Affiliates Fight for Slice of Platform Pie

When Fox began peddling episodes of Prison Break and 24 on iTunes last week, its affiliates didn't grumble. If anything, they celebrated. Under an agreement reached last month, Fox stations will get a cut of revenue from new digital deals.

That stands in contrast to ABC and NBC affiliates' experience. Those stations get nothing from their networks' iTunes agreements.

Such haves and have-nots are common among affiliate groups, as their networks scramble to make programming available on the Internet, mobile phones and video-on-demand. “Some people are walking with their partners, while others are not,” says Bill Hague, a TV-station consultant with Frank N. Magid Associates.

Here is a look at the current state of affairs for stations, relating to revenue stemming from alternative delivery.

The first to cut an iTunes deal, ABC is also testing free downloads of four hit shows and is considering revenue plans for stations. Just as ABC/Disney Networks chief Anne Sweeney addressed hostile broadcasters at NAB, network executives extended an olive branch to affiliates. Five stations (owned-and-operated KABC and four affiliates) are linking to the ABC download page and will promote the service on-air and online. If traffic proves significant, affiliates could make a case to share revenue.

“We are trying to help; affiliates can benefit down the road,” says Jan Wade, general manager of Young Broadcasting's WATE Knoxville, Tenn., one of the stations involved in the trial. “It's our job to make it as successful as possible.”

CBS affiliates' involvement is still a work in progress. Innertube is live with Web-exclusive shows, but the network needs a deal with its stations before it can stream its hit shows. CBS stations contribute to the NFL and NCAA basketball-tournament deals and, in turn, secured limited repurposing of current shows. To ease those restrictions, CBS will likely need to deal stations in. Talks should heat up in advance of the late-May affiliates meeting.

“I think there should be a marketing and promotional relationship that would be beneficial to both of us,” says Jim Goodman, president/CEO of Capitol Broadcasting, which owns CBS affiliate WRAL Raleigh-Durham, N.C.

Fox affiliates will receive 12%-25% of revenue from new digital distribution. In return, they agreed to phase out most limitations on repurposing shows and continue supporting the Fox NFL deal. Until usage climbs, however, stations' revenue will be modest.

On the agenda at this week's affiliates meeting are ways to co-promote new offerings. Some affiliates are also interested in streaming shows.

NBC and its affiliates plan to launch a co-owned site, dubbed the National Broadband Company (NBBC) later this year. The service will aggregate video from the 230 NBC affiliates, such as clips of sports, health and entertainment news. Plans could include user-contributed content and clips from NBC Universal's library. The video would likely be ad-supported, with the two sides sharing revenue.

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