Act III Broadcasting was a company that owned several television stations that started as independents, and later became Fox affiliates. The stations were located in medium-sized DMA's (markets) and were primarily UHF stations. Act III Broadcasting was in business from 1986 to 1995 when it was sold to ABRY Partners/Sullivan Broadcasting for million (equivalent to $million in ). Television producer Norman Lear owned a controlling stake in Act III Broadcasting through his company Act III Communications.
Early experience in broadcasting
Prior to the formation of Act III, Lear had a history in television station ownership. Along with his longtime business partners Jerry Perenchio and Bud Yorkin, Lear acquired WNJU-TV, a UHF independent station in the New York City area. The station offered religious English-language programming in the mornings and Spanish programming weekday afternoons and evenings. On weekend afternoons, the station offered a variety of ethnic brokered programming. Under their ownership, the station phased out the ethnic shows in favor of more Spanish entertainment programming.
In 1984, WNJU formed an alliance with Weigel Broadcasting's WCIU in Chicago and locally owned KSTS in San Jose to acquire Spanish programming to air on all three stations under a network called NetSpan. Blair Broadcasting, which had just acquired WSCV in Miami and KVEA in Los Angeles and converted these into full-time Spanish independent outlets, joined the alliance in 1985. WNJU and KSTS would be sold in 1986 to Reliance Capital Group, which separately acquired Blair Broadcasting;Reliance Buys WNJU for $70 Million Broadcasting Magazine November 3, 1986 the sale marked Lear and Perenchio's exit from the station business. The following year, Reliance would consolidate its Spanish-language holdings into the new Telemundo network, which is now owned by NBCUniversal. WCIU would be in that alliance for another year but retained by Weigel Broadcasting. Telemundo would eventually acquire Univision affiliate WSNS in Chicago, causing Univision to affiliate part-time with WCIU once again until it could buy WGBO in 1994.
These early, primarily Spanish-language, stations are unrelated to the later Act III Broadcasting, which was launched in late 1985. However, they are part of Norman Lear's early broadcast ownership experience.
History
Act III Broadcasting was formed as a subsidiary of Act III Communications in 1986, controlled primarily by Norman Lear, who had just sold WNJU. It ran primarily under the leadership of Tom McGrath and Burt Ellis. McGrath and Ellis had met in 1984, when McGrath was with Columbia Pictures, and the two had researched the value of independent TV stations at great length, a strategy that was later realized with the launch of Act III. McGrath was promoted to vice president on December 12, 1987.
Act III launched in early 1986; it made its debut by acquiring Fox affiliate WNRW in the Piedmont Triad from the TVX Broadcast Group, controlled by Gene Loving, for million (equivalent to $million in ). TVX had signed an affiliation deal with Fox; a clause in this deal stipulated that if TVX sold one of its underperforming stations, Fox could disaffiliate from that station. This was not the case in the Piedmont Triad, because WNRW's rival station WGGT (now WMYV) was in bankruptcy, but it still ran a comparatively low-budget schedule. This solidified Act III's strategy of acquiring stations in mid-tier DMAs, with the added spin of affiliating with the fast-growing Fox network which was rapidly emerging as a force in Broadcasting.
In 1987, it bought out its second station, WTAT in Charleston, South Carolina, from a local group led by Terry Trousdale, for $4.8million (equivalent to $million in ). WTAT's acquisition included restructuring ownership to gain majority control, but retained the stations limited partners.
On October 12, 1987, Act III acquired WRGT-TV in Dayton, Ohio, and WVAH-TV in Charleston, West Virginia, from Meridian Broadcasting for $22million (equivalent to $million in ). The transaction also included a construction permit for channel 11 in Charleston.Broadcasting, February 8, 1988 p.76
In early 1988, Act III acquired WZTV in Nashville, Tennessee, from Multimedia, Inc., followed in late 1988 with its $12million (equivalent to $million in ) acquisition of WUHF in Rochester, New York, from Malrite TV.WUHF Rochester Website In 1988, Act III bought out WRLH from Busse Communications, and also acquired WVRN's assets, and integrated into WRLH's programming schedule, which effectively go dark by September, which claimed it was $7-$8 million. It was finalized by September 15. That same year, Act III mounted an ultimately unsuccessful attempt to acquire WDBD in Jackson, Mississippi, and WZDX in Huntsville, Alabama, from Media Central, Inc. formerly under the control of Mort Kent but then in Chapter 11 proceedings.Broadcasting, July 4, 1988
In 1987, Act III successfully petitioned the FCC to allow it to move WVAH from channel 23 to the last VHF frequency in the market, channel 11. WVAH's signal on channel 23 was not strong enough to reach the entire market—a 61-county behemoth occupying rugged terrain in three states. The FCC granted the request, and WVAH moved to channel 11 on April 11, 1988.
