Bay Area Battlefield

The Bay Area, famed for cable cars and high tech, is an anomaly. It
covers three cities—San Francisco, Oakland and San Jose—and their expansive
suburbs, a daunting assignment. Only 13% of the population lives in San
Francisco; Oakland and San Jose are each large enough to rank as a top-25
market. But sprawl in the nation's sixth-largest TV market is secondary to
the area's new challenge: Nielsen rolled out local people meters (LPMs) Sept.
30. Stations get daily demo ratings, which can swing wildly.

“We're in for a year of transition,” says KNTV General Manager
Linda Sullivan.

While coping with LPMs, stations program to an eclectic audience: a
highly educated population, thanks to nearby tech paradise Silicon Valley and
various universities, including UC Berkley and Stanford. Plus, the ethnic mix
is unique: 11% of residents are of Asian decent, 18% of Hispanic origin.

“Addressing the needs of all these viewers is difficult,” admits
Mike Antonitis, president and GM of independent KRON.

All this diversity “makes late news a battlefield,” says Tim McVay,
GM for Cox Broadcasting's Fox affiliate, KTVU. KRON broadcasts at 9 p.m.;
KTVU follows at 10 p.m. The Big Three stations—CBS-owned KPIX, ABC O&O
KGO and NBC O&O KNTV—offer 11 p.m. shows. While no one station dominates,
there is extraordinary viewer demand for weather and traffic reports. One or
two ratings points can separate the top-rated stations across dayparts. In
prime time, KPIX is the market leader, buoyed by strong network programming;
KGO leads in fringe.

NBC's San Jose-based KNTV is the newest addition in the marketplace.
(NBC also owns a Telemundo station there.) KNTV became an NBC station in 2001
after Young Broadcasting's KRON converted to an independent. Distance means
KNTV is missing 400,000 homes, but a new transmitter should close the gap by
next spring.

Although local broadcasters benefited from the late-1990s Internet boom,
they've endured a revenue pinch since the bubble burst. “We're not as
vibrant as five years ago, but each successive year has been a bit better,”
says Ron Longinotti, president and GM for Viacom's San Francisco duopoly,
KPIX and UPN station KBHK. Year-to-date, the local ad market is posting
low-single-digit growth, executives say. TV revenues are up to $710 million
this year, from $670 million in 2003, per BIA.

Comcast is the dominant cable operator, with a robust 66% cable
penetration. And 29% of cable subscribers have upgraded to digital cable,
according to Scarborough Research.

“What sets us apart,” says Longinotti, “is our incredible