Family Men: 60 years of transition at WCAX

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Family Men: 60 years of transition at WCAX

Thu, 05/04/2017 - 2:07pm -- tim

This article was first published in Vermont Business Magazine in October 2014. Photo of Peter, left, and Alex Martin.

STORY: WCAX-TV sold to Gray Television, Inc for $29 million

by Timothy McQuiston Vermont Business Magazine Peter Martin pulled out his iPhone 5 and showed how one could watch the WCAX news broadcast crystal clear on a cell phone. So much for “film at 11,” a viewer can now get the TV news on a mobile device or at the CAX website. Won’t that just cannibalize your own news programming? “If we don’t cannibalize ourselves, someone else will,” Martin said.

Martin was in eighth grade in 1954 when his father, the legendary Stuart “Red” Martin, Stuart’s stepfather and a few local investors planted a television transmitter on Mount Mansfield and became the first commercial TV broadcaster in the state. Vermont was the last state in the lower 48 to get its own TV station. 

Sixty years later they still call themselves “Vermont’s Own.”

Red Martin died in 2005 at 91 and the plan all along was to hand off management of the company to his son, Peter. The Martins long-ago bought out the other minority owners and it has been a closely held family business since the 1950s. But the question was, who was going to be the next family member to take over?

Peter, 74, is still very much running the business and manages his side of the operations from Red’s corner office at the station’s headquarters off Joy Drive in South Burlington.

Peter’s own kids were well satisfied and successful in their own lives as were the nieces and nephews. The logical choice was Alex Martin, who was himself a young, successful technology expert who was also local. 

Alex, now 42, is Peter’s nephew, but was reluctant to join the family business. He had his own life that was going well in IT, and, anyway (with a bit of a smile), “I wasn’t sure I wanted to work for my grandfather.” 

Red was a smart, doctorate in physics, radar specialist, MIT professor, who was involved in high-speed photography during the nuclear tests in Yucca, NV. We’ve all seen the slow-motion video of a building being blown away. 

He was also a hardnosed businessman and a bit cranky.

While employees may call Peter, “sir,” they’re not walking on eggshells around him. 

Alex decided to take the leap. Part of the reason he waited was to establish himself and be in a position where he “could bring real value” to the family business and not just be an entitled legacy. 

While Peter wanted a member of the next generation to take over, he didn’t have to twist Alex’s arm. The time was right.

They made him a reporter initially so he would get to know that part of the business. He had no training in journalism. 

“I got sort of thrown into the fire,” he said. “That camera staring at you is kind of intimidating.”

He learned it was hard work and it gave him an appreciation for the news staff which would serve him well later on in management.

He was the first reporter on the scene when authorities found the body of Michelle Gardner-Quinn in Huntington. She was a UVM student abducted and murdered in 2006.

Alex was a reporter for two years before he joined management. Now he’s responsible for the news and technology departments, while Peter manages the business and sales. The effort is collaborative between the two.

History

Stuart “Red” Martin Jr was a “curmudgeon” probably since he was 25, as a long-time professional acquaintance described him. Certainly that was and is the prevailing opinion. He was old-school conservative Republican who would occasionally offer editorials on-air.

Local television doesn’t editorialize much anymore and if they do it’s about wearing your seatbelt or the need for open government. The kind of vituperative opinion that newspapers were famous for a century ago is now the bastion of syndicated radio, cable television and, of course, the Internet, where any thought on anything can be distributed to the world instantly, and then taken down.

While Red was opinionated and conservative, he was always forward thinking.

Vermont was the last of the lower 48 states to get its own television station, but it was not Red Martin’s first foray into media. Red and his stepfather owned the afternoon Burlington Daily News

Red’s stepfather, CP Hasbrook, was a newspaperman who came from the Richmond (VA) Times-Dispatch. He bought the Daily News and with it came a 100 watt AM station with the call letters WCAX, CAX standing for College of Agriculture Experimental, which was started by the University of Vermont. 

