Wednesday, April 07, 2004
By Rob Owen, Pittsburgh Post-Gazette

WQED has reached an agreement to lease sister station WQEX to the Home Shopping Network beginning May 1.

WQED Multimedia president George Miles would not say how much income the three-year deal will generate for WQED.

"We can't really tell you exactly, but it's a substantial amount of money," Miles said, "and we think we'll be able to net in the seven figures."

Last month another local operator of home shopping channels estimated a home shopping deal could bring in $700,000 to $800,000 a year for WQEX. Miles said rental income generated by WQEX will be reported to WQED's finance committee and the full board of directors.

HSN will program WQEX -- which will keep its call letters -- with its America's Store channel. Currently that channel airs locally on the Ron Bruno-operated low-power Channel 61. With this deal, America's Store will vacate Channel 61 and will be replaced by the company's primary channel, HSN.

"HSN is the flagship channel for the whole company, and that's going to be on Channel 61," Bruno said, "so from my perspective we ended up very good in this deal."

On its Web site, America's Store bills itself as "a unique TV shopping network that brings you the finest assortment of products to enhance your lifestyle or to fuel your enthusiasm for your hobbies, collections and crafts."

Todd Cralley, vice president of affiliate relations for St. Petersburg, Fla.-based HSN, said the deal with WQED presented an opportunity to further its presence in the Pittsburgh market.

Unlike other home shopping channels, Cralley said, America's Store programs sales in specific product areas -- electronics, clothing, housewares -- at scheduled times each day. See www.hsn.com/cnt/program_guide for details.

There are no current plans for America's Store to broadcast from Pittsburgh or have any employees based here, but, Cralley said, "We've discussed a number of opportunities with WQED, that I'm not prepared to discuss in detail, that would bring us to the Pittsburgh market."

WQED's Miles said the contract allows both parties to exit the deal after the first six months, but Cralley would not confirm that.

WQED has been trying to dispose of WQEX since 1996 and has been simulcasting WQED on WQEX since November 1997. Station executives have maintained all along that the sale or lease of WQEX was fiscally necessary to preserve WQED and pay down its debt, which currently stands at $7.5 million (including $4.5 million the station owes its own endowments, $1 million in accounts payable and less than $1 million due to PBS).

The Federal Communications Commission initially rejected WQED's request to convert WQEX's license from non-commercial/educational to commercial in 1996. Plan B involved a three-way swap with Paxson Communications and Cornerstone TeleVision. The FCC approved that deal, but it collapsed in January 2000.

WQED again proposed converting the WQEX license to commercial as part of Plan C, which the FCC approved in July 2002. Plan C, involving the purchase of WQEX for $20 million by Diane Sutter's ShootingStar Broadcasting, collapsed in November 2002.

The WQEX saga may have reached a tentative conclusion, but Miles said the station might still be sold.

"The station is off the market right now, but if someone came along and offered us some monies that make all the difference, we still have the option of selling it," Miles said, adding that a new owner would have to continue the lease with HSN until its expiration.

Miles said WQED had several offers from prospective buyers -- including religious broadcasters and home shopping channels -- but he felt they were looking for a bargain price.

"Because of the economy, and Pittsburgh's [market rank] dropping in the marketplace, it was not generating much interest early on," Miles acknowledged. "We got some offers but not the kind of offers we thought we should have gotten for the station.

"I didn't want to be criticized, if, five or six years from now, [whoever bought it from us] turned around and sold it and made a lot of money."

As recently as January, an outright buyer was in play for WQEX, but Miles said "that buyer didn't meet our expectations."

Now WQED has an additional revenue stream and the possibility of selling the station down the road. Miles said WQED also will be able to sell ad time on WQEX, up to four minutes per hour.

"We'll be able to offer an underwriter [of WQED programming] some commercial time that we can't present at the moment," Miles said.

WQEX, which has been down for repairs in recent weeks, will broadcast 24 hours a day beginning in May.

Some local cable systems dropped WQEX because it was simulcasting WQED. Station manager B. J. Leber said deals have been struck to return WQEX to some larger systems. Armstrong Cable will return WQEX to its lineup 45 days after the simulcast ends, Leber said, and the station is working with Charter Communications to get back on in Uniontown.

To meet its FCC requirements for public affairs (one hour weekly) and children's programming (three hours weekly), America's Store on WQEX will be interrupted once a week for four hours. Miles said that block will probably air from 6 to 10 a.m. Tuesdays. Specific children's programs have not been chosen; public affairs programs will probably draw from such WQED series as "On Q," "Off Q," "Black Horizons" and "LifeQuest." In addition, Miles said, America's Store is off the air on Dec. 25 and 26, allowing WQED to program WQEX those two days.

Nancy Hahn, who operates low-power station WNEU, Channel 63, said a rival home shopping channel won't impact her business. Currently Channel 63 carries the Shop At Home network.

"All of these shopping channels have their own flavors and personalities, so the redundancy isn't a problem," she said. "People love television shopping. They just do."

In a press release, WQED Multimedia board of directors chairman Herbert Bennett Conner called the deal with HSN "a great example of social entrepreneurship."

That statement didn't sit well with Jerry Starr of Mt. Lebanon, who led the opposition against the WQEX sale. His efforts ceased after the FCC granted WQED's request to de-reserve the license for WQEX, allowing it to become a commercial station.

"WQED CEO George Miles gloats over 'a number of additional merchandising and revenue building opportunities.' The station describes its mission as providing 'programming products and services for local and national audiences,' " Starr wrote in an e-mail. "This precedent-setting de-reservation was based on the false claim of severe fiscal exigency swallowed whole by the FCC's Republican commissioners and represents a shameful chapter in the decline of public broadcasters from public servants to corporate pitchmen."