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Published: Wednesday, 7/30/2008

Buckeye, WNWO-TV negotiating as deadline looms

BY KIRK BAIRD
BLADE STAFF WRITER

With a deadline looming, WNWO-TV and Buckeye CableSystem are negotiating a new contract to keep the channel available to Buckeye's 150,000 subscribers.

Jon Skorburg, the vice president and general manager of WNWO, Channel 24, wouldn't say during a news conference yesterday exactly what - if anything - will happen if the contract expires at the end of the day tomorrow without an extension or a new agreement.

But should WNWO decide to withhold its signal from Buckeye, local cable subscribers would have to plug in an antenna in order to watch NBC prime-time network Olympic broadcasts and offerings such as The Office, Heroes, Sunday Night Football, The Today Show, and The Tonight Show with Jay Leno.

At the heart of the negotiations is the television station's position that Buckeye should pay it to broadcast the NBC affiliate's signal.

Buckeye CableSystem is owned by Block Communications, Inc., parent company of The Blade.

Mr. Skorburg said yesterday that WNWO and its owners, Barrington Broadcasting, are seeking "fair value" in exchange for its signal.

"We're not out to gouge anybody; we want what's fair," Mr. Skorburg said.

Under the current arrangement, Mr. Skorburg said his station receives no direct payments from Buckeye for its signal, but now is seeking to be paid fees along the lines of those afforded to major cable programmers such as ESPN, USA, CNN, Fox News Channel, and Disney.

"The fact that broadcasters provide their programming for free over the air changes its value in a real sense and it cannot be compared to the value of exclusive cable or satellite channels," Allan Block, chairman of Block Communications, said. "And I believe economists would agree with me."

Mr. Block went on to say that his company has had a mutually beneficial relationship with local TV stations and that shouldn't be damaged by disputes over retransmission consent and payment.

"The key problem facing broadcasters is that their business model is changing," Mr. Block said. "Their advertising revenues are affected by the same economic forces facing all traditional media, but they cannot look to cable subscribers to make up that loss."

Thomas Dawson, Buckeye CableSystem spokesman, said the cable company is working to reach an agreement with WNWO, and is "not opposed to paying fair compensation" for the right to retransmit its signal.

Under the current arrangement, Buckeye compensates WNWO with on-air advertising trade-offs in exchange for airing its signal.

For Buckeye, at issue are WNWO's ratings compared with other local broadcasters. WNWO is the third-rated affiliate in Toledo, trailing WTOL-TV, Channel 11 (CBS), and WTVG-TV, Channel 13 (ABC).

"Based on their low ratings, we don't feel their value equals the other stations in town," Mr. Dawson said. "They simply want cash on the barrelhead for us to continue to show their programming. We think that they're asking way more than the perceived value to our customers."

Neither side would divulge the specific figures that are being disputed.

Even with the deadline quickly approaching, both sides expressed confidence a deal will be reached.

"We have very smart people working on both sides of the equation," Mr. Skorburg said. "We're going to get there - but if it does come to an impasse the NBC24 signal would no longer exist on cable."

Mr. Dawson alleviated concerns that subscribers would miss out on the Olympics, which begin Aug. 8, promising 1,300 hours of coverage on network-owned cable stations such as MSNBC, CNBC, Telemundo, and Universal HD.

Because of federal regulations, Buckeye would not be allowed to broadcast NBC network programming from the Detroit affiliate, WDIV, Channel 4.

WNWO was included in a sale nearly two years ago in which Barrington Broadcasting, of Hoffman Estates, Ill., agreed to a $262 million deal with Raycom Media Inc. to purchase a dozen television stations across the country.

In 2003, Pilot Group, a private equity firm composed of former AOL Time Warner executives, formed Barrington to acquire smaller market television stations. Barrington owns 21 television stations in 15 markets including Ohio, Michigan, Texas, New York, and South Carolina.

Barrington, in its financial statements to the Security and Exchange Commission that is posted on the company's Web site, acknowledged that if the company is unable to reach agreements with cable companies to carry the signals of its stations, "we could lose revenues and audience shares."

That pronouncement comes at a precarious time for Barrington Broadcasting, which reported a net loss of $7.3 million in the first three months of 2008, and shared concerns that the company may breach its loan obligations before the end of the year.

K. James Yager, the CEO of Barrington, previously served as president and chief operating officer of Benedek Broadcasting Corporation, which at its peak owned 28 stations.

According to federal court filings, Benedek filed for bankrupty in 2002 and sold off its stations. Mr. Yager, along with other senior Benedek staff, co-founded Barrington in May, 2003, with the support of the Pilot Group.

Mr. Skorburg said yesterday that Barrington and WNWO are looking for new revenue streams, and seeking increased retransmission fees are part of the company's new business approach.

Earlier this year, Barrington announced an 8 percent reduction of its work force nationwide.

The changes have affected WNWO as it has parted ways with high-profile anchor Jim Blue and longtime weather forecaster "Blizzard" Bill Spencer in recent months.

In April, WNWO announced a round of layoffs that included reporters, photographers, and editors.

Staff writer Steve Eder contributed to this report.

Contact Kirk Baird at:

kbaird@theblade.com

or 419-724-6734.



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