Initially, it was the radio station that supported the television station. But just as newspapers were supplanted by radio and then television (then cable television and eventually the Internet), television took over broadcast news from radio, with the Internet now hot on everyone’s heels.

“It didn’t take my grandfather too long to figure out that the Free Press was firmly entrenched,” Peter said. They were prescient enough to know that an afternoon newspaper, even in the early 1950s, was not the future of mass media, so they sold the afternoon daily and kept the radio station. 

Hasbrook had brought Red in and from that jumping off point in broadcast (they soon increased the radio output to 1,000 and then 5,000 watts), they started the television station, under the call letters WMVT. They had the arduous task of building the transmitter on top of Mount Mansfield. They leased the land from UVM.

Vermont finally had its own television station and the first broadcast was on September 26, 1954.

They saw very quickly that TV was the future. They soon captured the WCAX call letters for the TV station and eventually sold the radio station with the new call letters WVMT (AM 620). 

Television became the Martin family’s sole endeavor since they bought out the other minority partners in the 1950s. It was a single station, family owned TV business, exactly as it is now.

Technology

Peter Martin was in eighth grade and remembers well hustling down to the station after school to work the mimeograph machine at the TV station on Grove Street in Burlington. 

The technology kept moving ahead with digital being the most recent investment. Peter said a new generation of high definition digital is coming and another will follow that. He said the technology has to be turned over about every five years. The new high-def will go from 1,032 lines to 4,000 lines.

“Millions” of dollars were spent in the initial transition to high-def, as everything from microphones to the transmitter had to be updated. WCAX does not have the economies of scale that large media groups have, so costs run higher per unit than at most other stations. 

With ready cash in their pocket, they constantly look at the various assets. They code each like a stop light. “Red” means that something needs to be replaced immediately. “Yellow” means something will need replacing soon. “Green” means good for now. 

The Martins have always kept pushing forward. WCAX was the first to offer an hour-long evening news broadcast. They opened a Montpelier bureau and one in Plattsburgh, NY. They put a reporter in Rutland. They more recently expanded their weekend news programming. 

During the week, the Early Morning show starts at 5 am with a recap of the previous days’ news, sports and, especially, the coming day’s weather. From 6-7 am they do a live news show. There is a half-hour of news featuring the locally produced “Across the Fence” community program at noon. The 6 o’clock news hour now begins at 5 pm with News at Five, continues with the :30 at 5:30 (an interview-based program) continues with the traditional 6-7 news, weather and sports format, and concludes with the half-hour News at Eleven. 

All told it’s a whopping five hours of news programming a day. And they need a lot of people and a lot of technology to do it.

There are two control rooms high above the studio, one just for news. Young men, who look straight out of a casting call for IT techies, bustle about banks of computers and monitors. The cameras in the studio are remote controlled. There is a fleet of vehicles, including a massive satellite truck.

In other words, television is expensive to operate.

CAX’s local commercial TV news rivals are WPTZ (NBC affiliate) and WVNY/WFFF (ABC and FOX). PTZ is headquartered in Plattsburgh, NY, and also has a busy office in Colchester and a sister station in White River Junction (WNNE). They are owned by the Hearst group.

Like CAX, PTZ starts early, with 5 and 6 am shows, then again at 5 and 6 pm. It’s not as much as CAX, but it’s still much. 

After having, and losing, a news cast a couple times over the decades, WVNY has found stability in its news programming. VNY and FOX, under ownership of Nexstar (which also manages VNY), joined forces on the news side and now, between the two of them, broadcast news early morning, evening and at night, with FOX starting at 10 and ABC 22 at 11.

Of the 120 employees at CAX, 45 are involved in news, including production. On their Website they list 27 on-air in news: 10 anchors, 10 reporters, five in weather and two (separate from the anchors) in sports. This is more than their local competitors (WPTZ lists 18 total; WFFF/WVNY lists 16), and it also stacks up impressively against big urban operations. 

