'Mini CNNs' Fill a Niche On Local Cable Channels

As the Fox News Channel and MSNBC jumped into the national 24-hour-news business last year, another genre of round-the-clock news was expanding even faster. While headlines focused on media moguls like Rupert Murdoch and Bill Gates, local news channels were quietly setting up shop and building audiences - from New England to the Pacific Northwest.

Today, 19 local all-news cable channels are in operation, with a combined audience of nearly 15 million households. Some are wholly owned by cable giants like Cablevision Systems or Time Warner. Others are media partnerships, such as a cable operator teaming up with a local television station.

What they have in common is that virtually all of them are losing money. Yet news executives and industry analysts say that turning a short-term profit isn't the purpose of these news providers. What drives them is the opportunity to deliver news one can't get elsewhere, and in doing so, to build long-term loyalty with both viewers and advertisers.

Like mini-CNNs, all-news channels thrive on breaking news, from local crime and bad weather to traffic accidents and power blackouts. Most take a "field of dreams" approach to news gathering: Report it, and they'll watch. Statistics show 80 percent of viewers tune in to local news - as compared with slightly more than 50 percent who watch nightly network newscasts, according to David Bartlett, former president of the Radio-Television News Directors Association.

When an Avianca airliner crashed on Long Island in 1990, for example, News 12, a local all-news channel, was first on the scene and fed TV stations around the world footage of the crash site and rescue efforts. The station won an Emmy Award for its news coverage of the disaster.

One-third of the nation's 24-hour news channels are clustered in the Northeast, but all-news channels have recently been launched in Arizona, Virginia, Ohio, Florida, Illinois, California, Nebraska, and Washington State. That's heady progress for a genre that began only a decade ago when News 12 Long Island launched on Dec. 15, 1986. It took eight years for the station to turn a profit. For the last 18 months, it has simply broken even.

"You don't get into this business to build value for the next quarter, but for the next decade," says John Hillis, president and chief of News Channel 8 in Washington, D.C.

For a newspaper, broadcaster, or cable operator, partnership in a local all-news channel offers an edge in a marketplace that may soon be filled with programming delivered via satellite and by regional telephone companies - information providers who don't have to rely on cable operators or broadcasting to enter the home.

"All-news cable channels have a strategic value to cable operators because they'll be exclusive to cable," says Spencer Grimes, a cable analyst at the investment firm Smith Barney. "Cable operators can live with an unprofitable venture like an all-news channel if it's used as a retention tool for customers."

In covering city-hall news conferences and local school-board meetings, all-news channels are filling a niche local broadcasters have long ignored. New Jersey, for example, is known as a "sandwich market" for its traditional reliance on nearby television stations in Philadelphia and New York for news. That changed with last year's launch of Edison-based News 12 New Jersey by Rainbow Programming Holdings, the programming division of Cablevision Systems.

The New Jersey channel is Cablevision's fourth news channel and its first partnership with a newspaper, the Newark Star-Ledger. News 12 New Jersey appeared in 300,000 homes when it began operations last March, but it is expected to eventually be in 1.4 million homes in 14 counties.

Across the Hudson River, in New York City, all-news channel New York 1, with 1.4 million subscribers, is the only station in town that dedicates a reporter to covering the board of education. New York 1, solely owned and operated by Time Warner, is also the only station with a reporter whose entire beat is the subway system.

Steve Paulus, the channel's vice president for news and former assistant news director at WCBS-TV, says, "We've covered more stories from Staten Island or the city's schools in 12 months at New York 1 than I saw covered in 13 years at WCBS." At a panel discussion at the National Cable Television Association last year, Mr. Paulus said, "When I was at WCBS, I was in charge of sweeps specials and promotions. That wasn't really doing news. I'm a native New Yorker and I love doing news about New York. For the first time I feel like I'm really doing it."

Cable-industry executives declined to disclose figures but said start-up costs for an all-news channel are roughly $10 million, with an annual operating budget of about the same. Typically, the initial investment pays for a studio, at least two satellite trucks, a dozen camera units, editing equipment, and an editorial staff of 100.

Phil Balboni, president of the New England Cable News channel and chairman of the Association of Regional News Channels, says there could be as many as 25 round-the-clock news channels in the US by the end of the year.

No one is more optimistic than Norm Fein, who managed the launches of all four News 12 channels in Long Island; Westchester, N.Y.; Connecticut; and New Jersey. Mr. Fein, now vice president for news development at Rainbow Programming Holdings, says, "Once these channels establish themselves and can show that they're getting a viable portion of the audience, the potential for advertising is tremendous."

Like Time Warner and Cablevision, other media companies with investments in news channels, such as Cox Communications, Hearst, and Tribune Company, are reported to be contemplating the launch of more news channels.

On Jan. 20 in Long Island, a launch of a different kind will take place. That's the day a state-of-the-art American Eurocopter will give a flying start to News 12 Long Island's second decade of local coverage. Chopper 12 will be the first helicopter in the US operated by a local all-news TV network.