Hearst, Cox Propose All-News Channels

Hearst Corp. and Cox Cable Communications, two giant media corporations, are pitching competing plans to local California cable-TV systems to launch a statewide, all-news channel in time for the 1992 political election season.

Local news channels are already carried on cable systems serving Orange County and Long Island, N.Y., and others are on the drawing board for New York, Chicago, Washington and New England. Although neither the Long Island nor the Orange County channels are profitable, many operators believe that cable may eventually play the dominant role in local television news.

California cable operators have not yet lined up behind the Hearst or Cox plans and are not expected to do so for perhaps several months. But both proposals include incorporating CAL-SPAN, the twice-a-week network modeled after C-SPAN that televises the California Legislature and is available in 2.2 million households.

Cox is proposing a 30-minute “news wheel” that would largely be produced in association with local television stations across the state. The wheel, loosely modeled after CNN’s Headline News network, would have segments on state government news, public affairs, California sports and statewide weather, according to system operators who have seen the proposal.

“We don’t see this as a big revenue stream,” a spokesman for Cox Cable said. “This would be added value for customers. Broadcasters also have a lot of extra news footage they don’t use that could be available.” The Cox plan would use local TV stations in Los Angeles, San Diego, San Francisco and Sacramento to supply video footage to a Sacramento-based operation, the spokesman said.

The Hearst plan favors setting up a system of news bureaus across the state as well as using stringers in more remote areas. In contrast to the “wheel” plan endorsed by Cox, Hearst favors a more traditional Cable News Network approach with dedicated half-hour programs focusing on different topics, such as Sacramento politics or statewide news.

“We’re not doing this for public service,” said Phillip Balboni, the Hearst executive overseeing the California news channel project. “We think regional cable news is a growth area for the ‘90s.”

Many cable operators said there is room for only one statewide cable news channel and are privately urging Cox and Hearst to pool proposals. “Channel capacity is the biggest obstacle right now,” said Marc B. Nathanson, president of Los Angeles-based Falcon Cable TV. “For some operators, the question is if there is room for even one California channel.”

Cox and Hearst, however, would appear to already have some local cable systems committed, either through direct control or by proxy.

Cox owns a 324,000-subscriber cable-TV system in San Diego, the largest independent franchise in the state. The system has formed a joint venture with the local CBS affiliate, KFMB-TV, whereby the station starting Sept. 30 will produce a 10 p.m. newscast televised over the Cox cable system.

Hearst does not own cable systems, but is a partner with Continental Cablevision in a New England regional cable news channel set to launch next March. Continental is one of the largest operators of local cable systems in California. Hearst is also a part owner of the Lifetime, Bravo and ESPN cable TV networks.

Cable system operators said any statewide news channel would have to reach 70% of California’s 5.5 million cable subscribers to become profitable. Cox believes that its channel could be profitable within a couple of years after launch, but the Hearst venture, because it would require a larger staff, is expected to take longer.

Balboni wouldn’t comment, but one cable operator said Hearst expects to invest $25 million during a five-year period before turning a profit. By contrast, a network-owned TV station in Los Angeles spends about $25 million to $30 million annually to produce local news.