The surprise decision to fold netlets The WB and UPN and create a new network could open up some real estate for syndicated programmers. That was the buzz from the syndication community in Las Vegas for the NATPE programming convention.
The merged entity will be launched in fall 2006, with each company owning 50% of a new network, dubbed The CW.
Popular shows from each net will morph into the new net; losers won’t.
The combination of Tribune’s 16 stations and CBS’ 12 UPN stations will give the network an immediate 48% coverage of the U.S., including 20 of the top 25 markets.
Wall Street analysts were putting out calls to try and find out what effect the move could have on the value of the stations that no longer will be UPN or WB affiliates.
That cloud of uncertainty for some station owners could have a big silver lining for program distributors.
Syndicators were still trying to process the move, but were generally buoyed by the news since stations that lose network affiliations will be in need of programming and create a pool of pure independent stations once again. But executives from some of the affected stations were more plainly stunned because they don’t know if they have to buy programming to fill prime time hours or not: Said one executive," We still have to figure out how stations will be left stranded here on Gilligan’s Island."
Some speculators were suggesting that in markets where there will have to be "conversations" between stations and the new network about who gets to keep the affiliation, there could be a bidding process involving reverse compensation to the network.
It already looked like a good thing for Twentieth Television. Executives there say they have already been "flooded" with calls from stations asking about Desire, the new five-day-a-week syndicated telenovela set to debut this June.
With the only major, first-run prime time program at NATPE, Twentieth is scrambling to figure out its strategy. The show is currently cleared in 65% of the country.
Dawn Ostroff, President of UPN, will be president of entertainment for The CW, while John Maatta, COO of The WB, will be COO. Programming, marketing, scheduling, publicity and research report to Ostroff, while Maatta will be responsible for business operations, network distribution, legal, finance and human resources.
Bill Morningstar, The WB’s Executive VP, advertising sales, will become the head of sales, reporting to Maatta.
Tribune WB stations and CBS’s UPN affiliates signed a 10-year affiliation agreement. Tribune will not have an equity interest in the new network (it had a 22.5% stake in The WB).
The rest of the affiliations are described as a "combination of selected current UPN and The WB stations." That will mean some orphans when the nets combine in non-Tribune or CBS markets with an affiliate of each.
Paramount Domestic Television President John Nogawski said that there has been an immediate impact on syndication sales and that Paramount has been trying to convince impacted stations to double and triple run programming already on their air rather than make expensive new program acquisitions.
License fees were already on the rise within hours of the announcement. Nogawski said that if the announcement had been made six days ago, there would probably have been even more demand given that more GM’s would have headed to NATPE. Some of those would have been from third stations in a market looking to lock up programming now that there will be a new show-hungry competitor.
The newly independent stations could also prompt a competition between Fox and Tribune for the off-net sitcom, Two and a Half Men, which is coming into the market now for fall 2007.
Scott Carlin, HBO’s president of domestic TV distribution, also raised the possibility that there could be a window of opportunity for some small ad-hoc networks.
There was some speculation among syndicators that Fox might create a Fox II network with repurposed programming from the mothership, to give the newly orphaned UPN stations it owns some programing, at least in the short term.
In a briefing for analysts and the press (see story, next page), Dennis FitzSimons, Tribune Co. chairman and chief executive, noted that nine of UPN’s stations are owned by News Corp. He also wondered if Fox could use that platform of defunct UPN channels to launch another network, or if "another programming service will come into the market." Fox owns nine UPN channels in key markets—New York, Los Angeles, Chicago, Washington, Houston, Minneapolis, Phoenix, Orlando and Baltimore.
FitzSimons said the UPN and WB merger "came about quickly, over the last two weeks. It was the right time. It made sense."
Just last week, WB network Chairman Garth Ancier played down rumors of the network’s possible demise, saying: "It’s too important to the studio and too important to the stations to not go forward. The network is very sustainable, but just like with other networks, it is a very challenging time." But it now appears that Ancier and WB entertainment president David Janollari will have no role at the new merged network.
The 16 Tribune stations committing to the new net are in New York, Los Angeles, Chicago, Boston, Dallas, Washington, Houston, Miami, Denver, St. Louis, Portland, Indianapolis, San Diego, Hartford, New Orleans and Albany, N.Y. The CBS markets are Philadelphia, San Francisco, Atlanta, Detroit, Tampa, Seattle, Sacramento, Pittsburgh, West Palm Beach, Norfolk, Oklahoma City and Providence, R.I.
Other than Tribune and CBS markets, the CW’s affiliations must still play out.
Sinclair Broadcasting and other mid-level station groups that lose their WB affiliations will be in need of a large amount of programming, Sinclair has 18 WB stations and owns or operates a half dozen UPN outlets. Sinclair owns both the WB and UPN stations in four markets: Birmingham, Milwaukee, Nashville, and Raleigh. So far, it’s known that in four other Sinclair markets, the CW affiliation will go to Tribune or CBS (Tampa, Pittsburgh, Norfolk, and Oklahoma City), leaving Sinclair with at least eight stations that will have no affiliation. Still, Sinclair will likely get the CW affiliation in the majority of its markets.
Though neither UPN nor The WB have big ratings, the merger seemed to be a way for Time Warner, under pressure from investor Carl Icahn and in the midst of belt-tightening, to throw in the towel. Likewise, The Tribune Co. has been slashing budgets and personnel. Getting out from under the 22% ownership stake it has in The WB while still getting fresh programming from the new CW channel is a win-win proposition.
CBS Corp., the new carve-out of Viacom, was supposed to be a slow but steady investment. Instead, the merger with The WB is a bold stroke that could pump up ratings and profits.
"This new network will serve the public with high-quality programming and maintain our ongoing commitment to our diverse audience," said CBS President/CEO Leslie Moonves. "The CW will be able to draw from the creative talent and production resources from the top two television production studios in the business, while also seeking programming from all sources -- independent producers or other studios." (Moonves' memo to staffers is on bcbeat.com.)
The new network will mirror The WB in its structure, with six nights of programming and a total of 13 hours of prime time fare a 30 hours of programming total per week, with shows Monday-Friday 8-10, Sunday 5-10, as well as an afternoon block Monday-Friday, 3-5, and a five-hour, Saturday animation block. Popular shows will remain, including UPN’s Everybody Hates Chris, Veronica Mars, WWE Smackdown, America’s Next Top Model and Girlfriends. WB shows that will stick around include Gilmore Girls, Beauty and The Geek, Supernatural, Smallville and Reba.
According to a CBS source, the move triggers no FCC issues--it involves no stations--though courtesy calls were placed with the commissioners to brief them on the deal. There will be Hart Scott Rodino review by the Justice Department. "We expect some questions," said the source, but no problems.--Jim Benson, Ben Grossman, Allison Romano, and PJ Bednarski contributed to this story.