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Networks, Affiliates Solidify Spot-Swap Strategy

Super PACs, candidates may spend $3B on TV, and everyone wants their piece 10/01/2012 01:22:22 PM Eastern

The crush of 2012 political ad spending,
forecasted to be as much as $3 billion by Kantar/ CMAG, has compelled TV networks
and their partner stations to modify the spot-swapping concepts that helped
enrich both in the 2010 midterm elections. At the fore is ABC, which two years
ago debuted its Inventory Exchange System, designed to make the most of demand
for spots around election time and boffo shopping days such as Black Friday.
With Rebecca Campbell, president of ABC's owned stations, playing a key role,
ABC and its affiliates have expanded the mutually popular concept as this
election season heats up.

As part of ABC's Local Political Avails (LPA) model,
stations in high-demand political markets that find their inventory sold out
prior to Nov. 6 can request up to 40 additional 30-second avails from the
network, to be used solely for political spots, which would then "cover" a
network promo. "The use of network positions is only permitted when a station's
normal local inventory is completely unavailable because of prior sale," ABC
said in a memo to affiliates.

While affiliates of any network rarely get a free lunch, ABC
actually gives away the extra spots-both as a boost to its owned stations, and
as what affiliate leadership sees as a goodwill gesture.

The latest chapter of ABC's inventory exchange saw
affiliates offered a package of 22 primetime and 98 nonprimetime spots at
market price. The whole of the affiliate body decides on the offer, which
"triggers" if enough opt in. One slated for this fall did indeed trigger.

"The ABC Inventory Exchange System is another example of how
the affiliates, owned stations and the network are working together to find
innovative ways to collectively generate more revenue," Dave Boylan, ABC
affiliates board chairman and VP/general manager of WPLG Miami, said in an
email. "In the past few years, we have all come up with some very strategic
ways to exchange commercial inventory that respond to the demand cycles of both
the network and local stations."

CBS also is preparing for the crush of local political
spots. Starting four weeks out from Election Day, affiliates get one spot from
the network each night in primetime. They have from Election Day until the end
of the year to return the prime spots to the network.

"It's a very good deal for affiliates, particularly those
guys in swing states," said Chris Cornelius, CBS affiliates board chairman and
president and COO of Barrington Broadcasting.

The four weeks' worth of nightly spots is an expansion from
the two weeks CBS offered during the 2010 election season.

One key difference between the CBS and ABC deals is that the
CBS arrangement is all-in for affiliates, as opposed to a station being free to
choose. Cornelius says the majority are in a position to benefit. "Some don't
need it," he said, "but generally there's not a lot of discord about this
deal."

NBC affiliates say the network has not yet approached them
about unit trading leading up to Election Day, though some said those emails
usually arrive in October.

Jordan Wertlieb, NBC affiliates board chairman, and NBC both
declined to comment.

NBC does partake in creative spot-swapping outside of
election season, including its "9 for Prime" arrangement, in which affiliates
have the option to trade nine non-prime avails for a single primetime spot. The
network is also giving affiliates a 60-second window-for news, not spots-coming
out of the first commercial pod in NBC's Election Night coverage. "Please use
these minutes for your own coverage of important local and state races," said
an NBC memo to affiliates.

Fox, meanwhile, is in a different boat because its
affiliates often do not have the full slate of local news that political ad
buyers desire. "This hasn't been on our radar screen like it has been for the
Big Three," said Steve Pruett, Fox affiliates board chairman and CEO of ComCorp
of America.

Fox does have a spot-dealing program in place for NFL games,
where affiliates can purchase extra avails, then share the revenue with the
network.

The network and its affiliate leadership will see how the
various strategies go down at ABC and CBS, perhaps introducing their own model
the next time politicians, and Super PACs, start spending like parolees on
payday.

"As the Fox affiliates add more news, the topic will
certainly rise," said Pruett. "I think it makes sense."

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