Questions remain after GCI sells television assets to competitor

GCI Antenna. Photo by Sir Mildred Pierce/Flickr Creative Commons.

The future is uncertain for many employees of Anchorage CBS affiliate KTVA, after the television station’s owner, telecommunications company GCI, announced in late July that it’s getting out of the broadcast television business.

GCI has sold most of KTVA’s assets to Atlanta-based Gray Television, which already owns KTVA’s main local competitor, NBC affiliate KTUU, the top station in the market.

Having one company own the first- and second-ranked stations in the same market is allowed under a special exception by the Federal Communications Commission with approval, after GCI was unable to find another buyer. GCI is also selling its CBS stations in Juneau, Sitka and Ketchikan to Gray.

The deal comes just seven years after GCI bought KTVA, spent tens of millions of dollars to compete with KTUU, and made only slight gains in viewership.

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GCI declined to say how much it spent on KTVA, which it owned through a subsidiary called Denali Media, though some estimates put the total at more than $35 million. The spending included the purchase and remodeling of a building for its broadcasts, more personnel to beef up its news staff, and equipment for the first high-definition TV news in the state.

So why has GCI decided to cut its losses now?

“You know, the world looks different than it did in 2013, in terms of the broadcast TV business,” said Becky Windt Pearson, GCI’s general counsel, speaking on behalf of the company. “That means for us that it’s time to step out.”

The unanticipated changes over that time period — all of which meant less revenue for GCI — included advertisers shifting away from television to more digital advertising, an economic recession in Alaska and increased network affiliate fees that caused GCI to have to pay more for CBS’s programming, Windt Pearson said.

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GCI had been trying to sell its television assets for more than a year before the deal with Gray, Windt Pearson said.

“We were unsuccessful in locating a buyer who was interested in making that purchase,” Windt Pearson said. “I think likely because the same economic circumstances that made the business unsustainable for us were translated to what it would look like for another operator to operate the station on the same basis.”

Neither GCI nor Gray would say how much Gray spent in the deal. Windt Pearson said GCI’s decision to sell was made at the local level and had nothing to do with the purchase of GCI by the larger telecommunications company Liberty Broadband.

GCI will keep the KTVA callsign and its broadcast license, which Windt Pearson said GCI has not yet decided how to use. Meanwhile, Gray Television has moved CBS programming to KYES, Channel 5 in Anchorage.

GCI will continue to employ Denali Media’s cable advertising staff, but another 60 or so employees involved in the news and broadcasting operations have been asked to apply for jobs with KTUU, Windt Pearson said.

Gray Television will hire some, but not all, of those employees, said Kevin Latek, executive vice president with Gray.

“We have a number of positions open,” Latek said. “We need to add considerably to KTUU’s staff, but we need to add fewer than the positions that were being filled at KTVA.”

Latek said he did not know yet how many people would be hired. He said they will join KTUU at its broadcast center in Midtown Anchorage, and a group from the larger, total staff will work on a news program to be broadcast on KYES alongside the existing CBS programming.

When that will happen and what sort of news coverage viewers might see are yet to be determined, Latek said.

“It doesn’t make sense for everybody in the market to have the same focus, and that actually would be pretty rare, and pretty unfair to the viewers,” he said. “People should have, and we typically do see across the country, that different TV stations go after different types of stories that appeal to different parts of the population.”

Latek was of the opinion that KTVA had already been seeking out different types of stories than KTUU, and that the programming to be broadcast on KYES, with at least some of the same people from KTVA, would continue that.

But one of the main architects of both KTUU and KTVA disagreed: Longtime Alaska TV newsman John Tracy said that a shift at KTVA toward covering the same things as KTUU is part of the reason the smaller rival was unsuccessful.

Tracy, now with the Foraker Group, was a news-anchor-turned-news-director at KTUU and helped engineer the station’s rise to its current status as market leader. He left in 2008 when Schurz Communications bought KTUU, prior to its subsequent sale to Gray. Then Tracy got back into the TV business as a consultant to Denali Media and KTVA when GCI bought KTVA.

At KTUU, Tracy had worked under local, family ownership that invested heavily in quality journalism. He said that when Schurz bought KTUU, he wasn’t sure the Indiana-based company, which owned more than a dozen TV stations at the time, would keep that same commitment to journalism. So he left, but through his consulting work with GCI, he said he tried to mold KTVA into something similar to the old KTUU: a station that put a premium on in-depth storytelling, not chasing mostly titillating stories, often about crime.

“It was a grand experiment to see if enterprise journalism, done with collaborative reporters and excellent photographers to produce stories that were well-researched and meaningful, whether those types of stories could gain an audience,” Tracy said.

But KTVA’s ratings — and the ad revenue tied to those ratings — never really improved. Tracy’s consulting work with KTVA ended in 2018, and he said the station’s shift back to covering much of the same types of content as KTUU did not help.

“KTVA gained very little ground, which was disappointing, obviously, because you’re pushing the envelope, you’re spending money, you’re trying to do good storytelling, and the audience is not showing up in the numbers,” Tracy said. “So that was very, very disappointing, and perhaps my vision was not a good one, that the audience would respond to that. But the fact of the matter is that you weren’t going to compete with Channel 2 (KTUU) just doing the same thing that they were doing. You had to do something different.”

For now, KTVA’s news programming will continue as usual for the rest of the month, albeit on a different channel. Kevin Latek, the Gray Television executive, said KTUU was expected to be making job offers late Friday to the KTVA employees it hopes to hire, and anyone left without a job or that wanted to move to a different market would have opportunities to apply for a position at one of Gray’s television stations or digital properties in the more than 90 markets in which it operates.

Local management at both KTVA and KTUU declined to comment for this story.