News Articles

Fast Track

2/23/2007 07:00:00 PM Eastern

'TMZ' Show Cleared In 80% of the U.S.

By Jim Benson

Clearance levels for a daily series named TMZ, after the popular Time Warner-owned
celebrity-gossip Website, have jumped from 45% to more than 80% of the country.
That makes it a “go” for this fall.

Warner Bros. Domestic Television Distribution (WBDTD) started selling
Telepictures Prods.' magazine show TMZ to
stations at last month's National Association of Television Program
Executives (NATPE) conference.

Geared to younger men and women, unlike other, older-skewing,
female-slanted magazine shows, TMZ has
landed two-year, double-run deals in the 4 p.m.-midnight time period on
stations belonging to Sinclair, Tribune, Cox, McGraw-Hill, LIN, Clear Channel,
Media General, Meredith, Cascade, ACME, Raycom and Landmark. Fox stations
constituted the initial launch group.

Along with the strong time periods, the syndicator is believed to have
gotten reasonably good license fees for the magazine program, which at the high
end can cost north of $1 million per week to produce and distribute.

But if TMZ follows the same course
as others in the genre, Warner Bros. will likely see red ink in the early
years, despite controlling three of 14 commercial spots per half-hour episode.

The company is gambling on the series' attracting strong ratings,
which could lead to a hugely profitable franchise through higher station
license fees in future renewal deals and the negotiation of higher national
barter advertising rates.

The late sales launch for the high-profile TMZ
came after prolonged negotiations with the Fox station group, which
was looking for news-friendly programming. Warner Bros. designed the project
specifically for the Fox stations, since the rival Tribune stations were out of
the picture after acquiring Two and a Half Men
and Family Guy reruns.

Warner Bros. also sought to create a show that could enhance
stations' Web presence and play well on Fox, CW and MyNetworkTV affiliates.
Another target is any of the Big Four broadcast-network affiliates seeking to
boost their third-ranked newscasts.

To appeal to stations' desire for younger demos, Warner Bros.
describes TMZ as having “fast-paced”
video segments, breaking celebrity news and recurring behind-the-scenes
features. Buyers will also gain access to an exclusive TMZ.com module crafted
for their Websites, which can also be used as a free local newsfeed.

WBDTD President Ken Werner says the studio has received positive
feedback on the project, which he calls “an integrated, multiplatform content
and marketing play that combines the strengths of stations with the
Internet.”

XM-Sirius Deal Faces Serious Hurdles in D.C.

The House Judiciary Committee's new antitrust task force wasted no
time putting the proposed XM/Sirius merger under the microscope.

Headed by consolidation critic John Conyers (D-Mich.), the task force
has scheduled a Feb. 28 hearing, at which Sirius CEO Mel Karmazin is scheduled
to make the case that the meld will enhance, not impede, competition and
innovation in satellite radio.

After months of speculation and several years of battling for
satellite radio subscribers, XM and Sirius have made it clear they think they
are better off together. Now the only question is whether the Justice
Department and the Federal Communications Commission agree.

The two companies last week said they planned to combine their
services to create a $13 billion company with 14 million subs—and about $1.6
billion in debt—run by Karmazin as CEO, with XM Chairman Gary Parsons keeping
that title. Odd man out is XM CEO Hugh Panero. But that scenario relies on the
government's allowing the two companies to merge.

The FCC already has a rule on the books that says one company cannot
hold the satellite licenses of both XM and Sirius, but rules can be changed.
FCC Chairman Kevin Martin has said he is willing to consider the deal with
fresh eyes and has frequently championed looking at a host of competitors in a
market in gauging broadcast competition.

But Martin also pointed to the existing prohibition last week, noting,
“The companies would need to demonstrate that consumers would clearly be
better off with both more choice and affordable prices.”

XM and Sirius were trying to help make that case, saying that the
merger would enable them to provide more services and lower-priced equipment.
They also argued that satellite radio is simply one of a number of
“audio-entertainment” competitors, which include broadcast, cable, Internet
radio and mobile wireless services.

The companies also said they could offer more services à la
carte. Some in the sports community were reading the à la carte
suggestion as a signal that the combined companies might spin off their sports
programming—NASCAR, Major League Baseball—in separate tiers.

“In coming weeks, policymakers will have to weigh whether an
industry that makes Howard Stern its poster child should be rewarded with a
monopoly platform for offensive programming,” says NAB spokesman Dennis
Wharton. “We're hopeful that this anti-consumer proposal will be
rejected.”

Bert Foer, president of the American Antitrust Institute, said it is
not an “automatic replay” of debate over whether EchoStar and DirecTV could
be allowed to merge, calling satellite radio a new industry. “Competition
certainly does exist,” he says, “but is it so substantial that it can
assure satellite pricing will be competitive” particularly since the main
competitor is free.—John Eggerton

CBS Demands–And Gets–Cash

Retrans deals could mean $6 million for the company

By Michael Malone

CBS Corp. has reached retransmission-consent agreements with nine
cable operators, covering more than a million subscribers. The deals cover
analog, digital, multicast and high-definition rights to CBS programming.

CBS had sought 50¢ a subscriber in past dealings with cable
operators and Verizon FiOS. A source familiar with the negotiations suggested
that the new CBS deals are close to that figure, spelling a $6 million take for
the company. Several Wall Street analysts said none of the deals were for less
than 50¢ a sub and some were for more.

That may explain why none of the cable operators wanted to be
identified in the press release announcing the deals. Time Warner Cable,
Comcast and Cox are not among the nine top-25 operators included in the new
deals, which cover primarily midsize systems.

The retrans issue has picked up steam of late. Station group Northwest
Broadcasting Corp. battled with Time Warner over retrans recently, while
Sinclair faced off with cable operator Mediacom earlier this month.

The American Cable Association, which represents midsized systems, has
complained that broadcasters are getting an unfair advantage in retrans deals,
saying its members wind up paying more than big operators like Time Warner.

CBS Corp. President/CEO Leslie Moonves, who has long pushed for
retransmission payments, hinted at future battles. "Clearly, there is a new
paradigm in the marketplace—one that recognizes the value of the content that
we bring to our various audiences," he said. "This is a trend that bodes well
for us going forward as future retransmission deals are negotiated."

Last March, Moonves told Wall Street that CBS will eventually get
"hundreds of millions of dollars" from retrans deals as more cable systems
start paying for its marquee programming.

A CBS Corp. spokesperson acknowledged that more showdowns will
follow.

Additional reporting by John Eggerton

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