Joe L. Allbritton built a media dynasty in Washington by investing in the television business. His son, Robert, seems intent on reshaping his father’s legacy by getting out of it.
The younger Allbritton on Wednesday signaled a sharp change in direction for his family-owned business, Allbritton Communications, by disclosing that the company would sell its eight TV stations, including its crown jewel, Washington’s WJLA, known as ABC7. Allbritton said in a memo that the company will concentrate on new media, including Politico, its successful politics Web site and newspaper.
“This is the Golden Age of new media innovation, and I intend to stay on the leading edge of it,” he wrote in a dispatch to company employees.
The announcement reflects not just a change of generations at the privately held Arlington company but tumult in the media business, which has been roiled for years by the shift to digital technology.
The elder Allbritton, who died in December, was a transplanted Texan who made his fortune in Washington real estate, banking and media — three sectors that have undergone enormous transformations in the past decade. The patriarch became a media mogul in 1974 with the purchase of WMAL-TV and WMAL AM-FM as part of a deal for the old Washington Star newspaper (Allbritton changed the TV station’s call letters to his own initials and sold the radio stations to ABC). He later bought stations in five other states and started the NewsChannel 8 cable service in Washington in 1991.
His only child, now 44, has been involved in the family media business since he was 24, succeeding his father as the company’s chairman and chief executive in 2001. Although the Allbrittons sold another major Washington holding, Riggs Bank, to PNC Financial Services Group in 2004 after a money-laundering scandal, the younger Allbritton didn’t seriously consider getting out of TV until after his father’s death late last year, according to people at the company who spoke on the condition of anonymity because they weren’t authorized to speak publicly.
The decision to sell the stations appears to have the backing of Allbritton’s mother, Barbara, 75, who has been a member of the company’s board since it was founded in 1974.
“This [decision] demonstrates that there are very few second-generation heirs who are able to manage the empires and capital that daddy passed on to them,” said Washington wag Bill Regardie, who published a popular magazine during the real-estate heyday of the 1980s. “There was no one in the [sports magnate-developer Abe] Pollin empire. This kid [Robert Allbritton] is as smart as daddy. He knows how to manage capital, just like daddy knew.”
After decades as one of the most profitable businesses of any kind, TV stations have been losing viewers, advertisers and value for several years. Alternatives, from cable to satellite to the Internet, have siphoned off segments of the audience, especially young people.
At the same time, the recession has taken a deep bite out of advertising revenue. The most alarming losses have come in local TV newscasts, which can generate more than a third of a station’s revenues.
“Local banking is finished, just like local media is finished,” Regardie said. “He [Allbritton] is getting out today before the Internet decimates the value of what local television stations are worth. He can get top dollar today. He realized the television stations are essentially finished as cash cows.”
Allbritton, who attended the prestigious St. Albans School in Washington and owns one of the largest homes in Georgetown — a $24.5 million mansion restored by developer Herb Miller — declined to comment on Wednesday.
A sale of the Allbritton TV group could generate as much as $500 million or more, estimated Christopher Miller, president of Gammon Miller, a Midwest-based media investment and brokerage firm. “They are a very well run, highly respected broadcast company,” he said.
Miller originally estimated a sale price around $300 million, but raised his estimate a few hours later. “ I just have a feeling there is going to be a bidding war on this,” he said, given that stations in major cities are rarely sold.
However, the Allbritton group lists $455 million of debt on its balance sheet, complicating estimates of the net profit from a sale.
The Allbritton TV group generated $214 million in revenue last year and $28.9 million in profit, according to its annual report. Both figures were a big boost from a year earlier, but the gains came mostly from WJLA and two smaller stations — WSET in Roanoke and WHTM in Harrisburg, Pa. — that reaped a bounty from a cyclical influx of political ads.
WJLA (Channel 7) and NewsChannel 8 accounted for about half of the group’s revenue over the past three years, according to the annual report.