Triumvirate of visionaries reels in 43 million TVs, heads for NM
By PETER KELTON
Copyright © Peter Kelton
ALBUQUERQUE, NM — When a TV channel reaches into 43 million homes in a brief two years from startup, there's got be a visionary at the helm.
In the case of Realz TV network, it's a triumvirate of visionaries.
Stanley Stub Hubbard and two his sons, Robert and Stanley, created and developed the whiz-bang style of the Reelz TV Channel network, a motion-pictures-only telecast, cablecast and Internet cast. (© AP Photo Janet Hostetter courtesy Forbes)
They started in September 2006.
Now they are moving operations from the snows of the Hubbards' native Minnesota to the warmer high desert sands of New Mexico and saying goodbye to studios in Hollywood.
The relocation should be completed this spring.
Here's what it's all about, according to public records:
The Hubbards' venture ranks among the latest companies to join the media-age gold rush into the desert southwest. Here modern sound stages are rising among the drought-ridden cacti. With tax breaks engineered by Gov. Bill Richardson, Hollywood no longer just makes movies in the dust; it's actually looking to squat permanently in the state called The Land of Enchantment.
So what's a nice family man like Stanley doing among these glitzy sojourners? After all, Hubbard Broadcasting Inc. (HBI) operates one of the few remaining large family-owned television companies in the nation, its roots firmly entangled in Middle America values.
The simple answer may be that Stanley Stub Hubbard has always been ahead of his time or, more precisely, he's created his own time. As Frank Sinatra sang, "What's more, I did it my way." At this writing, Reelz is the only cable/satellite network and website dedicated to everything about movies — news, previews, trailers and, occasionally, some rather "asinine" commentary.
Forbes magazine ranks the senior Hubbard, 75, as the 281st richest American, worth about $1.7 billion, some of that attributed to the sale of his pioneering direct broadcast satellite company to Hughes/DirecTV in 1999.
A staunch Republican who supported the Bush campaign with a contribution of $41,500 in 2004 (he gave the Democrats $10,000), Stub today views the future of communications, as he has for decades, through a satellite-focused lens. He pioneered satellite broadcasting with United States Satellite Broadcasting Company, sold it to Hughes and went looking for other adventures.
That pioneering spirit runs in the family. Stub's father, Stanley Eugene Hubbard, built the family's first radio station in 1923, branched into television stations 25 years later. Today the Hubbard family's broadcasting legacy spans three-quarters of a century. The value of Twin Cities-based KSTP-TV alone has been estimated at a quarter of a billion dollars. Other assets include a dozen TV stations, two AM radio stations and two FM stations. The two sons, Stanley, 48, and Robert, 44, help run things across the board, years after starting in the business on a very low rung, just as their father started as a trainee for his father. Stub was first a file clerk, then a news photographer.
And then there's this upstart digital Reelz TV Channel, a triple threat via Internet, cable, DirecTV and DISH Network, available in 43 million homes, yet maligned as not particularly "relevant." As recently as the Jan. 16 issue of TV Week, Columnist Josef Adalian led off his column like this: "Barack Obama has so many crises on his plate, the concerns and troubles of the TV industry seem about as relevant as the Wednesday night lineup on the Reelz Channel."
Relevant may have been the wrong word when looking to the future. The investment firm of Donaldson, Lufkin & Jenrette predicted a decade ago that the direct-satellite market would not exceed 13 million homes by the year 2000. They were right. DirecTV itself had only 9.5 million subscribers in 2000, but by 2008 it had acquired more than 20 million. What's relevant is that, given a few breaks, the exclusively movies channel has a good chance of eventually commanding good ratings for some of its segments, according to movie-TV critics interviewed.
"You need to remember," said one critic, "the Hubbards have always shown patience, lot's of it. When his early satellite business was under fire, Stub asked Geraldine Fabrikant of The New York Times, 'if our strategy is to get from point A to point B, and it takes longer than we hoped it might, is it less desirable to reach point B?'"
The ReelzChannel® - TV About Movies™ (that's the official way to refer to it) takes its relevance from knowing pretty much where it's headed (from point A to point B) without revealing its secrets. According to Pamela Howell, media spokesperson for Reelz, "the ratings numbers are not yet available, and since we are a privately-held company, we do not provide goals or budget information."
Ratings in this business are everything. The proof to advertisers lies in the numbers.
Not everyone who has nurtured Reelz from birth plans on joining the move to Albuquerque. Three top executives — Gary Thorne, president and chief operating officer, Terry O'Reilly, executive vice president and general manager, and Bernie Weiss, executive vice president of finance and administration— already have said they won't move, according to the Hollywood Reporter.