WBZ-TV (channel 4), the CBS-owned and operated affiliate in Boston, lists six anchors, 17 reporters, three in weather and three in sports. It also does news on its sister station WSBK (channel 38). 

Peter Martin said all his anchors also are reporters. It gives the bench depth and flexibility.

These people are beamed into viewers’ living rooms and kitchens and bedrooms. The viewers get to know them. The reporters and anchors become celebrities whether they want to or not. Alex said he never got used to that.

Peter said the anchors from a previous generation, like Stuart Hall, “were an outsized presence in people’s lives.” That connection is still important, Pater said, but is not as outsized as it was as market share has fallen and reporters tend to move on faster now.

Along the way some things were abandoned. The Friday night dance party, a kind of local “American Bandstand” from the 1960s and the more recent late night show hosted by Tim Kavanagh, were locally produced entertainment programs that never quite worked out from a business perspective despite their popularity. 

“We had to lease the space. We don’t have the studio space here,” Peter Martin said of the 40-year-old building on Joy Drive. It was expensive and time consuming, Peter said, and WCAX’s focus has always been on news.

While WCAX was the first television station, in many ways it still stands alone even among national broadcasters. 

It is independently owned, “essentially” without debt, with only one station and no side businesses. Alex and Peter figure there must be another similar station somewhere in the country with similar attributes, not that they could name one. They’re pretty sure there is not another in the top 100. Burlington is the 98th largest market in the US. 

Their independence and lack of debt allows the station (the ownership company is Mount Mansfield Television) great flexibility in a capital intensive industry. They can run at low margins, where corporate ownership groups demand 20 to 30 percent profit margins for their member stations. But to avoid debt they do have to keep up with reserves.

“We run very cash heavy,” Peter said. 

Red’s background as an engineer and tight-fisted businessman can be seen in the sophisticated technology the station can boast of and that lack of debt. He also came up with the teal and gray color scheme for its vehicles in the 1950s because he also understood the value of branding and marketing. Who doesn’t immediately recognize a WCAX news van?

“Is it ugly,” Alex asks, “yup. Does it work? yup.”

With dominance in the marketplace and no debt, the Martins could have sold the place for tens of millions years and decades ago.

“Why?” Peter asks rhetorically.

Because someone would pay you eight figures.

According to broadcasting analysts BIA/Kelsey, nearly 300 TV stations changed hands in 2013, as heavy political advertising and low interest rates made them hot commodities. The Tribune Company, famous for its newspapers like the Chicago Tribune and the Los Angeles Times, alone bought 11 stations for $2.7 billion. 

In 2013, Heartland Media of Atlanta bought a Utica, NY, station for $16 million. That’s eight figures for WKTV, the local NBC affiliate in the 169th marketplace. And, frankly, it’s Utica not Burlington. 

WCAX surely must be the largest station in Vermont, but neither it nor any of the local stations reveal their revenues.

“This has been a successful business for us,” Peter said, so why sell? “This is what we do.”

Peter said that because of the private ownership, they don’t have to worry about meeting quarterly financial goals.

“If we have a great year, great,” Alex said. “If we have a good year, good.” 

But change is also necessary, Peter said.

“You have to keep in mind that the business isn’t what it was,” he said. “We can’t even remember what it was 20 years ago.”

The transitions in that time have been significant – the rise and then peak in the ‘90s of cable, and then the Internet and digital and high-definition.

The TV stations were already into video, so the transition to the multi-media world was easier than for radio or print.

The WCAX Website has been successful, sort of. They get 7 million page views a month, but they have not been able to monetize it to an “appropriate level.” 

Peter is no geezer. He never says “back in my day.” He’s as versed in the tech as anyone. He, like everyone in media, is trying to figure out how to make money on the Internet when the advertising, in its many forms, has been commoditized. 

“Print dollars to digital dimes” but the Internet is changing and that analogy might better be equated to pennies. 