This sort of deal-making characterized Act III into 1990, a year when it made several innovative deals in 1990 that positioned its stations the only general entertainment stations in their markets. In Nashville, WXMT (originally WCAY, now WUXP-TV), then the Fox affiliate, had been sold by TVX in 1988 to Michael Thompson. Fox was considering executing its policy that no broadcaster could control more than eight Fox affiliates by pulling the Fox affiliation from WXMT and moving it to WZTV. In January 1990, Act III cut a deal in which WZTV would take all of WXMT's shows, leaving WXMT with only religious and home shopping shows. However, Thompson backed out of the deal at the last minute. Fox then announced it was moving its affiliation to WZTV as of February. At the end of January, MT Communications and Act III made a revised deal, which allowed WXMT to keep barter cartoons and several low budget syndicated shows, giving WZTV all the cash programming, which included the better and more expensive shows, along with Fox programming. WXMT's daily schedule now featured home shopping for 15 hours, religion 3 hours, cartoons 3 hours, and low-budget shows 3 hours. While WXMT was not eliminated as a competitor, it was left with a much weaker schedule.
In Buffalo, Act III bought WUTV channel 29 in Buffalo from Citadel Communications in 1989, and merged all assets of WNYB into WUTV's programming schedule. Act III proceeded to get a duopoly waiver citing cross-ownership with existing WUHF in Rochester, which Act III then-recently acquired. Act III then restored its Fox affiliation to WUTV, as well as its rights to the Buffalo Sabres games, which WNYB obtained when the deal closed in 1990. With the deal, the Sabres received a minority stake in the new WUTV
McGrath stepped down as chairman of Act III Broadcasting in 1990 when he left to join Time Warner as President of International.Broadcasting & Cable April 11, 1994 "McGrath Appointed President of Time Warner International" Bert Ellis continued the company's strategy into 1991.
To obtain dominance in the Piedmont Triad, Act III embarked on another programming-buying deal in 1991. It bought the entire program inventory of WGGT, the other general entertainment station in the market, and merged it onto WNRW's schedule. WGGT's owner, Guilford Broadcasters, agreed to simulcast WNRW's signal on WGGT, making WGGT a full satellite of WNRW. This created a strong combined signal (with over 60% overlap) which became known as the "Piedmont Superstation." For all intents and purposes, Act III's stations were now the only general-entertainment stations in their markets, except for Nashville.Broadcasting, November 4, 1991
Bert Ellis left Act III in early 1992 to form Ellis Communications and continue to pursue station acquisitions eventually building a group of 13 TV stations, two radio stations and Raycom Sports.Ellis Communications
At the time Act III Broadcasting was sold to ABRY Partners II in June 1995, seven of the company's Fox-affiliated television stations, with the exception being the company's Nashville, Tennessee-based television station WZTV-TV, had also become affiliates of the then-fledgling United Paramount Network (UPN)
Local marketing agreements In the late 1980s Act III pioneered the concept of the local marketing agreement, or LMA for short. Under an LMA, one station would buy all or most of another station's broadcast day and take over its operations, but the other station would technically remain under separate ownership. The senior partner in the LMA would then program the other station with shows that it didn't have time to air. Act III, however, was not interested in this concept. It was the approval of the LMA concept that allowed Act III to consolidate ownership and control of programming in small markets, significantly enhancing the value of its stations. This revolution in broadcasting was the first step in the FCC's eventual de-regulation of station ownership and the lifting of the 12-station cap on ownership that had existed for decades prior to Act III's initiatives.History of Broadcast Ownership Rules Sadler Chapter 5
Management The management team of Act III Broadcasting from its formation in 1985 through 1991 consisted of Tom McGrath, Chairman who was president and chief operating officer of Norman Lear's holding company, Act III Communications; U. Bertram Ellis, Jr. ( Bert Ellis), chief executive officer; Bill Castleman, President and Chief Operating Officer; Dick Kantor, EVP and Head of Programming; and Blair Schmidt-Fellner as CFO. All of Act III's station acquisitions and other transactions were conducted during this period. McGrath was succeeded by Hal Gaba in late 1990; Bill Castleman was succeeded by Dick Kantor and Blair Schmidt-Fellner was succeeded by John DeLorenzo and Warren Spector. Ellis left in early 1992 to form Ellis Communications.
Sale to ABRY ABRY Partners, a Boston-based investment firm, already owned two Fox network affiliates when the company entered into an agreement to acquire Norman Lear's controlling interest in Act III Broadcasting in early September 1991.Broadcasting. September 9, 1991. The remaining shareholders, including Prudential Insurance, agreed to roll over their shares into the new company.Broadcasting, "Getting in on Act III" October 14, 1991 p.6 However, the deal fell apart shortly thereafter, with CEO Bert Ellis declaring the deal "dead as a doornail."Broadcasting, "Act III-Abry in Trouble" December 23, 1991 p.12
Ellis left Act III in early 1992 to form Ellis Communications, and the group was put under the leadership of long-time Lear and Perenchio associate Hal Gaba. Gaba did not continue to growth of the group or conduct any acquisitions; instead, he focused on selling the group as the financial markets began to recover from the deep recession of 1990-92 and the collapse of Drexel Burnham Lambert.Recession of 1990 Berkley.edu During the 1989-1991 period, virtually no takeover activity was undertaken and asset values in general experienced steep, if temporary, declines.