Time Warner’s WB Network is looking to take more control of its distribution – either through backing broadcasters in acquiring new stations or acquiring its own stations outright.
Although Time Warner’s massive cable holdings make buying TV stations complex, the company has had recent acquisition and partnership talks with group owners. (FCC rules prohibit ownership of cable and broadcast outlets in the same markets.)
Earlier this year, WB encouraged its affiliates to apply at the FCC for the last remaining broadcast spectrum for new stations. Although it was ultimately unnecessary, the company was willing to assist its affiliates in filing for the stations and, down the road, in building new outlets. Rival netlet UPN took a similar course toward FCC applications for new channels.
WB execs anticipate problems in the top-100 markets. Beyond that, the netlet is counting on its local cable station group, called the WeB, to fill gaps where no broadcast affiliate is available.
‘Filling in gaps’
One prominent TV station broker confirmed that Time Warner was looking for stations, but he said the search was focused only on “filling in some gaps” in the WB network station lineup, rather than on any major station groups.
A WB spokesman said it is “no secret that one of the top priorities at the WB is to continue to upgrade our distribution system.” In the top 100 markets where the netlet has no affiliates, the spokesman added, “We are pursuing a myriad of opportunities.”
A Time Warner spokesman declined to comment, and people close to the company said the entertainment giant is unlikely to be planning to spend any significant amount of money, given its commitment to reducing its $17 billion debt and its focus on restructuring its cable holdings.
There are no signs that Time Warner is close to agreeing on a restructuring deal with telco partner US West, whose execs told investors at a recent presentation that it was happy with the current structure of the Time Warner Entertainment partnership – owner of Warner Bros., HBO and most of Time Warner Cable. Time Warner wants to spin off the cable systems to US West, although the two sides have to agree on the pricing and precise structure of the deal.
Not only does Time Warner face internal and regulatory hurdles on the broadcast front; sometimes the agendas of various Warner Bros. divisions clash.
No deal with Silver King
That most recently was the case when the WB entered talks with Barry Diller’s Silver King. According to sources familiar with the talks, Silver King was willing to sell the WB an option to buy its Baltimore station WSHW for about $20 million. Although the WB already has an affiliate in Baltimore, WNUV, it wanted a station it had more control over.
The deal was very complex. Besides the Baltimore option that Time Warner could either exercise itself or sell to a “WB-friendly” broadcaster, Silver King was also talking to the netlet about Chicago. There, the WB affiliate is Tribune-owned superstation WGN. Although Tribune has an ownership stake in the WB, its heavy sports load sometimes means preemptions for the netlet. Silver King was willing to carry some of WGN’s sports on its Chicago station, WEHS.
In return, Silver King wanted guaranteed carriage, or must-carry, on the Time Warner cable systems in New York and Tampa as well as carriage for its Home Shopping Network. Silver King, sources said, was not looking for any sweetheart deal and was willing to pay Time Warner for carriage of HSN as part of the WB deal.
But although the deal would have been a boon to the WB, sources said Time Warner Cable wouldn’t play ball and the deal fell apart. A Time Warner Cable spokesman couldn’t be reached for comment.
The Baltimore aspects of the deal could still come to fruition. Although without carriage for Silver King and HSN on Time Warner Cable, Diller may decide to hold on to the station there and just affiliate with the WB.