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CEO: Capitol Broadcasting retooling, cutting expenses

Posted March 18, 2009

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Capitol Broadcasting, the parent company of WRAL-TV, WRAL.com and other communications, real estate and sports interests, is instituting a series of cuts to deal with what Chairman and Chief Executive Officer Jim Goodmon described as an “unprecedented drop” in revenue.

In a series of four staff meetings, the last of which took place Wednesday morning, Goodmon spelled out the details of the cuts as well as plans for moving the privately-held company forward.

Goodmon then agreed to an interview with WRAL.com.

“Nobody has seen anything like this,” he said of the U.S. economy.

“I want everybody to know our goal is to reduce operating expenses by 15 percent, and we’re all going to work together to figure out how to do that,” Goodmon explained. “[The cuts] will include all the ways you do that.”

Goodmon did not resort to furloughs, however. “We still are going to put on the news,” he said. He declined to discuss cuts or what he called “personnel matters” in detail.

"I don’t intend to talk about specifics, but we have decided that, overall, the corporation needs to reduce operating expenses,” he said.

However, Goodmon did acknowledge that no one in the company was immune from the cost-cutting. “Everybody in the company is involved in the different measures we are using,” he said.

Asked if Capitol is profitable, he said, “Yes.”

“None of this is driven by a balance sheet, by debt,” Goodmon added. “This is all driven by – and actually it’s a national problem – a cut back in advertising revenue. We are trying to anticipate what it’s going to be like when we come out of the recession.”

“Listen, I’m confident the economy is going to recover, but my own notion is that it’s going to take a while. It’s not going to happen one afternoon.”

Capitol is a diversified company, with the American Tobacco historical complex real estate venture in Durham, the Durham Bulls minor league baseball team, WRAL-FM and 99.9 The Fan FM ESPN Radio in Raleigh; the CBC New Media group; and Microspace Communications, a satellite data-services firm. It also operates Fox 50 TV in Durham as well as TV stations in Charlotte and Wilmington and radio stations in Wilmington.

The fact that Capitol owns numerous properties is important in weathering what Goodmon labeled a “perfect storm” of economic events.

“It’s helpful we have other businesses to help us stabilize the bottom line,” he said. “They are not all down at the same time.”

Overall, Goodmon said, “The company has never been stronger from the point of view of our products. Our ratings are very high; our Web site is a national leader; we’re the leading company in terms of distribution of movies to theaters (through Microspace).

“What we have here,” he added, “is an unprecedented drop in advertising revenue.”

While local advertising has declined, Goodmon said the drop in national advertising has been much worse.

“Automotive advertising was probably 25 percent of our revenues,” he said. The struggles of that industry are well-documented.

The uncertainty about when an economic rebound might occur factored into his decision, Goodmon said.

“It is also very unclear when we are going to get out of this,” he said. “So the notion is then we need to retool, reboot and plan for the next three years so that we come out of this in the best position to compete after the recession. I’m trying to get us ready for three to five years from now.”

Past challenges ‘aren’t even on the same scale’

Capitol has faced challenges before beyond economic factors. In 1989, its 2,000-foot tall broadcasting tower in Clayton collapsed after an ice storm. In 1994, Goodmon suffered a heart attack.

However, those events “aren’t even on the same scale as what we’re talking about” in the current economy, Goodmon said.

Going forward, he insisted, Capitol will be a “new company, and not one where one day expenses pop back up to where they were. This is what I call the new reality.

“There’s a new base of operations. I don’t want people to think that in two years this will be all over and we will go back to the way we were.”

Rather than communicate by e-mail with Capitol’s staff of more than 600 people spread from Charlotte to Wilmington to Raleigh, Goodmon chose to conduct staff meetings. He took questions from employees as well.

“It was very important that we had staff meetings to do this,” he said. “I wanted the employees to hear about it first. … I’m really glad that I met with everybody and everybody at least understands (that) even though (it’s) not really good news, everybody knows the plan.”

No programming changes

Capitol will not be making changes in its programming at WRAL-TV, the ratings leader in the Triangle market, Goodmon stressed.

“As to what does this mean to the public, the answer is nothing,” he said. “We’re going to improve our product. We’re not talking about anything anyone will notice in our products.

“We will continue to improve the product and add to it,” Goodmon said. “We don’t plan any product changes. We’re not going to be different. No one will notice this.”

