Countdown Begins on the Great Network-Affiliate Divorce


The blogosphere has been abuzz about that potential day down the road when networks no longer need affiliates, and affiliates no longer need networks, since the eye-opening Wall Street Journal story on the topic came out.

TVSpy guy Erik Sorenson takes the ball a little further with a post on his Remote Control blog. Interesting stuff.

There is growing chatter about one or more of the major networks shifting popular first-run programming from traditional over-the-air stations to cable channels with their dual revenue streams. When it happens, it will make NBC’s decision to strip Leno at 10pm and ABC’s decision to sell shows on iTunes seem like child’s play.Why would it be good for the networks? Well, do the math. Figure ratings would drop 15-25% due to smaller paid-than-free audience, viewer confusion, and diluted marketing efforts. Figure CPM’s might also take a haircut, though that’s less certain. The ad sales guys at the network would have to scramble to hold advertising revenues at 75% of current levels. But the network bosses could tighten the screws at the negotiating table with Time Warner, Comcast, Verizon, DirecTV, and the others to more than make up for the shortfall with higher affiliate revenues. And affiliate revenues are much more consistent and renewable than advertising, especially in a recession (not to mention a depression.)

Knowing it would infuriate station affiliates, why would they do it? First off, no one is naive enough anymore to think that the networks really care much about their affiliate stations, right? Good, I didn’t think so. Secondly, it’s actually already begun. NBC put “Friday Night Lights” on DirecTV last fall with the repeats getting fed out to stations on Friday nights this winter. Why not launch an episode of “30 Rock” on USA or BRAVO and then feed the repeat to stations days, weeks or months later? (This could also further marginalize the already reeling syndication business, but that’s another blog for another day.)

But don’t the networks care about their O&O stations which will obviously be affected just like the affiliates they don’t own? Uh - in a word - no. Ask around if you don’t believe me. Ask a friend working at any O&O whether she thinks her network gives a hoot about her station. You will get an earful. Iger, Zucker and Moonves have heard the infamous sucking sound and it’s coming from the revenue side of their stations’ balance sheets. That’s what they care about.
Is it as bad for station groups as it sounds? Well, there is always a silver lining although it’s difficult to muster in this scenario. For one thing, stations in question will get back a lot of prime-time ad inventory. Instead of just a few minutes per hour for local ads, stations would control 100% of that prime real estate. And to the extent stations might be saddled with low-rated dog programming there’s further relief. Furthermore, I’m guessing that networks would leave news and sports programming on their “affiliates” - so there’s that. But I agree, this sounds rationalizing - and it is.

What’s a station group to do? I’m sure a lot of group chiefs feel like Dave Letterman’s mother right about now: “I do and do and do for you, and this is the thanks I get?” Well, here’s a thought. Do it to them before they do it to you. Knowing that this is coming, now might be a good time to jump ship - or start jumping ship. Find a mother network that isn’t as likely to kick her chicks out of the nest (Fox?) Or, dump your current network and declare independence with an aggressive local news attack mixed with syndicated programming. Finally - if all that’s too risky because you believe you need whatever crumbs your network will throw you - then at least have the temerity to preempt more aggressively. Bottom line: since you can’t count on the home network to drive your identity in the future you have to make sure you’re independently branded with sufficient resources to stand on your own two feet when that fateful day arrives. It will be here sooner than you think.