Multichannel News reports that the move should save the Hubbards up to $20 million a year in operating costs. While there are only about a half-dozen sound stages in New Mexico, compared with 34 in the Los Angeles area, there are other apparent advantages — the Hubbards purportedly have no affection for the way some unions organize workers. They are leaving behind 1088 unions in California, 39 in Minnesota, to embrace a less unionized work atmosphere in New Mexico; 29 unions. These range from the Screen Actors Guild to the International Brotherhood of Electrical Workers.
Contrary to the comparatively benevolent labor atmosphere, the electrical union is capable of playing hardball. They threatened to strike PNM, the local utility, in 2000 and won significant concessions at the 11th hour.
The record shows union issues are important to the Hubbards.
Stanley Stub Hubbard has been an outspoken critic of the proposed Employee Free Choice Act that would give unions the right to organize if a majority of employees sign cards supporting a union, eliminating the need for a secret-ballot process where many organizing drives now fail. Hubbard maintains that many workers don't want the legislation.
"It doesn't take a genius to recognize that people don't like to be pressured or harassed," said Hubbard in 2007, alleging that often occurs when workers are asked to sign union-organizing cards. "The only protection they have is the private polling place."
The act failed to pass the U.S. Senate but appears likely to rise again in 2009. President-elect Barack Obama told the Washington Post on Jan. 15: "I think the basic principal of making it easier and fairer for workers who want to join a union is important. And the basic outlines of the Employee Fair Choice are ones that I agree with. But I will certainly listen to all parties involved including from labor and the business community, which I know, considers this to be the devil incarnate. I will listen to parties involved and see if there are ways that we can bring those parties together and restore some balance."
Hubbard, along with a strong contingent of Republicans and business leaders, is expected to be talking with the Obama team about "the devil incarnate."
The Hubbards bring to Reelz in New Mexico a long-established tradition of speaking up for what they believe in, whether it's business or private. They are characteristically patient and often win out in the end when there's a dispute.
Most recently, Robert Hubbard, president of Hubbard Television Group, has been doing battle with the Minnesota powers-that-be. He wants to build a much larger house on the site of a small 1950s-era cabin on the scenic St. Croix River. He said recently that most of the house is already built, but the permit is still hung up. St. Croix River rules and ordinances require that new houses be built farther from the river than the old cabin. The matter is still hung up between agencies and the courts.
Stanley E. Hubbard, president of the Hubbard Media Group, speaks just as matter-of-factly as brother Robert and daddy Stub. It was the elder Stanley who, in 1989, warned Fred Friendly, a towering figure in the history of broadcast news, during a debate about news, with this mid-America, anti-intellectual quip, according to The New York Times:
''I'm not smart enough to understand a New Yorker cartoon, so don't show it to me.''
The same man vigorously defended his TV coverage of a Minnesota election in 2006 when it came under political attack: "I have never ever, nor has my father before me or my sons and daughters after me, ever gone to the newsroom and suggested they help any political candidate or suggested they hurt any political candidate and we never will," Hubbard said.
The younger Stanley demonstrated the same directness in an interview with Multichannel News last March. "Reelz Channel makes sense. On a digital system today, cable or satellite, there are over 4,000 movie titles out there a month to choose from. The No. 1 way people choose movies to watch on pay-per-view, (video on demand) or on premium channels, is title.
"So if we can do really fun and interesting and informative programs about movies and not just movies that are in theaters but movies that are available in the home, this week, this month and today, the takeaway is viewers are going to recognize more titles and we absolutely believe that recognizing more titles is going to translate into watching more premium movies and buying more video on demand and pay-per-view.
"We absolutely believe we really can make it in a market as big as this whole country. And we think we can help the operators sell more movies."
The growing New Mexico movie environment into which the Hubbard visionary triumvirate has plopped Reelz operations has drawn a sort of jealous criticism from other western states, most recently Idaho, better known for producing potatoes than the 159 films that have been made there. An article by Kevin Max, published by the Idaho Film Office, carried the title, "How the film industry fell for the Land of Enchantment."
Max wrote: "The state has stolen more than 80 feature films and television projects from mighty Tinseltown, adding more than $1.2 billion dollars over four years to the economy. That’s up from a meager $8 million just five years ago. The industry created 3,000 new in-state jobs. The crew base in the state shot up from 60 technicians in 2003 to more than 1,400 today."
Apparently, the so-called theft of movie making involves more than tax breaks. Saving $20 million can be a happier affair when the climate turns friendly, as records show it does in parts of New Mexico. The economic climate also helps. Recent unemployment figures show The Land of Enchantment at 4.3 percent (back in 1998 the state had the highest unemployment rate in the nation at 6.4 percent). The same U.S. Department of Labor estimates (for November 2008) placed the unemployment rate in Minnesota at 6.4 percent, and 8.4 percent in California.
