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CEO tries to build an audience and an advertising base for her small local television station.

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Can positioning yourself as the low-cost producer work in television broadcasting?

Down in New Orleans, the business community was surprised -- shocked, even -- when it heard that a new television station was preparing to set up shop. After all, the local economy was hurting; advertisers were few and far between. And the Big Easy had five commercial TV stations already, some of them barely managing to break even. Who was this New York City hotshot, the town elders asked themselves about WCCL-TV founder and chief executive Barbara Lamont, who thought she was going to move into New Orleans and carve herself a piece of its already shrinking pie?

Then came the crabs. There were hundreds of the little crawlers, fresh and gritty, straight from Lake Pontchartrain. Packed in cardboard boxes that were discreetly labeled "perishable -- open immediately," they were hand-delivered on a single day by WCCL's staffers to the heads of every single advertising and media-buying agency in the area. The locals took notice.

It was an unusual introduction to one of the most unusual entrepreneurs this city has seen in a long while. Lamont, 50, speaks seven languages, including Mandarin Chinese and Yiddish, and comes to TV-station ownership with a résumé that includes a stint as an international cabaret singer. She's insatiable when it comes to taking on new challenges. After 20 years as a successful broadcast journalist in New York City's high-profile radio and TV markets, Lamont led a team of 23 to Nigeria, where she managed the state-owned television network. A 1984 military coup sent her home via a tortuous northern escape route to the city of Kano, where she caught the midnight flight to Paris. Somewhere along the way she decided that it was time, finally, to think about going into business for herself.

But what a business she chose. Independent television stations, or "indies" -- stations unaffiliated with any of the three major networks -- have been on a roller-coaster ride since the early 1980s, when new owners and financiers started flocking in, convinced that an FCC license to build a TV station was a license, plain and simple, to print money. And for a while they were right. Thanks to investment tax credits, accelerated depreciation, and some of the other tax goodies available before 1986, backing a new station could be lucrative for investors -- even if ad revenues, the heart of TV-station viability, were sluggish or market shares small. Given those incentives, it's not surprising that the number of independent stations in the United States rose from about 250 in 1984 to some 400 today and now account for around 25% of all TV-station revenue. "The hard part was getting the FCC license. The rest used to be easy," says Lamont.

Not anymore. After tax reform wiped out those breaks for investors, indies were forced to become something more than a clever tax play. To attract needed capital they had to start making money the old-fashioned way -- by taking in more cash (in ad sales) than they spent (on overhead, transmission and selling costs, and program creation or purchase). All the new stations only made things tougher; increased competition for the syndicated reruns, movies, and original programs that indies buy for broadcast led to higher prices, sending programming costs ever upward.

Still, Lamont -- resettling stateside after her Nigerian escape -- saw an opportunity in operating as the low-cost TV station in a low-cost city. (She chose to apply for the New Orleans license instead of Tampa, the other available FCC slot, because its market seemed to be close to bottoming out, with plenty of real-estate and construction bargains available.) Her business plan concentrated on controlling fixed and operating expenses as the key to profitability, rather than the more typical industry approach of building audience share and subsequently raising advertising prices. It would be OK if her programming didn't bring the viewership other stations got; she wouldn't need as much ad revenue as they did to cover costs. "I decided to run my television station like a lean, mean radio station," Lamont declares.

Lamont's strategy focused at all times on building cash flow, which in the TV industry is seen as the ultimate indicator -- rather than net aftertax profits -- of a station's viability and market value. (It's worth noting that WCCL's cash-flow formula is controversial. Unlike most stations, WCCL considers program amortization a noncash expense, leading to a more attractive cash-flow figure than standard industry accounting would yield.) The reason for her focus: her goal is to sell most or all of WCCL-TV to investors after six years, for what she hopes will be between $27 million and $34 million, or 10 times projected cash flow -- about the multiple that TV stations currently fetch.

OPERATIONS: Barbara Lamont figured she was coming into the market at a good time. Most of her competitors were locked into the kind of longer-term, high-cost programming contracts that were popular in the mid-1980s. But she would be free to buy whatever shows came on the market cheap. In addition, New Orleans's economic problems gave her room to bid down her construction costs.

She wound up spending about $3.6 million on land as well as transmission and broadcast equipment -- a good price, thanks to bargains such as the state-of-the-art production equipment that she bought, slightly used, after it had been deployed at the Seoul Olympics. Lamont's offices, set up in an old glue factory in an industrial corner of the city, are equipped with furniture, computers, and even stationery that she bought at a bankruptcy auction.

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