How Ion Media Scored for Investors by Bucking TV’s Conventional Wisdom

About 15 years ago, Ion Media chairman-CEO Brandon Burgess set out to play “Moneyball” with a group of TV stations that were on the verge of bankruptcy.  

He scored in the long run by following his own kind of algorithm, with a strategy that was counter to the business trends that are transforming the pay-TV marketplace. After inheriting a company saddled with nearly $3 billion in debt, Burgess this month completed the sale of Ion to E.W. Scripps Co. and Berkshire Hathaway for $2.7 billion.

“We were never the cool, sexy network, but we gave our investors a return of 28X on their capital,” says Burgess, who spent eight years as a top dealmaker at NBC before moving to Ion in late 2005. 

In Burgess’ view, the biggest factor in Ion Media’s turnaround was the discipline to resist the siren song of original content. While dozens of niche outlets began to invest in new scripted and unscripted production, Burgess studied the landscape and realized that Ion’s collection of 70-plus stations could not compete without a huge bankroll, which it definitely did not have. It was overspending on content that led the previous regime at the company, then called Paxson Communications, to become hobbled by debt.

When Burgess took over Paxson, the company was so cash-strapped that its stations served up only infomercials for about half the day.

Burgess was a big fan of “Moneyball,” the 2003 nonfiction book by Michael Lewis that chronicled how Oakland A’s manager Billy Beane used his analysis of player stats and math to build a powerhouse squad without paying sky-high star salaries. Burgess made his management team read the book.

The TV spin on “Moneyball” was to study ratings. It’s no secret that the most plentiful audience in TV is older adults, particularly women. What do older women watch? Procedural crime dramas and movie thrillers consistently rank high on the list. Burgess focused on acquiring syndicated reruns that would fit the bill: “Criminal Minds,” “Law & Order: SVU,” “NCIS: Los Angeles,” “Blue Bloods” and “Hawaii 5-0.” Instead of chasing elusive younger viewers, Ion would be happy with drawing a crowd in the 25-54 age range and beyond.

Targeting older viewers with reruns to drive a business model entirely dependent on advertising is pretty much the opposite of the vision for most other sizable television players. That’s why it worked. 

“As no one else was systematically focused on this strategy, Ion was able to run the table and corner the market for top-quality syndicated crime dramas,” Burgess says. “And studios were thrilled to license those to us because Ion paid good cold cash for the shows.”

When Burgess first took over Paxson in late 2005, he tried to persuade Warner Bros. to merge with the station group to provide a backbone for its WB Network. But he didn’t know then that WB Network and UPN were already down the road on their own merger, which begat The CW. That drove Burgess to double down on his focus to keep overhead extremely low. Ion stations are programmed 24/7 by reruns and operated from a central hub in West Palm Beach, Fla. 

More recently, when Ion began pursuing a sale again, the slimmed-down Fox Corp. was seen as a logical contender because it would have given it leverage with many of the network’s affiliate station owners. But amid the upheaval of the pandemic, the most aggressive suitor turned out to be Scripps, with an assist from one of the world’s most renowned investors, Berkshire Hathaway’s Warren Buffett. 

Ion stations were early into the field of multicasting because it owned so many stations and because Burgess was intent on experimenting after the nation’s digital transition took effect in mid-2009. The infrastructure that Ion built out in its Florida facilities was a big draw for Scripps, which has invested in multicast niche nets including Bounce, Grit, Laff and Court TV Mystery.

Ion prospered by respecting its natural limits. Burgess thinks the company was helped by being headquartered far outside New York or Los Angeles.

“It never would have worked if my owners had been Hollywood experts,” Burgess says. “We did the opposite of what everyone told us to do.”

(Pictured top: “Law & Order: SVU”) 

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