“Now it’s a dirt cheap commodity. Anybody can distribute anything to anybody at virtually no cost,” and they can do it with that iPhone 5. And that cell phone takes better video than a $60,000 TV camera from the ‘60s.

Money

There’s a reason why there is so much local news. On the one hand, there’s an audience, and on the other, it’s the best way to capture advertising. 

The local affiliates will get limited time to sell advertising into a network program. But if they produce their own shows, they get to keep all the time and sell it for themselves.

Much of that time goes to national advertisers who may want to extend their national advertising plans by buying into the affiliates. It also gives them an opportunity to pick and choose their markets. Automobile ads or political ads from national buyers are important revenue streams locally.

And of course there are the local advertisers. With four or five hours of local news, the local stations have many opportunities to slot in the local ads. Their in situ production facilities also allow for local ad production.

The audience is like technology, it’s always changing.

People don’t stay up to 11 as much anymore and the morning news has supplanted it, Peter said. “You go where the audience is,” he said.

The morning viewer is also different. They’re not just sitting on their couch. They’re rushing about getting ready for their day. 

While they and WPTZ start at 5 am, in some markets a station will start its local news at 4 am.

What the viewer wants is “local, local, local,” Peter says. Get the news quicker, better, and with high quality. 

And you have to connect with them. It is always “your weather.” The combined FOX 44 ABC 22 Website is mychamplainvalley.com.

Gravy

The CAX business peaked in the mind-1990s, Peter said. Distribution has changed, where once the networks controlled everything through the 1970s. Then satellite came along and cable had 500 stations. A top program use to get a 35 share, now it gets a 10 on the Nielsen ratings, which tracks television viewership. 

It also resulted in big rollups of television groups, as technology could be used to cut expenses on the backend production and in management. 

Whereas the business was “gangbusters” in the 1970s, it flattened out in the mid-90s. In the last few years it has grown more robustly. Peter admits he doesn’t know why exactly the business flattened. Some of it, he thinks, is that demographics changed. Population growth, which was vigorous in the ‘60s and ‘70s in Vermont, came to a standstill. The population also got older on average here.

The Great Recession hurt all media and WCAX suffered through its first-ever layoffs in 2008. The main culprit was the loss of automobile advertising.

“Automobiles drive this market, the TV market,” Peter said. “This is considered a good market for automobile companies, small, but good.”

There is not fast-food or big retail taking up a lot of the ad time.

“We don’t even have a Target,” Alex said.

“If autos have a problem,” Peter said, “we have a problem.”

Political advertising plays an important role on television, and like everything else it is also changing. 

In the odd (non-election) years, Alex said the goal of WCAX is to break even. The election years bring in the “gravy.” 

The change in politics is that ads are not just being placed by political campaigns and maybe not even targeted at a general election.

“What we’re starting to see with Citizens United is issue advertising,” Peter said. This is smoothing out some of the odd year-even year revenues. A lot was spent on the civil unions debate in the Legislature way back in the Dean Administration, for instance. That type of thing is becoming more prevalent with big ad dollars being spent by advocacy groups. 

While Vermont is solidly a “blue” state for political purposes, CAX and PTZ get a lot of political advertising because they reach into New York and especially New Hampshire, which has become a swing state. A lot of ads have come in on the 23rd New York congressional district, Peter said. New Hampshire also has a hot gubernatorial race this year.

“The money never stops,” Peter said. In big swing states like North Carolina the TV political money comes “in dump trucks.”

Governor Peter Shumlin’s first race for governor featured a hotly contested Democratic primary with a down-to-the wire general election. There was a lot of advertising. Two years ago it was pretty quiet. This year, Peter said, he’s seeing a bit more in the gubernatorial race but the there is not a Senate race and Congressman Peter Welch is running virtually uncontested.

Not All Gravy

A few things haven’t worked out. With digital came the ability to have more than one signal. WCAX 3.1 is the main channel and 3.2 is the weather loop. If you get your television via satellite like DISH or DirectTV, you can’t access 3.2 unless you unplug it. With cable, 3.2 is in the nose bleed seats of your remote control. 