The meetings to discuss economic matters were a first for Goodmon, he added. Goodmon, 66, has been president and CEO of Capitol since 1979. He is a grandson of company founder A.J. Fletcher, who formed Capitol in 1937. The onus is on him to make these economic decisions, Goodmon said, “and I want people to know that.”

“If you are going to criticize me, then criticize me for taking so long in doing this,” Goodmon said, referring to the cost reductions. “Broadcasters have seen this coming for two years.”

Goodmon also said he would meet with the company’s staff on a quarterly basis because “there is so much going on.”

16 Comments

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  • ContinuityMan Mar 19, 2009

    Why three early evening newscasts? That must cost a fortune to produce. Most stations used to have one newscast at 6 PM followed by the network propaganda - I mean news - at 6:30.

  • bbad238 Mar 18, 2009

    Alot of these comments focus on WRAL TV 5 when there are so many other areas where he's probably losing money, ie.. real estate. They don't need to get rid of anchors. Someone suggested Debra M. Don't get rid of her, she's great. I'd just cut out the Saturday news since no one watches that.

  • districtcadvocate Mar 18, 2009

    I am just greatful that the Triangle has strong corporate leaderhip like Jim Goodmon and CBC. Together we will weather this economic hurricane and be the better for it.

  • RowdyFriend Mar 18, 2009

    Too bad they can't get rid of Harry Smith and the awful network morning show. I swear, the world could literally be coming to an end, and they'll kick off the show with details of the previous night's "Survivor". Get real.

    Why not do Raleigh's very own localized morning show from 7-9? Then more personnel would be involved with live remotes at the tire store, cooking segments, etc. Also, get rid of Wolfpack Sports Marketing, we need less AM stations carrying their games.

    Finally, don't layoff the GOLO staff and mods; just kill the forum and get rid of the haters.

  • Soulbait Mar 18, 2009

    He is a great guy. Very nice and approachable too. I have met him a couple of times.

  • beachboater Mar 18, 2009

    Maybe they will be willing to share the information about cutting expenses and living within your income with our illustriative gov'nor, Miz Perdue. She certainly appears to need a little ecnomics training.

    HEY!!!!!!!!!!!!!!! Maybe the increased education budget is tot allow Bev to go back to school and learn about accounting and finance. She obviously never had those classes when she was in school.

    thanks in advance WRAL.

  • FloydRTurbo Mar 18, 2009

    I don't much care for Jim Goodmon's recent "political activism" but he has been an outstanding Triangle Business Citizen. Very few CEOs can come close to the contributions CBC has made in the public interests over the years. Jim Goodmon is "a good guy".

  • OLD PIRATE 2 Mar 18, 2009

    There does seen to be alot of people reading old news to us each day. I really get tired of all the lawyer advertising from all over the country. Make your fees available to the small business in the area. But then maybe you want the image of a big city TV station....personally I like the down home feeling.

  • Soulbait Mar 18, 2009

    Cutting the live remotes will not save them much money. They own the company that they do their live feeds through, Microspace, so they are not loosing money on it.

    What they need to do is start better local advertising on their web-site and bring high quality live feeds of their news channel and weather channels to the web. This is where the industry is going. They should be able to have better returns on local advertising than google-ads if they can prove that their traffic is high enough. That is why Angela has been tightening the reigns on Golo, to make it more community friendly. What we will probably see is a mixture of google-ads, and a mixture of other third party ads, and some local ads until the market grows for it.

    Also, the cuts inside are more than likely pay cuts and getting rid of unnecessary expenses, perhaps no more donut Fridays?

    Why does is seem like there are a lot of WRAL haters and dislikers on a service provided by WRAL?

  • Mr Douglas Mar 18, 2009

    I grew up watching WBTV in Charlotte. I remember one news anchor, one sports anchor, and one weather person per broadcast and they didn't have the news on from 5:00 PM to 6:30 PM either. It was 1/2 hour from 6:00 PM - 6:30 PM and that was it in the evening. There was the 1/2 hour morning news and the 1/2 afternoon news. Normally the people who did the morning news did the afternoon news too. WBTV didn't have near the people WRAL has on camera for each broadcast 1/2 hour. Sometimes cutbacks and layoffs are good. Maybe this will bring WRAL back to the level of being a station to watch for news, weather, and sports.

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