Kstw Joins Kiro-TV On Sale Block -- Parent Unhappy With CBS Affiliate's Results

Two of Seattle's seven commercial TV stations are for sale - an unprecedented situation in the nation's 12th-biggest market and an unusual one for any locale.

For two weeks, the hottest available television property in the land was KIRO-TV (UPN).

But yesterday, with release of its third-quarter earnings, Gaylord Entertainment of Nashville announced it will sell KSTW-TV (CBS) because it "is operating in an extremely competitive market and its financial results have not met expectations." The company declined to be specific.

Last month, A.H. Belo of Dallas said it would divest itself of KIRO-TV because it is buying Providence Journal Co., parent of cross-town KING-TV (NBC) and NorthWest Cable News. Government regulations prohibit owning more than one broadcast TV station in the same market.

With two TV stations for sale and a third about to change ownership, the Seattle media business is topsy-turvy, although viewers probably won't notice any immediate differences.

Gaylord said it has no buyer for KSTW yet. As for KIRO, Belo is not commenting.

"We're in a silent period, and I can't talk about it," Ward Huey, Belo's president for broadcasting, said from Dallas today.

The Gaylord announcement was made by visiting corporate executives to a standing-room-only staff meeting at KSTW's main studios in Tacoma yesterday.

Gaylord's frustration with KSTW's ratings since gaining CBS affiliation in 1995 has been no secret, and a sale has been rumored for more than a year.

"I know they were trying to do the right thing by coming to us, and you've got to respect that," one news staffer said, "but we've all been looking at the writing on the wall for months. In fact, we were all surprised that this was not the (actual) sale announcement."

Herb Weisbaum, the consumer reporter for KSTW and "CBS This Morning," who also has worked for KIRO, added: "We all expected this to happen sooner or later. The KIRO one was the shocker."

Staffers at KIRO-TV three weeks ago were stunned by news that highly respected Belo, which had invested heavily in news, would sell or - more likely - swap the station after less than two years of ownership. Belo acquired KIRO-TV from Bonneville International of Salt Lake City, a holding company of the Mormon Church, for $162.5 million in 1995. On the market today, the station likely will fetch $200 million or more.

Gaylord bought KSTW for $4.5 million in 1974. Gaylord won't comment specifically on KSTW's cash flow, so it is unclear what it is worth today.

After government ownership caps were relaxed this year, big corporations have been buying and trading TV stations like crazy, and prices have been high. It might not matter that two stations are for sale in the same market. Both could be attractive acquisitions.

KSTW was a low-profile independent station with an inexpensive, somewhat sleepy news operation until Gaylord managed to pry CBS affiliation away from KIRO-TV in early 1994.

Although major-network status propelled KSTW into the big time, it also meant living with bigger risks, such as riding the cyclical success and failure of a network and fulfilling the expectation that the station develop a full-blown, helicopter-equipped news operation.

KSTW spokesman Dean Greve said the station's CBS prime-time ratings are up 50 percent this year and that the audience for other programming has grown significantly.

"CBS has gone from the No. 3 network nationally and in Seattle to the No. 2 network nationally and in Seattle," Greve said.

Thanks in part to the CBS increase, KSTW's 11 p.m. news is now ranked third, ahead of KIRO's, but its other newscasts draw rather modest-size audiences compared with KING, KOMO and KIRO-TV.

Three and a half years remain in the affiliation contract with CBS, so there is little chance of KSTW losing the network during its or KIRO's ownership change.

Gaylord said it will not sell its only other TV station, CBS affiliate KTVT-TV in Dallas, which yesterday's quarterly report said had a cash-flow increase of more than 50 percent this year.

The combined revenue from Gaylord's two television stations in the first nine months of 1996 is down $37.3 million, or 38 percent, from the year-earlier period. KSTW clearly is the weakling.

Conventional TV-business wisdom holds that only the big and mighty survive.

The buyer of KSTW is almost certain to be a major conglomerate with a growing stable of stations that can capitalize on economies of scale and influence.