But for those with rabbit ears still, 3.2 is the de facto weather channel. WCAX drops in news bits, some sports and features like “In the Garden” or “Made in Vermont.”

But, still, it’s never gained an audience. Without an audience, WCAX just can’t monetize it. Satellite viewers make up 40 percent of the audience. It’s not appointment viewing. 

The other stations also have these substations. WPTZ has two others, one of which is MeTV, which features classic syndicates, like Kojak and Bewitched. Vermont PBS has three, two of which are usually travel and cooking. WFFF and WVNY each have one, which is often just a simulcast. 

Then there is Canada. Quebec is a huge market and if they could count it, it would make CAX a top 10 market nationally, Alex said.

There are two problems, Peter said, “simultaneous deletion and substitution” and taxes. The Canadian tax situation makes the ad buy much more expensive, but they might not buy it anyway.

The Canadian broadcasters can simply cherry pick American shows. If they want to broadcast NCIS, a CBS program, they can essentially take it away from WCAX. They then can take an NBC show, or whatever, buying it directly from the producer. 

This “cultural sovereignty” leaves the Vermont stations without the ability to guarantee to the advertiser what show they are exactly sponsoring. Nor are the national advertisers happy with it because they market to Americans differently than they market to Canadians and Quebecois. Nielsen doesn’t count it either. Plus it’s mostly French up there.

“As a practical matter,” Peter said of the Canadian market on his business, “it’s zero.”

And what about the much ballyhooed 3-D? 

It hasn’t taken off, Alex said, it will only be a “niche” and doesn’t really matter to CAX either way.

What they are looking strongly at is digital marketing services. Giving the customers what they need. They have the expertise and technology, Alex said, to help local businesses reach local customers. Not just the important(to CAX) broadcast advertising, but all manner of Internet, mobile and digital to achieve “holistic” marketing.

WCAX has its successful “Jumponit,” the special 2-for-1 type deals (the Burlington Free Press has been successful with its version called DealChicken). It’s another way of advertising that is more advertiser friendly, as they can see the direct response.  

“If we don’t sell it to them, someone else is going to,” Peter said.

The competition for local is increasingly coming from monsters like google and facebook, as they mine ever deeper into personal preferences, Peter said. An easy way to see this is through the kind of advertising that mysteriously appears as you browse the Internet. The ads on a particular site you’re looking at just happen to be from the online store you rummaged through last week. It’s not a coincidence of course.

Disruptive technologies are all over the place. Uber is disrupting the cab business with on-demand car services directly to where you are. The traditional taxi industry is not happy about it. Airbnb is taking business away from the traditional hospitality industry, which is trying to get local governments to enforce tax laws and regulations.

“The technology makes it possible and people are demanding it,” Alex said. “The consumer now basically is driving everything.” WCAX, he said, needs to build its business to accommodate this new world.

It’s not just technology that has changed television news. Sometimes the news changes television and journalism in general.

Right at the beginning of the school year in 2006, a man shot five people, killing two, including a teacher inside the Essex Elementary School. Alex went to that school when he was a kid. The shootings were both a personal moment and a professional one for him.

At the time he had been with CAX for only about a year. His wife called him and asked him what was happening. She, like everyone else, was waiting for the news. Alex realized that the news could not wait for the regular broadcast. 

“We were taking the wrong approach,” Alex said. “It was clear the Internet was going to be the place for breaking news.”

“The broadcast is still vital to us, but it was clear we had to put more on the Web,” he said. 

The story itself, he said, changed the business.

With only four in Peter’s generation (he’s the oldest and they own it together) and only five in Alex’s generation, the ownership transition is likely to be easier than if there were many grandchildren.

They have a plan in place, Peter said, and “in the course of time,” ownership will be transferred to Alex’s generation.

“We manage in the long-term,” Peter said. “We manage for market share and longevity.”

“If we can do that,” Alex said, “we can hopefully be around another 60 years, at least.”