Rebel station groups say they won't defray costs
NEW YORK — CBS faces an open rebellion from some affiliates that say they won’t give the network a dime to help pay for its $4 billion package of NFL rights.
CBS affiliates also accused their own board of betraying their interests in negotiations with CBS about whether or not they should help foot its National Football League bill.
As a result, CBS will have more difficulty than it realized collecting NFL contributions from some of its affiliate stations owners, especially in markets that don’t have an American Football Conference team.
CBS affiliate station group owners such as New York-based Young Broadcasting and Irvine-based Freedom Broadcasting said they will resist any effort by the network to recoup its costs, whether in the form of cash payments or givebacks of ad time.
Executives from these station groups said Howard Kennedy, chairman of the CBS affiliate board and general manager of KMTV Omaha, Neb., exaggerated to CBS the affiliates’ willingness to pay the network additional funds for the NFL.
“This hick from Omaha, Howard Kennedy, who gets blown away by sitting down to lunch at ’21’ with CBS executives, said that the affiliates would help CBS shoulder some of the costs of the NFL rights,” said Vincent Young, chairman of Young Broadcasting. Young said that some of the stations on the board were surprised at Kennedy’s boldness.
“Based on the enthusiasm of the affiliate board chairman, the network may well have gotten an impression that is not accurate,” said Alan Bell, president of Freedom Broadcasting. “We do not support the statement made by the affiliate board that we are ready to help.”
Several members of the CBS affiliate board informed Kennedy of their station groups’ opposition to paying CBS during a conference call Tuesday morning.
“We’re concerned that some affiliates feel that the board has sold them out. We haven’t and we have no intention of doing so,” said one CBS affiliate board member, who declined to speak for attribution.
While Bell is against paying CBS cash or ad avails, he said he was willing to consider the possibility. Young flatly declared his company wouldn’t pay CBS anything.
“There is no agreement by the CBS affiliates to give the network anything back, and I have no intention of doing so,” said Young.
Peter Schruth, senior VP and G.M., CBS affiliate relations, characterized Young as one in a vocal minority of affils opposed to helping the network pay for its expensive NFL deal.
“Mr. Young has been voluminously quoted as to his stated unwillingness to pay for football,” said Schruth. “We have multiples of Vincent Young who have expressed their willingness to pay, because they understand the new era of economics. The stations make money and the network does not make money.”
Schruth sent a letter to all 192 CBS affiliates on Feb. 28 informing them that each station is expected to pay an equal percentage of its net income from football. The exact percentage has not yet been calculated.
Schruth said the network has budgeted receiving $40 million to $49 million, or 8% to 10% of CBS’ yearly NFL bill, in total from its stations. He added that the network is seeking all cash and not ad avails.
If affiliates refuse to pay CBS, there’s a difference of opinion about whether the network can force the issue.
Bell said CBS does not have any recourse because of the affiliate contracts.
“Once you have the long-term contract, there’s not a lot CBS can do on a mandatory basis,” said Bell.
One member of the affiliate board said it is unlikely CBS would be willing to risk alienating affiliates to pay for the NFL “unless they are willing to make a Laurence Tisch-type move and cancel all the existing affiliate contracts,” said the board member.
He added: “There was so much ill will last time that I’d think they’d want to avoid that.”
CBS’ Schruth, however, took a different view. “We do have recourse,” he said, but he declined to elaborate.
One senior executive at a competing network that is also wrangling with its affiliates over NFL contributions said there are plenty of ways for networks to pressure stations.
“Networks can do numerous things to piss off affiliates that are still legal,” said the executive. For example, “networks can run movies over into local news. It drives the affiliates crazy.”
Affiliate board chairman Kennedy attributed the fracas between himself and some CBS stations to affiliates changing their positions on paying CBS for the NFL.
“We committed to supporting CBS’ efforts, but suddenly there was a hue and cry that the board doesn’t have the power to commit,” said Kennedy. “I did what I thought we had to do, but some people aren’t seeing it that way.”
(John Dempsey contributed to this story.)