Network O&O's Versus Affiliates

Network O&O's Versus Affiliates

Another way to measure the effect of large company ownership is to examine local stations that are owned and operated by the networks, the so-called O&O's. Four of the six largest station groups are owned by broadcast networks with central news divisions: CBS, Fox, NBC, and ABC (in declining order of group size).

Moreover, the size of the O&O groups has grown in recent years. As networks have seen a declining return on programming in their entertainment divisions, the O&O station groups have become more important for network profits. For example, in 2002, according to Jessica Reif Cohen, an industry analyst for Merrill Lynch, Fox's TV stations generated $1 billion in cash flow even as the Fox network posted a $130 million loss.1 Since the last relaxation of the ownership rules in 1996, the networks have been able to compensate for their losses in entertainment by acquiring more stations (both in new markets and by creating duopolies). Thus it is reasonable to expect that this expansion will continue if the new ownership limits are relaxed. Already, two networks (CBS and Fox) have surpassed the current ownership limitations on audience reach and technically are in violation of the regulations.2

Did being a network O&O, a corporate sibling with a national newsgathering operation, improve the kind of local news citizens see?

As mentioned in brief earlier, the data suggest the answer is no. O&O's were less likely than independently owned affiliates to be "A" stations (12% vs. 18%).

They were also much less likely to earn "F's" but more likely to earn "D's" in our study.

Did specific patterns stand out between O&O's and affiliates? There were some.

In general, affiliates demonstrated somewhat more enterprise, cited more sources and tended to be more local.

O&O's, by contrast, tended to air more points of view and scored better when it came to finding the larger implications of a story.

Specifically:

• On Enterprise: O&O's relied more heavily on syndicated material and feeds (25% of stories versus 19% for affiliates). That, and some other differences, translated into O&O's also being less likely to send reporters out to cover events such as trials and press conferences. Perhaps the easy access to network feed material at O&O's made them more likely to rely on this material.
• On Sourcing: O&O's were somewhat more likely to rely on unnamed sources or only passing reference to sources (38% of stories versus 34%).
• On Localism: Affiliates were more likely to air stories that affected everyone in the community while O&O's were more likely to air national stories with no local connection-those car chases and exciting footage from faraway.
• On Balance: O&O's overall scored slightly better when it came to airing a mix of opinions in controversial stories.

1 See Diane Mermigas, "CBS, Fox reap rewards of robust owned stations," Electronic Media, Oct. 28, 2002.

2 In separate decisions, the FCC approved Fox's purchase of the Chris-Craft station group, and Viacom's purchase of CBS-the transactions which pushed each company over the ownership cap-on the condition that each company move to divest itself of its assets in order to return to compliance with FCC regulations. Neither company has divested yet. In February 2002 a federal court ruled that the FCC needed to justify a cap on ownership or else it would be declared illegal. This ruling has been put on hold pending the outcome of the FCC's current rulemaking process. See Bill McConnell, "Court to FCC: Prove it!" Broadcasting & Cable, Feb. 25, 2002.