NBC, Affiliates Iron Out Blanket Retrans Deal

Steve Burke: "A thoughtful and beneficial way of working together"
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NBC and its affiliates have worked out the framework of an arrangement that would see the network handle retransmission consent negotiations with subscription-TV providers on behalf of its partner stations. The bulk of the pact, which has been worked on off and on for the past two years, was ironed out at the affiliate board meeting May 16 in New York, the day of NBC's upfront presentation.

The "proxy" deal would be optional for affiliates. NBC called it "another step toward further solidifying the partnership" between the network and its affiliates.

Affiliates that opt in would hand over "proxy rights" to retrans negotiations to the network. NBC affiliates board chairman Brian Lawlor described it as a one of a kind arrangement. in broadcast television "It's a brand new kind of deal," he said following the upfront presentation. "It completely changes the network-affiliate model."

Indeed, a network's blanket deal with affiliates regarding retrans has often proven elusive. Such a deal bedeviled Fox and its affiliates board several months ago, and set the course for at times bitter negotiations between the network and its affiliates regarding the splitting of retrans cash as part of affiliation agreements. Last week, Fox announced it was parting ways with two affiliates, the divorce stemming from unmet retrans demands.

Fox is demanding affiliates come up with specific payment amounts per pay-TV subscriber, which escalate each year. A critical difference with the NBC deal is that NBC wants a percentage of affiliates' retrans earnings, as opposed to demanding a particular dollar amount, such as 25 cents per subscriber. Some NBC affiliates called it a more advantageous arrangement for them.

Some Univision affiliates say they've enjoyed a blanket deal with the network for a few years. Univision said the network does not discuss its agreements.

In a statement, NBCUniversal CEO Steve Burke said, "The proxy concept we are working on as partners is a thoughtful and beneficial way of working together on retransmission consent."

Lawlor, former NBC affiliates chairman Michael Fiorile, and Gannett Broadcasting President Dave Lougee have been instrumental in working out the framework with NBC.

Lawlor said there would need to be around 80% buy in from the affiliates for the concept to fly. He would not divulge around what percentage of stations' retrans would go to the network, but said affiliates would likely share around the same percentage. Anecdotally, he says the reaction from the local folks has been positive. "We've had good conversations, and people are intrigued by the concept and intrigued by the innovation of the idea," says Lawlor, who heads up the Scripps TV group. "They see it as a true partnership."

Multiple major figures on the NBC affiliate side, asked about the proxy retrans concept following NBC's upfront presentation at the New York Hilton, spoke favorably about it. They did not choose to comment publicly, preferring that Lawlor speak on their behalf.

In a statement, NBC said:

"The network and affiliates are continuing to work together on innovative ways to align our businesses, and in that spirit we are currently working out the specifics of an agreement to have the network handle retransmission consent negotiations for station groups that opt in. The successful completion of this arrangement would be a win for the NBC broadcast network and NBC local stations, both of whom need to develop additional revenue streams to offset the high cost of producing local and national programming and news. It would be a win for the network-affiliate partnership to have the split between partners be amicably negotiated. And it would be a win for both distributors and consumers because it would produce fewer negotiations where conflict can result in programming going off the air."

The Comcast-NBC merger was approved in January. Comcast had pledged that it would be solely responsible for negotiating retrans deals with NBC-affiliated stations, and that NBC would have no input on the buy side of that equation. It does not prevent NBC from bargaining on behalf of its stations with Comcast, the nation's largest cable operator.

Though a number of cable operators have told the FCC they think that such collective bargaining violates the "good faith" requirement the FCC is empowered to enforce, that is a general policy debate rather than one tied to a specific merger condition on the deal.

The FCC said in its Comcast/NBCU order that its decision did not limit actions "that are in the ordinary course of their independent negotiations and/or relationships and that do not tie together network affiliation and retransmission consent negotiations."

NBC entertainment chairman Bob Greenblatt presented the new batch of programs to affiliates and media buyers May 16, and many on the affiliate side saluted the new leadership, including Greenblatt, Burke and NBC Broadcasting Chairman Ted Harbert, for having a long-term plan to shake up NBC's long somnambulant prime.

"We saw a long-term strategy," said Lawlor, "designed to return the network to its heyday."

John Eggerton contributed to this report

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