Belo the belt

When Belo got into the cable news business, it set off a war with Time Warner that has both companies fighting over Texas

On New Year's Day, when A.H. Belo Corp. launched its 24-hour, all-news cable television station, it touted the enterprise as a statewide effort, hoping to cover the news of Texas for every Texan with a cable box on his set. But there is a hole in that claim that stretches from one end of the state to the other.

TXCN, as Belo's new cable service is called, reaches some 600,000 households in the Dallas and Fort Worth market. But in three of Texas' biggest cities, Houston, San Antonio, and Austin, TXCN cannot be found no matter how hard a couch potato tries.

The obstacle: Time Warner Cable.
The Stamford, Connecticut-based company owns the cable operators serving those three Texas cities as well as cable concerns in Waco and El Paso. To make its news channel available to Texans in those towns, Belo would have to enter into an agreement with Time Warner. So far, Time Warner has made no such deal, and there is little likelihood that it will happen anytime soon.

"Every week, we have a different programming channel saying they want to be on our service," says Lidia Agraz, the spokeswoman for Time Warner Cable in Austin. There is a limited amount of space for channels available on Time Warner cable's service, she adds. The cable company doesn't have room right now for TXCN. It would have to kick off another channel.

Even if there were room, there is another obvious reason why Time Warner wouldn't be eager to embrace Belo's all-news enterprise: competition. The cable company plans on launching its own 24-hour news station in Austin--just like it's already done in New York City, Rochester, and Tampa. The Time Warner news channel, which is expected to start up as early as June, will only cover news breaking out of Austin.

"Don't we have a First Amendment right to have our own news station?" asks Time Warner vice president of corporate communications Michael Luftman, rhetorically. Although negotiations with Belo are ongoing, Luftman admits the prospect of Belo's getting its TXCN broadcast in Austin is slim. "We don't have plans to put them on anytime soon," he says. "We don't ever say never, of course."

Questions about Belo getting on Time Warner's cable in Austin surfaced two weeks ago when the Dallas-based media company, which owns The Dallas Morning News and WFAA-Channel 8, announced that it had traded television stations with the Gannett Corp. Belo acquired KVUE, the ABC affiliate in Austin, and in exchange Gannett got KXAS, the ABC affiliate in Sacramento, along with $55 million in cash. Belo representatives did not return phone calls for this story.

If the deal makes it past the Federal Communications Commission, Belo will have more negotiating power with Time Warner, since the cable company wants to provide its subscribers with access to all networks. "It's really in both of our interests to keep the station with us," says Time Warner's Agraz.

Belo must be banking on this Sacramento trade to enhance its bargaining position with Time Warner and pull its assets out of the fire. TXCN is an expensive venture that will cost at least $15 million in investments this year alone. If it fails, it could wreak havoc on Belo's already wobbly stock price. For the fourth quarter of 1998, Belo reported a $12.4 million dip in earnings compared to the previous year. The hit was linked in part to a severance package for retiring Morning News employees.

It wouldn't have taken a Rupert Murdoch to figure out early in TXCN's development that Time Warner might not be receptive to an outsider providing all-news programming. Since 1991, the entertainment conglomerate has provided its all-news service to New York City cable subscribers, and it has made no secret of its plans for expansion into other markets. Belo execs, who were betting so heavily on shifting much of their company's resources from print to broadcast journalism, just might have thought they could overcome all odds. But their recent battles with Time Warner must have them believing it's no sure thing.

 
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