Jekyll, Hyde And The Invisible Banker?

(Editor’s Note: From reading posts from around the broadcast community, it is hard to tell what the character of SJL/Lilly might really be. Is it the kind hearted and brilliant Dr. Jekyly who is leading two of Erie’s television stations, or is it his secret evil twin who slashes jobs and burns budgets? Perhaps there is even an invisible banker who lurks and whispers in the shadows of this media empire.

Peter Ames Carlin, a writer for the Portland Oregonian, seemed to be similarly perplexed in an article he wrote on May 21st of this year called “As The Koin Turns.” [He preferred to think of the mystery of SJL as a CBS soap opera. I rather think of it in the “spirit” of the current season.]

Below is an excerpt from Carlin’s Mickey Spillane/Mike Hammer experience. It was written following the turmoil of SJL’s purchase of Portland station, KOIN. It is well written. Wish we could have seen this type of investigative reporting in the Erie Daily Times, but then there would be no need for EMGR would there? Look for names recognizable to some in Erie.)

The mystery buyers

At first it all seemed so predictable. Almost exactly a year ago the chief executive of Emmis Communications, the Indiana-based media conglomerate that has owned KOIN since 2000, announced that he was done with the TV business. Intent on focusing on his radio and magazine holdings, Jeff Smulyan put his 16 TV stations on the market, presumably for the consumption of still another far-flung media conglomerate.

As a major network affiliate in a major city (Portland and environs rank as the nation's 23rd-largest media market), the station attracted instant interest from potential buyers. Emmis' insistence on packaging the station with at least a few of its smaller TV stations (which would have been tougher sells on their own) removed some customers. But others were interested enough to dispatch teams of xecutives and financial analysts, who reportedly took turns measuring haunches and examining teeth at the KOIN Tower throughout the summer. At the end of September a deal was announced: Emmis would sell KOIN, KHON-TV of Honolulu and two smaller stations in the Midwest for $259 million to a team of owners consisting of the Blackstone Group and SJL Broadcast Management Group.

At which point the prevailing reaction was: Who? And, a bit more anxiously: Why?
Why would the Blackstone Group, an enormous, privately held finance group with something like $40 billion at its disposal and not a lot of previous interest in media properties, be snapping up small local TV stations? Why were they teamed up with rhis SJL company -- a company, by the way, which no one in this not-entirely-unsophisticated town had ever heard of before this moment? And it's not like anyone was making it easy to discover the answers to these questions. Blackstone, for all its riches and high-profile employees (co-founder Pete Peterson was secretary of commerce during the Nixon administration; after that he was CEO of a little investment firm called Lehman Brothers), keeps a low profile in the media. But at least it had a corporate Web site. And that put Blackstone one up on the mysterious SJL.

After a day's worth of journalistic exploration just after the sale was announced at the end of September, it first appeared that SJL was based in Montana. But that address and phone number didn't pan out, leading to a search that pointed to Montecito, Calif., a village somewhere near Los Angeles. A search of that town's records produced a general telephone number for the company's headquarters, but that rang into voicemail.

You've reached the offices of SJL and George Lilly, the machine said, cheerfully enough. Our offices are closed for vacation and will re-open on Oct. 18. The machine offered another name and contact number, but that rang to voicemail, too. A third number, for SJL chief operating officer Sandra Benton, scored paydirt: a real, live human, who answered warmly, despite having been interrupted in the middle of what sounded like a TV show. Actually, she's out now, he responded. Can I have her call you when she gets home?

Eventually Benton called back. Yes, she was a top exec at SJL, which indeed was the company that wanted to take over KOIN, along with stations in Honolulu, Wichita, Kan., and Topeka, Kan.

"We're fairly small," she said, explaining the circumstances that led to the company's entire head office being out fishin' for the first half of the month. "There are six of us, and some of us work out of our homes."

Those of us intending to write another version of the enormous-and-faceless-media-conglomerate-buys-local-station story were momentarily stymied. I mean . . . they work from home?

