Peace, love and affiliates

Throughout the history of the TV networks, local stations nationwide have formed the core of the network distribution system. And throughout that history, there have been divisive issues putting networks and affiliates at odds with each other.

But one statistic suggests that, despite the squabbling over such issues as the national television-station ownership cap, station owners truly believe that, though imperfect, the current system is going to remain in place for the foreseeable future: More than 85% of NBC's affiliates have recently renewed or extended their affiliation contracts through 2010 or longer.

"I think the relationship is terrific, I really do," says NBC Television President Randy Falco. "If you look back just a couple of years ago, there was a lot of uncertainty."

There was even talk that the networks would bypass stations and go to cable. Specifically, comments to that effect were made public by Disney head Michael Eisner and NBC Chairman Bob Wright, although Wright insisted recently that any comments he made on that subject were in response to a hypothetical question and not ever seriously contemplated by network brass.

Falco, too, says the idea of bypassing stations for cable was a notion that made for good headlines but wasn't discussed as a realistic scenario. "While I never fully believed that that would be the case, I think that there was some uncertainty among some station people. But we managed to get through all that and renegotiate deals, and we're together now."

Not that there aren't some issues outstanding.

The FCC still hasn't addressed the joint grievance of the Network Affiliated Stations Alliance (NASA) that alleges a number of rules violations on the part of the networks. Among the charges: that networks illegally restrict program preemptions by stations, that the nets are trying to encroach on digital spectrum, and that they unduly influence station sales.

Network executives believe the NASA petition is long on accusations and short on evidence. They say that most of the complaints are registered by a loud minority. But it's not just Cox and Post-Newsweek that support the NASA petition.

Others do as well, including some of NBC's other large affiliate groups. "It's irresponsible of the FCC not to have addressed the NASA petition a year after it was filed," said the head of one such group. "We need to know what the ground rules are."

Meanwhile, station executives are resigned to the fact that network compensation is going to gradually disappear. Sources say that NBC's total compensation payments will drop from approximately $260 million just a few years ago to about $70 million by 2006. Executives at the other networks say they have similar targets in mind.

Falco won't comment on the specific numbers. "Every deal is different," he says, adding that phasing out compensation has been the network's publicly stated goal.

What NBC is doing in many cases, sources say, is getting station groups to extend their current affiliate deals (which may have three or four years left) by another five or more years. At the same time, the network is persuading the groups to spread comp payments owed under the old contracts over the life of the extended deals. Perhaps the network adds a little extra payment, which could be looked at almost as interest for the right to spread the compensation payments over the longer term. But incremental comp dollars are minimal to nil.

And when the next big cycle of contract renewals starts some time after 2010, comp won't be an issue on the table. It just won't exist.