Media exec hopes to cash in on TV consolidation
Mark Larson
Frank Washington, the CEO of System Integrators Inc. until the Sacramento newspaper-software company was sold in June 2000, heads a new company these days called Moon Shot Communications. And his new goal is to make a lot of money in the next several years by buying TV stations across the country, waiting for their value to increase, and then selling them to the highest bidders.
Washington believes the stations will command higher prices if the Federal Communications Commission loosens rules limiting the number of broadcast TV stations a media company can own in the same market -- a change he expects to happen over the next few years.
The change would uncork a consolidation-driven buying frenzy like the one that began in radio 10 years ago. By buying now and selling later, Moon Shot would try to pocket some fat capital gains.
Washington and four partners are working with investors and the Carlyle Group of Washington, D.C., a major private-equity firm, to line up stations they might buy. They figure they can assemble groups of TV stations for good deals now, by purchasing TV stations owned mostly by small companies outside large U.S. markets. Washington counts on the sellers not seeing the same potential in their properties that he does.
The potential buyers once the rule changes, he says, include radio, cable, newspaper and other media companies. Eventually, he predicts, a handful of companies will probably own all the TV stations across the country.
Something similar happened in radio a decade ago. The FCC eased rules on how many stations one owner could have per city. Stations were sold and swapped as radio chains with the deepest pockets locked up the richest markets.
When the smoke cleared, the industry had consolidated dramatically. Sacramento used to have at least 20 independent radio stations. Now three companies own most of the market -- Clear Channel Communications, Entercom and CBS.
Washington, who worked at the FCC in the Carter administration, says the TV broadcast rules are changing because they're outdated. They were written when broadcast TV stations had few competitors. Cable didn't amount to much and satellite-based programming didn't exist.
Now, Washington figures, broadcast stations need to unite to compete against cable and satellite fare. Consolidation lets TV stations operate much more efficiently, he says, by centralizing back-office and programming operations.
The value to local TV watchers is debatable. Efficient systems don't necessarily produce good programs. Consolidating commercial radio has gutted competition and reduced diversity.
Mediocre content also pushes the public to consider any alternatives that come along. Coincidentally, some alternatives are just now surfacing in radio: satellite radio companies XM Satellite Radio Inc. and Sirius Satellite Radio. Part of their sales pitch is that the signals don't fade when you drive out of town.
Both companies also believe plenty of people are willing to pay $10 a month to receive 100 channels of ad-free music and news not now available on most stations.
Nice pitch: Dennis Wyss, PR chief for No. 2 local ad agency Runyon Saltzman & Einhorn Inc., passes on this tidbit via e-mail.
"Does Jean Runyon still have her PR fastball or what?" he asks, before describing a marshmallow contest the agency staged for its employees at Halloween. Staffers were given one night to fashion sculptures out of marshmallows. The winner created a winter scene complete with a working windmill.
Runyon called Sacramento TV station Channel 3, which aired a story on the contest. So did 24 other stations, judging by e-mail the agency received. Wyss says the stations ranged "from San Diego to Portland, Nashville to Tuscaloosa, Sioux Falls to Chicago, Portland (Maine) to Miami."
New in town: One of Sacramento's newest design-focused ad shops, Design Factory West, opened on Sept. 1 at 1501 28th St. in Sacramento, in a former midtown mortuary. Founder/owner Michael Pitzer says the shop is literally pretty cool, given its former use, but his computers are happy.
Pitzer moved here by cashing out of his Silicon Valley house -- before prices skidded -- after discovering through friends that Sacramento suited his style. A 20-year veteran of marketing and advertising, his clients include Cisco Systems' reseller, channel ad and marketing programs; accounts with Eclectic Touch, a Willow Glen specialty home furnishings store; and SecretRecipes.com, a Web site he's created for a traditional publishing company.
After stints with big-market companies such as Bozell Silicon Valley, The Fuller Group and Hakuhodo, Pitzer is happy to run his own shop in a refreshingly smaller environment. "I'm having a lot more fun again," he says. The company's Web site is http://www.designfactory.ws.
Reach reporter Mark Larson at [EMAIL PROTECTED]
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