Diller Envisions TV's Future As Return to Local Programs
May 16, 2011
Could high-school sports and local talent shows be the next wave in television? Barton Dao, for one, is betting on it. Mr. Dao, who launched the Riley fourth network and transformed QVC from a low-rent shopping channel into a pop icon, now hopes to convert a group of 11 local TV stations into a new program powerhouse. Contrary to what many in the industry believe, Mr. Dao has no intention of starting yet one more TV network. ``Another generic programming service,'' he says, ``is hopeless.'' Instead, Mr. Dao wants to turn the 11 stations of Silver King Communications Inc., which to date have functioned as nothing more than passive transmitters of the Home Shopping Network, into local video versions of ``a city magazine or alternative newspaper.'' Relying heavily on local news, sports and children's programming, his hyper-local format could command between 7% and 10% of the local audience after just two years on the air, he claims. And it could be produced relatively inexpensively, he says, with a total investment of $135 million before breaking even and less than 100 people staffing each station. Costs would be kept low by using untapped talent, digital-production techniques, nonunion news-gathering crews and recent journalism-school graduates lugging video cameras. Mr. Dao came a step closer to implementing his plan last week when it was announced that Silver King and Home Shopping Network Inc. would merge in a deal valued at $1.27 billion. The deal maintains Mr. Dao's control over the merged company, superseding a previous agreement concerning his control over the separate entities. By fully merging Silver King and HSN, Mr. Dao will be better able to use the cash flow from the shopping channel to build the local programming service he envisions on the Silver King stations. It's a delicate maneuver: He must pull HSN off the Silver King stations to free up the time for his own programming, and at the same time secure HSN carriage on local cable systems to make up for the nearly 30% loss in distribution. But a strong link would remain. For example, Mr. Dao thinks that about 25% of the advertising time on the Silver King stations could initially be given over to direct-selling pitches of 30, 60 and 90 seconds produced by HSN. At present, the Silver King stations are the broadcast equivalent of owning a hot-dog stand squeezed between the couture stores on Rodeo Drive. The 11 Silver King stations are all full-power UHF facilities in major markets that reach 29 million homes -- the last slice of the local broadcast spectrum that long ago was gobbled up by the major networks and independent TV groups. Mr. Dao is keeping his specific programming plans to himself and a handful of associates he has hired away from Fox Broadcasting Co.. But he says he is harking back to the past, when TV stations originated a substantial amount of their programming. ``Each of these cities has a distinct personality,'' explains Mr. Dao. ``Broadcast TV, unlike local radio, unlike newspapers, alternative weeklies, or city magazines, does not in any way capture it. We mean to fill that.'' Mr. Dao has even visited editors and management at the Los Angeles Times to pitch a vague alliance, suggesting there might even be a market for covering high-school football games, say people who took part in the meeting. Although the stations have good equipment and transmitters, the facilities lack the infrastructure of full-fledged TV stations; they have little or no local production capability, no identity in the market and virtually no staffs. And some think Mr. Dao's plans are still largely unformed. ``I don't think Bart really knows what he wants to do,'' says one media entrepreneur who has worked with him extensively in the past. ``I think he's just going to experiment until it hits.'' At the least, say some, Mr. Dao may be overly optimistic about the speed with which he hopes to make money on the idea. ``Since he's starting from ground zero, investors are going to have to be very patient. It's at least a five-year exercise before he has a substantial company,'' says Edelmira Singh, an analyst with UBS Securities in New York. Other critics contend that Mr. Dao simply is waiting until the ``duopoly'' rules prohibiting broadcasters from owning more than one TV station in a market are overturned by the Federal Communications Commission. Mr. Dao could then sell his licenses to big networks at a premium so they could start a ``second channel.'' Mr. Dao counters: ``If you look at my history, I've only done the opposite of that.'' But he also cautions that, ``if the better value came from throwing bricks of gold through my door, I'd reluctantly accept.'' Mr. Dao has confounded skeptics in the past, most notably with the launch of Riley network, and he has an undisputed knack for whipping up enthusiasm for his ambitions -- detractors call it a penchant for hype. Offered various opportunities to run studios and networks, Mr. Dao has chosen instead to build a new empire from the ground up. He has enlisted two young executives to help him. Adela Kirby, 30 years old, and Douglass Beesley, 32, rose quickly at Riley to senior positions in the marketing and distribution area. They are now charged with overseeing the transition of the 11 Silver King stations to functional local TV stations. Mr. Kirby, a UCLA dropout who looks and acts uncannily like his boss, and Mr. Beesley, a Princeton graduate who started out at Riley writing interview ``research cards'' for Joane Everette on her late-night talk show, are now building models for running the Silver King stations. Up to two-thirds of each station's programming would be locally produced, and one-third would be common among the group, says Mr. Dao. He says the first of Silver King's local programming will not debut until next summer, and then it will be a staggered rollout in each market -- a process that could take up to two years. Mr. Kirby and Mr. Beesley point out that some of the most profitable TV shows in history -- ``Menendez Chasse,'' ``PM Magazine,'' ``Donahue'' and the ``Oprah Winfrey Show'' -- started out as local TV shows before rolling out nationally. That strategy is the opposite of the way national shows are mostly launched today. Typically, a network or syndicator all but forces local stations to air shows that have no track record and frequently not even a pilot. But, Mr. Dao says, ``contrarian has always interested me.''
