Stations Fight Back Across the Board - Broadcasting & Cable

Stations Fight Back Across the Board

The NBC shakeup—and recent retrans battles—prove affiliates still have plenty of clout
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The NBC affiliates could stand a bit taller when their board members strolled into 30 Rock Jan. 21 for their annual face-to-face with the network. While NBC had been saying it could live with The Jay Leno Show's middling ratings, the affiliates said they could not, and famously pressured the executives in charge to make the change. If mom-and-pop stations at times feel powerless before the almighty network, chalk this one up for the little guys.

Representing the affiliates in New York late last week, board chairman Michael Fiorile said the recent face-off with the network hadn't caused any fissures in the relationship; if anything, the network-affiliate pact is stronger than ever. “We had a great relationship throughout launching the show, working with the network on its construction, producing it, the inventory,” he said. “We voiced our concern that it wasn't working, and the network made a quick decision....The relationship was good before, but it's never been better.”

Anxiety over the viability of the decades-old network-affiliate relationship had been mounting, with many wondering when the networks would opt to bypass affiliated stations entirely and reach customers directly through cable, the Web, smartphones and perhaps even Apple's anticipated tablet—a concern compounded when the cable giant Comcast announced its intent to buy a majority piece of NBC Universal in December. As recently as October, CBS affiliates board chairman Timothy Busch identified the long-term health of the network-affiliate relationship near the top of his body's concern list, if not the top item itself.

Yet some recent affiliate stands, including the NBC group's with the 10 p.m. hour and the subsequent pushback from a number of Fox affiliates when presented with the potential prospect of Conan O'Brien shifting to their late-night air (general managers at Fox stations privately say they want big concessions from the network before disrupting their late-fringe shows), seem to suggest that the stations still wield considerable clout.

“It seems as if affiliates are an emboldened group right now,” says Frank N. Magid Senior VP Bill Hague. “NBC's late-night dustup, retrans fees and stations' efforts to build mobile video have their interests more in sync. It all points to the affiliates having some juice.”

CONSOLIDATING THEIR POWER

A stronger economic outlook has also invigorated the local television community. After the unprecedented economic slump of the past few years, station general managers are almost unanimous in saying that the fiscal picture within their shops has improved dramatically. All-vital automotive advertising is on track again, and the midterm election season is increasingly looking more like a presidential election season, with the candidates spending like sailors on shore leave.

“The broadcast model has rebounded very nicely,” says Meredith Local Media Group President Paul Karpowicz. “The last few years were an aberration. We're going to be fine.”

Even Comcast's entry into the broadcast world, deemed by some a harbinger of doom for over-the-air television, ended up eliciting just the reassurance many on the broadcast side needed to hear. Presenting its case for the acquisition to the FCC, the cable colossus said rumors of spinning off the network or its owned stations were bogus, and that it remained committed to not only preserving local programming, but actually expanding “access to local news, public affairs, politics, sports, entertainment and weather.”

And while the hot-button issue of retransmission consent has increasingly pitted affiliate against network, with some station group bosses publicly chafing at the notion of sharing retrans spoils, it's also made the two sides partners in the battle with cable, satellite and telco television. Affiliates and networks each offer the viewer something the other don't—a street-level local newscast, and high-value primetime fare like The Mentalist, respectively. Both parties know the value proposition to viewers would suffer dramatically if either half of the package were cut out.

Increasingly, the partners in broadcast—dysfunctional as they may be—look to walk in lockstep. “If you're in bed together on retrans, you're in it for the long haul,” says one CBS affiliate manager. “It behooves us all to work together on all sorts of things.”

But if stations are to give the networks a cut of the retrans cash they fought for, they want a bigger say in the business matters that affect them, such as how much they're kicking in for top-shelf sports packages. “Stations are saying, if we're sharing our retrans, you're going to give us some equities that we haven't gotten in the past,” says SmithGeiger Senior VP Mark Toney.

Not everyone is convinced that any ground was won amidst the recent developments in the great network-affiliate tug of war. Some privately wonder if NBC in fact used the affiliate pressure as cover to pull the plug on the failing Leno experiment. The network's owned stations were, after all, losing late news viewers—and revenue—due to Leno at the same clip as its affiliates. NBC's affiliates board has inquired about the stations programming the 10 p.m. slot on their own, and has been shot down by the network.

“It's a football game—the Jets score, then the Colts score,” says one broadcast veteran of the perpetual push and pull between networks and affiliates. “I don't feel like any of these victories are permanent.”

A PARTNERSHIP, NOT A POWER SHIFT

Others feel strongly that both sides have to stop keeping score against each other and work together on bigger-picture issues, such as the increased competition for eyeballs from the likes of iPhones and Xboxes, and encroachment on their spectrum in Washington.

“It's unfortunate to look at it as a power shift, as opposed to an ongoing partnership,” Karpowicz says. “The reality is, we need each other. It's been a very good model for a lot of years—let's not screw it up.”

That was the sentiment at the NBC affiliates board meeting last week. While both the network and affiliate sides typically show a united front when the meeting wraps, the negotiations at 30 Rock seemed genuinely positive for both parties. Perhaps the affiliates group had earned a little more respect in recent weeks.

“We're proud of our distribution system and the great job the affiliates do on an everyday basis,” said NBC TV Network and Media Works President John Eck. “It's a symbiotic relationship—it's got to work hand in hand for us and for them.”

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