Weather may also be a factor. A day chosen at random, forecasts for Jan. 23 showed the Twin Cities of Minneapolis and St. Paul at 17 degrees F. with a low of 2 degrees; sunny Los Angeles with 62 degrees and a low of 45 degrees; and Albuquerque 56 degrees and a low of 25 degrees.
While the current national recession impacts everyone, the climate at DirecTV, which accounts for a lot of Reelz channel distribution, remains quite upbeat. DirecTV reported third quarter 2008 revenues increased 15 percent to $4.98 billion. Operating profit increased 25 percent to $1.25 billion. Second quarter revenues had increased 16 percent to $4.81 billion. Second quarter operating profit had increased 20 percent to $1.36 billion. Subscriber growth was strong, with average revenue per user up 6.1 percent.
Since Hughes Electronics founded DirecTV in 1994, the operation has passed through several hands, with chunks of it owned by General Motors, Rupert Murdoch's News Corp., and ultimately (so far) John Malone's Liberty Media.
All that corporate "horse trading" involved publicly held ownership, while the Hubbard Broadcasting operations remain solidly private. Tight control of HBI (not to be confused with the maker of bras, panties, underwear and hosiery) is held through the Kinnimaka Trust Co., a two-person operation in Sioux Falls, SD, and several other Hubbard trusts. According to an ownership report filed with the Federal Communications Commission, the father-sons triumvirate vote 24.89 percent of the HBI shares; the women of the Hubbard family vote 13.98 percent; and the trusts (combined) vote 62.01 percent of HBI shares.
The Reelz TV Channel network formats a 24-hour series of programs that deal exclusively with every aspect of motion pictures, including an excellent series about directors. Their stories are told via interviews mixed with film segments and voice-overs that may be among the best story telling on television or the Internet. The series has a rhythm of its own that critics describe as spellbinding. Whether by intension or by accident, the rhythmic flavor of the series spills from one segment to the next, creating a style and a corporate identity for Reelz of which its founders can be proud.
Less respectable elements are also telecast in the name of Reelz. One critic has described something called The Mob as "embarrassingly asinine." A recent segment purported to review the Clint Eastwood film Gran Torino. "It was a bunch of punk teenagers butchering the English language, 'like this' and 'like, man, like that' to the point where my own teenage daughter abandoned the Reelz channel," wrote the critic. "That kind of offensive drivel, while it may target teens, I find a real put off."
What Reelz has going for it in these difficult economic times is escapism. Psychologists have said hard times lead people to escape into motion pictures, the bread and butter of Reelz.
One optimistic critic suggested that Reelz could format a straight news half-hour about movies only and run it opposite network news during the traditional early and late evening slots. "Even the Hubbards, who know the news business from ground up, some 84 years' of family experience from 1923, might be surprised at the numbers they could shift to Reelz," he said.
The Hubbards are not strangers in New Mexico. The family has owned the NBC affiliate, KOB-TV, Ch. 4 in Albuquerque since 1957, and while there are a couple of Hubbard townships in Minnesota (one in Polk County, population 83, and one in Hubbard County, population 786), they appear drawn to Albuquerque like moths to a flame. When Reelz held a recruiting fair for 100 positions Jan. 13, not quite 3,000 wannabes showed up, some standing in line for three hours. Most prospects, however, didn't bring the requisite HBI application forms, although they'd been told how to download the forms.
Reelz people graciously handed out the forms and even offered pens to fill them out. Such lack of sophistication among the potential workforce may be the only negative intrusion on an otherwise smooth start in New Mexico.
The Hubbards run Reelz their way, the Sinatra way, "my way" as it was. And usually they've been out ahead of events, this triumvirate of visionaries, even when the conventional wisdom was drifting in the opposite direction. In fact, there's one big test of Stanley Stub Hubbard's self-directed opinion coming up in the next few years. In an interview with R. Randall Padfield of Business Jet Traveler, published June 1, 2008, the senior Hubbard said:
"I’d back off on this global warming nonsense. It’s going to be very interesting to see Al Gore and his guys made fools of in five years. Actually, global warming is a very good thing, if it happens. The last time was between A.D. 1000 and 1350. There was less sickness and fewer hurricanes, and people prospered. The Canadians and Russians are worried about global cooling, because they’ve been watching sunspot activity, which is down."
In five years, despite global warming and/or cooling, the "relevant" question for the Hubbards will be: "Just how far has ReelzChannel® - TV About Movies™ network come in five years?" ###