NEW YORK ( TheStreet) -- Local TV station groups are facing more pressure these days as viewers flock to standalone online video services as television advertising sales decline and broadcast networks demand higher fees to carry their programming.
So why double down on local TV?
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In the face of industry trends that point to greater digital and less old-fashioned linear television, Tribune Media (TRCO) spun off its newspapers, including the Chicago Tribune and Los Angeles Times, in August to become the country's largest TV affiliate group.
CEO Peter Liguori says he has a plan to make it work, although lately the stock has been teetering as investors express concern that the Tribune's big investments in programming may not pay off soon enough to rationalize an investment in the Chicago-based company's shares. Tribune's stock is down 33% from its 52-week high of $87.50 set in July.
The broadcaster has bulked up its TV station ownership to give it more leverage with MVPDs (multi-channel video programming distributors), and has increased its investment in businesses that are less dependent on the volatile ad market, such as its entertainment metadata company, Gracenote.
Liguori argues that the TV bundle is far from dead, and that consumers will continue to want a clear signal to their local network affiliates. Additionally, Tribune is seeking ways to profit from its various real estate holdings as well as loads of broadcast spectrum that it may not need.
"We really like the story," Chris Paciello, senior analyst at Philadelphia-based Penn Capital, which owns 227,000 Tribune Media shares, said in an interview. "We think it has a lot of catalysts."
Tribune may also benefit from higher retransmission fees, the price pay-TV operators are charged to carry local TV stations, provided that customers don't find other ways to access local television stations.