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FOX TO AFFILS: SPEND

Fox TV chairman-CEO Chase Carey threw down the gauntlet to Fox affiliates at its annual confab (June 22-23), saying that the weblet will continue to invest in programming but that much is expected from stations in return.

“As we continue to invest in building the network, we need you to make investments to address your individual weaknesses, whether it’s upgrading facilities to over-come weaker signals, launching local news or improving promotion and marketing,” Carey said.

Carey reiterated the network’s desire for all affiliates to get a news presence.

“Your stations are not just local outlets with old reruns. Too many of our stations still have no news at all…. We need all of you to invest in first-rate news.”

Carey also singled out stations in non-Nielsen-metered markets for not delivering as strong an audience as the metered stations.

According to Carey, Fox’s share of the 18-49 audience dropped 25% in non-metered markets while figures for the other three networks rose. Some smaller-market affils said the blame should fall on Nielsen, not the stations. They said Nielsen doesn’t do a good enough job in measuring the typical Fox viewer in smaller markets.

Fox, Carey said, is entering Phase Two of its development. He said the weblet should become the market leader in three years.

In order to do that, he said, primetime programming must continue to improve, hockey has to become a franchise and the weblet’s return to latenight must be successful.

Carey also reiterated the network’s commitment to sports. Look for Fox to go after the next two Olympic games – and to go after baseball, which will be available next year.

While the numbers for hockey aren’t strong, Carey and other Fox execs told affiliates to stick with it. Fox execs reminded affiliates that NHL ratings are up 51% from what ABC averaged last year.

Affiliates, Carey said, need to be willing to make the sacrifices for long-term gains, as Fox has.

“We have certainly carried the lion’s share of the burden. We made the $1.6 billion investment in football. We went more than $50 million in the hole until the kids business turned around. And whatever the cost of the NHL is to you, I assure you that our investment is a multiple of yours.”

There is a payoff for stations willing to invest. Carey said Fox is willing to enter into long-term affiliation agreements with stations that are “prepared to make the substantial investments necessary to build their station to No. 1 and have the resources and resolve to do so.” Affiliates, still reeling from Fox’s efforts to upgrade its distribution system, welcome longer-term deals.

While Carey’s speech was no love letter, it was met with respect from affiliates. “He drew a line in the sand,” one affil said. Most agreed that Fox has shown it’s willing to spend to get to the top and the affiliates need to make that same commitment.

Fox affiliates were also promised a cash return on the Fox Children’s Network in the neighborhood of $48 million starting next May.

FCN president Margaret Loesch delivered the good (and in the eyes of some station operators, overdue) news saying that affiliates would begin receiving checks no later than May, with the $48 million total to have been handed out by August ’97.

The size of those checks will be predicated on the number of kid viewers delivered by each station.

In addition, Fox’s payments will extend to stations that have lost or will lose their Fox affiliation through next June. Those “departing,” as Fox put it, before the break-even point is reached will receive a minimum one year’s worth of profit-sharing, while those shifting after that point will potentially receive more. The formula was worked out in concert with the affiliates board.

According to Loesch, FCN – the top-rated children’s network for more than two years – will finally turn a profit during the coming season.

Affiliates may still harbor some skepticism about the FCN payouts. Stations were supposed to garner cash from Fox’s retransmission consent deal that launched basic cable network FX, but those returns were ultimately kept by Fox to offset the $1.58 billion paid for rights to NFL football.

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