Obviously, SJL wasn't your father's media conglomerate. They're more like your grandfather's media conglomerate. Only now Pop-Pop's got the keys to someone else's $40 billion bank account and what was going to happen next was pretty much anyone's guess. At least until the head grandpa got back from fishing, or wherever he was vacationing.

Early returns are mixed

So let's mull this over. Could SJL really be as down-home as it seemed? And if it was, did that mean KOIN was going to be traveling back in time to the bygone days of locally owned, community-centric local broadcasting? Hey, it could happen! While the easing of government regulations in the past two decades has led to an increasingly corporate atmosphere in which profit takes precedent over content -- particularly when it comes to news -- it doesn't have to be that way.

According to Tom Rosenstiel, director of the nonprofit Project for Excellence in Journalism, some local stations have started tacking away from the flashy, trashy model used by so many corporate-owned stations, back to the Old World diet of high-fiber newscasts and loads of locally produced public interest shows. "It can be done," Rosenstiel insisted. "But it means you have to accept a 30 percent profit margin for a few years."

At which point our eyes widened. A 30 percent profit margin sounded pretty good to us. And that was the compromise figure?

"Well, the backdrop is that TV stations can make like 40 or 50 percent profits," Rosenstiel explained. That's double what you can expect from a publicly held newspaper, he continued, and four times the average in other industries. But the only way to get there is either to cut expenses -- employees, production budgets, creative ambitions -- to the bone. Either that or shoot the moon by plowing so much work and money into the station you blow all other competitors to smithereens.

Figuring that the keys to KOIN's future may very well rest somewhere in SJL's past, I let my fingers do the walking to Altoona, Pa., to the offices of WATJ-TV, which had been owned by SJL from 2000 to 2004. (Editor's Note: The company reoganized and recently sold to NEXSTAR for 56 Million) And from the moment SJL moved in the results were . . .

"Horrible!"

This from news photographer Trish Gates. Gates' tales were extraordinarily similar to those heard from employees at Charleston/Huntington's WOWK-TV regarding their two years in SJL's stable (2000-02), including 25 percent staff cuts, computer-driven studio controls that tended to crash in mid-broadcast and a corporate culture so parsimonious that checks were mailed every other week, rather than every week, to reduce costs.

This was more like it: a tale of ravenous corporation ignoring the public good all for the sake of the bottom line. After all, virtually every industry-watch story I've written in the past five years revolves around one station or another having its budgets sliced, its employees diced and/or being otherwise steered away from the actual purposes of quality broadcasting. "Typically they're thinning out the product by spreading people thinner," says Rosenstiel of the Project for Excellence in Journalism.

But then we called Cindy Plymyer, a news producer at WICU-TV in Erie, Pa., who reports that a decade of SJL ownership has done nothing but make things better for the station.

"We're in a good spot now, and I think they're very
pleased," she said. A large part of the credit, she said, goes to Brian Lilly (son of SJL President George Lilly), whose first move as station manager was to install a suggestion box so employees could air their complaints to management. But now that the station is a solid No. 2 in the market, and making moves on the top-rated station, there's not a lot to complain about. "We don't have a lot of turnover," Plymyer said. "Everyone I know is happy here."

Back at the KOIN Tower, however, the anxiety was ramping up. "Rumors are picking up that new owners SJL will jettison KOIN's news department altogether," wrote blogger Lynn Sipprelle on her Oregon Media Insider blog. "I'm also told that (one very recent top manager) is saying that 'things will get far worse' for KOIN employees . . .
These days I wonder if owners HAVE any shame."

Were such high-octane accusations truly a sign of things to come, or just more keening and wailing from panicky employees? That would be an interesting question to ask George Lilly. Once he got back from vacation, that is.

-Peter Ames Carlin: The Oregonian -
©2006 The Oregonian

So which do we have in Erie?

Congress passed a law on February 1, 2006, setting a final deadline for the DTV transition of February 17, 2009. Most television stations will continue broadcasting both analog and digital programming until February 17, 2009, when all analog broadcasting will stop.." FCC http://www.dtv.gov/

Thursday--Another EMGR CHAT DOWN On Media Responsibility and Local Politicians. (It's the Season)