Raleigh, N.C. — 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.”