CBS and its affiliate board have reached a critical stage in talks concerning annual payments by the stations to help the network pay for the NCAA men's basketball tournament, one of TV's most watched—and costly—annual events.
Talks are ongoing, but it appears that the stations will be hit with an annual tariff of between $12 million and $15 million—as much as $120 million over the remaining eight years of the contract—say affiliates. It could be even more, according to network sources.
The sources say that, if CBS can't reach an agreement within three weeks or so, it may walk away from the talks and work directly with individual station groups.
LIN TV Executive Vice President Paul Karpowicz is on the board committee and won't comment beyond suggesting the new deal has to be "a two-way street where there is value for both sides."
Months ago, CBS proposed that affiliates pony up $26 million a year to help pay for the 11-year $6 billion NCAA sports package. Now the talks have broadened to include an extension of the NFL exclusivity deal with affiliates and a cap on price increases for what CBS charges affiliates for its newsfeed service, NewsPath.
Also being discussed are format issues concerning The Early Show: Affils want added flexibility to cut to local more often during the show. Affiliates also want a commitment from CBS to negotiate new language in network affiliate contracts that details rights and obligations pertaining to the network's use of the digital spectrum.
Finally, affiliates want the network to promise not to ask for more support for programming in the future. "That I can confirm," said Bob Lee, chairman of the CBS affiliate board and president of WDBJ(TV) Roanoke-Lynchburg, Va.
It was CBS that first proposed extending the existing NFL/affiliates deal to 2006, which is when the network's rights deal with the NFL expires, as part of the ongoing talks about the NCAA basketball pact.
Affiliates were surprised by that proposal, says Lee, because, the station group contends that the NFL pact is "self-renewing" through 2006. "We think there is a fundamental misunderstanding on the network's part."
But other sources note that the NFL agreement has provisions that allow either side to trigger a renegotiation at the end of the current football season. It self-renews if neither side forces the issue. Affiliates say CBS so far has not pulled the trigger. CBS won't comment, and it remains unclear whether it intends to push for new terms.
What the affiliates particularly want to avoid, sources say, is changing the terms in the NFL agreement that give affiliates 110 or so 30-second spots per week and limit CBS's repurposing ability to five hours a week of prime time, only two hours of which can be on UPN.
CBS reportedly is now asking affiliates for less than the $26 million a year it had originally requested and is willing to give affiliates more ad inventory as a partial offset. Talks are focused on a cash payment minus the value of the spots, equaling an estimated $12 million to $15 million, affiliates say.
Where the inventory would come from is still being negotiated. Earlier the network offered spots in The CBS Evening News With Dan Rather, The Early Show
and Craig Kilborn. The affiliates pushed for prime time spots, and the network has agreed to investigate that idea. It has pulled the Evening News
offer from the table.