Two approaches to affil pactsFox, affiliates agree on an inventory-buyback plan; ABC still dickering on football 7/14/2002 08:00:00 PM Eastern
Fox has induced a majority of its affiliates to renew an inventory-buyback plan that had been in place for the past three seasons. Under the plan, which took effect in 1999, the affiliates started paying a combined fee in the low $50 million range annually for prime time spots they had previously received without charge.
But, as network economics change, ABC and its affiliates, who met last week in Chicago, still haven't come to terms on a renewal of their "NFL-exclusivity" pact. For the past three seasons, that pact, which expires July 31, committed affiliates to help pay for football to the tune of about $45 million in cash along with some re-allocation of Saturday-morning and prime time inventory that helped ABC generate more revenue. In return, affiliates received a number of program-exclusivity guarantees, including a promise that the network would re-purpose no more than 25% of its prime time schedule.
The Fox plan has been particularly painful to mid- and smaller-market affiliate stations that were harder hit by the recession and Fox's ratings decline this past season. Consequently, those stations had a hard time selling spots, and the buyback plan forced many of them into the red.
Apparently, though, Fox felt their pain and has agreed to offer significant discounts to smaller- and mid-market stations, says John Tupper, chairman of the Fox Affiliate Advisory Board and owner of KNDX(TV) in the Minot-Bismarck-Dickinson, N.D., market.
Fox and ABC are taking different approaches to their negotiations. As it did in the last go-round, ABC is negotiating a template with the affiliate board that will be used to sign deals with individual groups and stations. But Fox has decided to go directly to stations to hammer out individual deals. "My sense is this represents a new level of flexibility being offered by Fox," said Tupper, who has come to terms for KNDX. Meredith, Cox and Clear Channel are also believed to have renewed buyback plans. Tribune has not but is currently negotiating with the network, sources say.
Meanwhile, at ABC, talks continue, and they are "positive, moving forward, but not complete," said ABC Television Network president Alex Wallau.
He confirmed that the network and the affiliates are also trying to fashion a mutually acceptable policy on the matter of assigning the network affiliation when affiliates are sold. That has been an issue in which stations have accused the network of holding up sales in order to get better terms in affiliate deals.
Wallau and ABC Affiliate Board Chairman Bruce Baker briefed reporters on the network's affiliate meeting last Wednesday and stressed that the NFL pact had not been intended to be a main discussion point at the meeting. Rather, said Wallau, the network's main agenda was to discuss with stations its plan for getting out of its prime time rut. Both executives described the overall tone of the meeting as positive.
One other ABC matter that needs to be resolved is the Jimmy Kimmel Show, set to debut in late night in January. It's an hour-long show, and therefore stations will be forking over a half-hour more to the network than they had been. Wallau says the network expects that the second half-hour won't be cleared very well in its first year. He said the network hopes to win stations over by producing a first-rate telecast.