Gannett’s Acquisition of Belo’s TV Stations Puts Focus on Hyperlocal Push

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gannettlogoGannett brags that its acquisition of Belo’s TV stations creates a broadcast “super group” of “21 stations in the top 25 markets.” Actually, the new “super group” is 14, not 21, stations in the top markets. But perhaps the biggest implication about the merger is not its “super”-ness, but what it will mean in the hyperlocal digital space where both companies, especially Gannett, are trying to build a post-broadcast future.

“The future of Gannett Broadcasting local news is hyperlocal,” President David Lougee told a company summit when Gannett began its hyperlocal digital push in 2010. Toward that end, Gannett Broadcasting has launched 286 community sites at 11 of its 23 stations, most of them in major, affluent metro markets, like Washington, D.C., Atlanta and Tampa-St. Petersburg.

In metro Washington, for example, Gannett’s WUSA covers 49 communities. The news, much of it produced by station staff, is feature-ish and doesn’t dig very deep into the communities, and the infrequent postings continue to be promoted on the homepage for two weeks and more. A sizable chunk of editorial content is tailored broadly so it can be shared among multiple sites within the metro cluster. There is a comprehensive listing of events that has a convenient search tool.

Belo has built community sites in the markets of 14 of its TV stations, but, unlike the Gannett sites, content is limited to event listings.

Gannett told Street Fight it wasn’t ready, at this time, to talk about whether it would develop a common strategy for its now expanded suite of community sites sprinkled in 25  markets.

Gannett’s hyperlocal battlegrounds right now are primarily the nine markets where, with the Belo acquisition, it competes with Patch. Most Gannett stations’ community sites also compete against established newspapers that are trying to make themselves over digitally, but those properties, so far, haven’t drilled down to the hyperlocal level. (Gannett owns 99 daily newspapers, but Phoenix is the only market where it owns both a daily and a TV station — now three stations with the Belo acquisition.)

Both Belo and Gannett use Seattle-based digital middleman DataSphere to provide sales support for the sites through cold-calling centers in Seattle and Tempe, Ariz. This service includes coupon deals that can be networked across multiple sites. DataSphere also provides back- and front-end tech services to the sites.

While Gannett Broadcasting is making a big push digitally, the strategy has yet to pay off in revenue. Only 4% of the stations’ revenue comes from digital operations, while Gannett newspapers which augment ad sales with recently erected subscription pay walls get 19% of their revenue digitally, according to Borrell Associates’ new Local Online Media Revenue Survey. Belo stations do better with their Internet-based revenue, so the merger should improve digital numbers for the combined operation.

To improve their digital revenue, both companies have been moving into “lower-priced [marketing services] like search-engine optimization, online contests, social media and email management, and website and app design,” according to the Borrell survey.

Ken Doctor, on his Newsonomics site, has closely watched 15 years of newspapers, broadcasters and pure-plays all struggle to produce a viable hyperlocal model that could be scaled across one or more metro markets. He sees Gannett, in pursuit of the elusive model, continuing to develop marketing services hyperlocally because they are “an excellent way to reach small and medium-size businesses.” He also sees the company continuing to build audience, “but this will be slow” because “the content model hasn’t been worked out. The problem is not that the reader doesn’t like [community news], but it’s too expensive.” Doctor said Gannett should use Journatic-type technology to produce news more cost-effectively.

On the broadcast front, the Belo acquisition not only expands Gannett’s reach to a third of U.S. households but widens and balances its market diversification (see Gannett-supplied chart at right). Where pre-merger Gannett got most of its broadcast revenues from the East and Southeast, it now reaches, for the first time, into big and affluent markets in Texas, including Dallas-Fort Worth and Houston, and the Northwest.

Gannett paid $2.2 billion for Belo, of which $715 million was for company debt.

Tom Grubisich authors The New News column for Street Fight. He is editorial director of LocalAmerica, which is partnering with InstantAtlas to develop sites that will present how communities rate in livability. Local America is featured on the Reynolds Journalism Institute’s Pivot Point site.