sense from two perspectives – the high cost of program acquisition and the need to plan ahead.

“It makes sense because they’re giving me 10 hours of programming that will make money for us and that are better than we could give viewers on our own.”

In practical terms, KAYU will need to buy 104 fewer movie titles in the next 12 months if the Fox programs produce the kind of ratings the station expects. That reduction means money saved by KAYU, at the same time that Fox will provide a small compensation fee to the station for carrying the five weekend programs beginning tonight.

The Fox connection also signals a realization that solitary independent stations are a dying breed, according to Hamacher. “This move is part of an effort to figure out where TV is going.

“Independents have to go where the whole industry is going, not just keep pace with other stations. With Fox, we’re trying to get there faster than we could without taking this route.”

Sunday, April 5, 1987


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