Looks to offset costs of new contract
ORLANDO, Fla. — ABC is trying to convince its affiliates to accept a plan in which the stations would pay the network roughly $30 million to help ABC offset the cost of its new expensive NFL contract, but it was unclear if a deal would be done by the end of this week’s annual affiliate meeting here.
ABC affiliate sources said that ABC’s proposal was similar to the one CBS affiliates agreed to last week at the CBS affiliate meeting in Las Angeles.
In addition to soliciting money to partially cover its NFL rights fees, ABC is also seeking permission to reuse ABC network programming through other outlets, such the cable outlets it owns or digital channels it has in the works.
ABC affiliates refer to this issue as exclusivity and ABC network president Preston Padden refers to it as “repurposing.”
“Your network must find ways to get more value out of our program content,” said Padden.
One station group executive with ABC stations said that sticking points in the talks were how soon ABC could reuse network programming after it airs on the network and how much financial benefit the affiliates would get out of repurposing the shows.
“We built the value of these shows by exhibiting them,” said an affiliate source. “We deserve to share in the upside when runs elsewhere.”
On the repurposing issue, Padden said, “We’d like to find ways for [affiliates] to participate. We will proceed slowly and cautiously.”
ABC owns ESPN, half of Lifetime and one third of A&E and The History Channel. In addition, the network will soon launch a digital feed, which can be used to create several “multicast” channels of programming.
All four major broadcast networks are trying to alter their relationships with their affiliate stations to help the networks cover escalating programming costs that are occurring in a time of decreasing ratings.
Last week CBS cut a deal with its affiliates under which the stations will pay the network about $50 million, the equivalent of 10% of CBS’ $500 million per year NFL deal. CBS affiliates will pay the network partly in cash and the rest through a complex swap of advertising time.
Two weeks ago, NBC offered its affiliates an ambitious plan under which the stations would gradually give up their compensation to a network-affiliate joint venture company that would invest in assets related to the TV business. The plan is still under consideration.
At ABC’s affiliate meeting, Padden acknowledged the network’s poor ratings performance in his opening speech.
“We are not satisfied with our ratings performance in primetime,” said Padden.
He also said that the affiliates and the network need not be at each other’s throats during the process of ABC soliciting NFL contributions from its stations.
“The traditional network business model is under tremendous strain,” said Padden, echoing sentiments expressed by his boss, ABC Inc. president Robert Iger, at the recent NAB convention. “Change is inevitable, but conflict is avoidable. Contrary to any notion out there of us abandoning you, our goal is to build a deeper partnership.”
Despite the prospect of having to cough up funds to ABC to pay for the NFL and the network losing viewers, ABC affiliates at the meeting were generally upbeat.
“We recognize the need to focus on a new paradigm,” said David Barrett, executive VP and COO for Hearst-Argyle and the chairman of the ABC affiliate board. “We have differences but there are smart resolutions. This should be an exciting time for us. We shouldn’t come here and just feel down about the ratings.”
ABC made several announcements at the affiliate conference Tuesday.
General Motors will be ABC’s sponsor in marketing the network’s new fall primetime schedule, said Alan Cohen, ABC’s executive VP, marketing. The primetime promotional campaign will include a giveaway of 200 Oldsmobile Alero, one to be given away in each market.
Cohen said that the ad campaign to promote ABC’s new lineup will reach 95% of the adults 18-49 in the United States. The campaign will include traditional advertising, such as radio and print ads, and non-traditional advertising, such as 30 million stickers on bananas in supermarkets.
Cohen also said that Kraft has signed on again to promote ABC’s “Disney’s One Saturday Morning” lineup. In February and March 1999, Kraft will plug ABC’s Saturday morning kids shows on 100 million packaged goods.
“Disney’s One Saturday Morning” will also align for the second year with Toys “R” Us to promote the children’s shows with a toy sweepstakes.
ABC also announced the appointment of Mike Benson to the position of senior VP, advertising & promotion for ABC Entertainment. Benson was senior VP, promotion & program planning for VH1/MTV Networks. In his new position, Benson will oversee the design and implementation of all paid media and on-air promotion to support ABC’s primetime and late-night lineup.
In the public service area, ABC announced it formed a partnership with The Advertising Council to support the network’s Children First public service campaign.