Fox turns tail

At affiliate meeting, it apologizes for a dismal year that Carey confesses did not 'live up to our expectations'

It was only last summer that FOX executives extracted a three-year, $175 million reverse-compensation pact from their affiliate body. The groundbreaking deal placed new economic pressures on station owners and basically showed who was calling the shots in the network-affiliate relationship.

Oh, how things have changed.

FOX Television Chairman and CEO Chase Carey, who headed the network's efforts a year ago in changing the money flow between the two sides, was apologizing to Fox's 170 or so affiliates last week at Fox's annual summer affiliate meetings in Scottsdale, Ariz.

And he was also extending an olive branch, in the form of lowered affiliate fees.

The concession was a dollars-and-cents acknowledgement of Fox's less than excellent prime time adventure in the past season.

"The bottom line is that FOX has tried to deal with the changes in network economics, while also keeping an eye toward retaining our competitive advantages," Carey told affiliates. "We have tried to approach issues directly and fairly. I am certain we have handled some things better and individual market-to-market inequities may have emerged. For that I do apologize."

Carey confessed, "Realistically we did not have a year that lived up to our expectations and we have listened and talked to our affiliates. We recognize that, in any relationship, there has to be a spirit of give and take and clearly we have a partnership here. This is a way to say we recognize that."

Affiliates paid a total of $50 million in their first year of the reverse-compensation deal, and were due to pay a 10% increase this year. Waiving the increase helps smaller-market FOX affiliates, many of which have struggled financially through the first-year of the compensation deal.

"I think its going to help out a lot because it was unexpected," said Linda Gray, of WXIN-TV Indianapolis and vice chair of Fox's affiliate board. "We had asked them not to impose the increase, and we pretty much thought the answer was no. They didn't have to do that, and it was really appreciated."

Don't expect anymore Mr. Nice Guy attitudes from FOX, though. "We certainly plan on having a better year, and this is not a longer-term statement," Carey said bluntly. "This was for this year."

On another key issue-the sluggish FOX Kids daytime programming lineup-network executives created a subcommittee to "explore" various options. At the previous affiliates meeting, FOX said it would "revisit" the children's business in January 2001 if things had not changed dramatically. Some affiliates want to get out of the competitive daytime children's arena, where cable networks such as Nickelodeon are grabbing the majority of the advertising dollars.

"I think the important thing here is that, rather than the FOX network folks going off in a corner and trying to think of something that will please the stations, we are making this a collaborative effort which makes a lot more sense," says Maureen Smith, general manager, FOX Kids Network.

"It really speaks to the whole partnership nature of this thing. Technically, we could say we're sorry and walk away from this thing. But our partners here on the affiliate side are struggling on the weekdays. Hopefully, we can work together to find a solution that we can all embrace."

FOX executives also said they still are not ready to openly discuss where the network will be going in terms of digital broadcasting. Again Carey apologized, noting, "I think in some ways we probably have not done enough to move the ball with affiliates, and I think we will in the coming months."

He promised to have more solid digital plans in September when the affiliates meet again.

The affiliate meeting was a coming-out party for Fox's new programming-executive lineup, headed by Sandy Grushow, who now oversees both 20th Century FOX Television and the FOX network. Over the past few weeks, Grushow has hired a new programming team, including Entertainment President Gail Berman, who developed FOX hit Malcom in the Middle.

"I think we liked what we saw, and I have a lot of confidence that this team can restore us to the position that we are accustomed to," said Cullie Tarleton, the chairman of the FOX affiliate board and senior vice president of television and cable at Bahakel Communications.

As for Berman's first public appearance as the network entertainment president, she says she can handle the programming chores, but the speaking engagements are another thing. "The affiliates were fantastic," she joked. "It was the Teleprompter that I had to battle with.It was my first Teleprompter experience, which I'm now happy to report is over."