CBS topper Michael Jordan told Eye web affiliates Thursday that the traditional network-affiliate business partnership is “undergoing dramatic change,” but he promised that CBS would pursue those changes in a “synergistic” way with its affils.
“The broadcast industry is at a crossroads,” Jordan, chairman and CEO of CBS Corp., told affils gathered in Los Angeles this week for the web’s annual spring affiliates meeting. “Our business proposition (with affils) will change and evolve over the next two to three to five years,” he said.
Jordan’s remarks echoed assertions made last week by NBC execs during the Peacock web’s spring affiliate confab. NBC has proposed to its affils a ground-breaking overhaul of the decades-old system in which the Big Three webs pay stations for carrying blocks of their programming.
NBC has suggested phasing out affiliate compensation payments at 10% per year over a 10-year period, with those payments going instead to a venture capital fund that the web and its affils would jointly control. NBC’s 25-page blueprint for the future drew a chilly reception last week from most affils, which have long-term affiliation contracts that would have to be amended to accommodate the new plan.
CBS, like NBC, forks over about $150 million to $200 million per year in comp payments to its 200-plus affils. Jordan offered no specifics regarding the nature of the changes ahead for the Eye web. Instead, he pledged that “however the process unfolds, it will be done in a cooperative, consultative and joint problem-solving way.”
Jordan added that the network’s primary interest is in maintaining a strong affiliate body, but he also cited recent Wall Street analysts’ projections that the Big Four networks would generate essentially zero profit off $12 billion in advertising revenue next season.
“We know that the strength of our financial future in the TV business is at the local market level,” he said. “But we face (increased) competition for viewers from a dramatically eroded profit base. Even though advertisers recognize the value of network television (to reach a mass audience), that erosion has put a crimp on our revenue growth. … But I’m confident that working together we can make this a win-win situation” for both the web and the affils.
Afterward, several CBS affils said they weren’t sure what to make of Jordan’s vague remarks. One station group chief said Jordan “seemed to be going out of his way to try to soften the blow down the road when they start asking us for money.”