Sinclair, ABC Agree on License Fees for Affiliates

Affiliation deal done after several extensions

By Michael Malone -- Broadcasting & Cable, 3/26/2010 11:06:34 AM

Sinclair Broadcast Group has come to terms with ABC for renewal agreements for Sinclair's nine ABC affiliates. The agreements are good through August 2015 and involve Sinclair paying a license fee to the network to help cover the cost of programming.

Sinclair and ABC had pushed back agreement deadlines several times as the two parties negotiated a new deal; the initial deadline was the end of 2009.

"We believe the length of this new term continues to demonstrate the robust viability of the network/affiliate model," said Sinclair President/CEO David Smith. "The agreement will benefit our local market viewers by continuing to provide popular programming and will help us to more quickly realize the value our programming, including ABC programming, brings to multi-channel video program distributors."

Sinclair Executive VP/General Counsel Barry Faber said the broadcaster realizes it has to share programming costs with the network. "Although the agreement includes a license fee, based in part on retransmission consent revenue, we believe that the pass through to the networks of a reasonable portion of the fees that broadcasters receive is a necessary and appropriate way to make sure that the networks continue to be able to provide the most popular programming on television," he said. "Over time, we expect that the fees paid by multi-channel video program distributors to acquire content will be reallocated so that the payments they make more closely correlate with the popularity of programming.

"As a result," Faber continued, "the fees paid to broadcasters are likely to increase to more appropriate levels, which will allow affiliates to share these fees with the networks in a measured manner, while the local stations continue to benefit from this dual revenue stream."

Sinclair said it does not expect the terms of the new agreement to negatively impact the 2010 expense guidance provided in its Feb. 17 earnings release, which had anticipated such amount.