Affiliates Picking Off More Network Spots
Networks making ad time available to partner stations in high-demand times is gaining steam—and cash
By Michael Malone -- Broadcasting & Cable, 11/28/2010 11:01:00 PM
ABC has since taken the ad exchange model with affiliates in dramatic new directions.
While hot-button issues such as reverse compensation and sharing retransmission consent cash continue to rankle some stations, the vast majority at the local level appreciated their networks’ efforts to maximize the stations’ taste of political cash this fall. And they are increasingly curious as to how the model might work during other parts of the year.
“I think it’s a great concept, and it’s worked out real well for us,” says Vincent Sadusky, who oversees a 32-station group as president/ CEO of LIN Media. “Any time the networks and affiliates come together like this, it’s a win-win.”
New Take on a Tested Concept
The concept of networks swapping or selling spots to affiliates is not new. But never before have the networks made such a powerful offering as they did prior to Election Day, with ABC, CBS and NBC all coming up with novel ways to wheel and deal commercial time with their affiliates as the big day drew nearer. ABC first offered affiliates six ad units in primetime in midand late October, then offered a second batch of spots in World News and prime in mid-November, the start of the holiday shopping season.
ABC and its affils will next attempt a “reverse exchange,” with the stations making some of their spots in shows such as The Middle and The Bachelor available to the network during the slower local sales period of early-to-mid-January. “The ABC Affiliate Board has received very positive feedback about the first two exchanges, when affiliates purchased additional inventory from the network,” ABC affiliates board chairman Bill Hoffman told stations in a memo. “We are hopeful you will look at this reverse exchange as a very welcome source of new revenue.”
Seeing the success ABC had with its inventory exchange, the NBC affiliates board engaged in conversations with the Peacock network about drawing up their version of the concept on the NBC stations’ air. The talks resulted in the affiliates being able to buy a 30-second spot each evening in Nightly News from Oct. 18 to Nov. 1. “We [saw] this as a great way to help our affiliates meet the demands of the marketplace,” NBC said in a statement. “It capitalizes on our long history of optimizing inventory to benefit both the stations and the network, and it builds on our many shared successes.”
An estimated two-thirds to three-quarters of the NBC affiliate body is said to have opted in for the spots in Brian Williams’ newscast. “The reaction from affiliates was really good,” says Brian Lawlor, NBC affiliates board chairman. “Our board members said they thought it was great—their stations were able to monetize it.”
NBC affiliates were also able to monetize a pair of spots in the pre- and post-game Sunday Night Football broadcast on Oct. 31. Both NBC and the affiliates board characterized the spots as a gift from the network.
CBS, which is enjoying an extraordinary primetime run that is delivering strong audiences to affiliates’ late newscasts, went with a different approach. Affiliates were given a spot swap, as opposed to being able to buy an ad unit—with the network giving up airtime in late October and taking equal time back after the elections in November. Unlike the exchanges at ABC and NBC, CBS affiliates were not given a choice about opting in.
Speaking at the B&C Onscreen Summit in late October, CBS Corp. President/CEO Leslie Moonves said his network frequently engaged in spot swaps with affiliates. “You go where the money is, where the best economics work out,” Moonves said. “There’s no hard and fast rule, but this was an opportunity for the affiliates to win, the O&Os to win and for the network to win.”
CBS swapped spots with affiliates in 60 Minutes during election season in years past. This fall’s offering included the 60 Minutes batch and 10 additional spots in a range of primetime shows, including The Mentalist. Most affiliates did well with the extra spots, said CBS affiliates board chairman Wayne Daugherty, though he wouldn’t mind board input— or at least an earlier heads-up from the network next time, “so we can plan for it a little better,” he said.
The Fox network, meanwhile, did not push a spot exchange for affiliates during election season, though the network has had its own “inventory buyback” program in place for years. Fox affiliates say they must purchase extra ad time as part of their affiliate contracts.
All four major networks of course have sizeable O&O station groups (though ABC’s stands to shrink from 10 outlets to 8 when a deal to sell WTVG Toledo and WJRT Flint is completed early next year). The networkowned station groups play critical roles in inventory exchanges, cluing the networks in as to when local demand may exceed national, and helping the networks establish pricing for local spots.
‘Exchange’ of Ideas
With the historic 2010 midterms in the rear view, it will be some time before political spending—and spending on local races in particular—heats up once again. But the networks and their affiliate bodies are exploring ways the inventory model could work during other times during the year, such as ABC’s exchange occurring the weeks of Nov. 15 and Nov. 22, ahead of the Black Friday kickoff of the holiday shopping season, and the reverseexchange program planned for January.
(Lawlor and Daugherty say there have been no discussions with their networks about making the ad exchange a two-way street, as ABC has done.)
ABC execs have said that high-wattage TV events, such as March’s Oscars telecast and June’s NBA Finals, are at least up for discussion if the affiliates can make a case that demand for local spots during these programs is running particularly high. Lawlor says conversations with the folks at 30 Rock about broadening NBC’s exchange program is ongoing. “This is the beginning of us having regular dialogue about the opportunity to expand it to other dayparts,” the NBC affiliates chief says. “Hopefully we can brainstorm new and different ways of doing business that allow us both to be better. If we can identify ways to increase cash flow for the affiliates and develop a revenue stream for the network, that’s really good for the relationship.”
Gluing the Model
The traditional network-affiliate model evolves daily, and some realists speak of it imploding at some point in the future, under the weight of such issues as excessive reverse comp. The inventory exchange model is evolving too, and could meet a similar fate if networks and affiliates don’t agree on the pricing or timing of such transactions. “The devil is in the details,” says one influential affiliate board member.
But concepts such as sharing retrans cash gleaned from pay-TV operators and buying, selling or swapping ad units to maximize their value appear to add a considerable amount of concrete to the decades-old network-affiliate foundation.
“It tightens the bond and strengthens the relationship between networks and their affiliate partners,” says Perry Sook, Nexstar Broadcasting Group chairman/CEO. “I think it’s a very good move.”
E-mail comments to email@example.com and follow him on Twitter: @StationBiz
No related content found.
No Top Articles
Digital Rapids provides market-leading software and hardware solutions, technology and expertise for transforming live and on-demand video to reach wider audiences on the latest viewing platforms more efficiently, more effectively and more profitably. Empowering applications from..more