LAS VEGAS — CBS affils hope to come up with a proposal by next month on how to help cover the cost of the Eye’s pricey $6.2 billion NCAA basketball deal.
CBS has asked the stations to contribute almost $300 million to help pay the fee for the NCAA men’s basketball tournament. Net is in the midst of an 11-year deal that gives CBS exclusive rights to televise the tourney through 2014. Pact, one of the largest in televised sport history, was sealed in 1999.
Affils, gathered at Las Vegas’ Bellagio Hotel for day two of the annual CBS Affiliates Meeting, continued to engage the net over how much cash to cough up — and by what means, such as inventory exchange.
Stations also have had their usual round of requests, such as program exclusivity or the ability to preempt in primetime.
CBS execs first broached the subject of an affiliate contribution for the NCAA deal last year. Eye wants affils to contribute 5% of the cost of the contract, or about $27 million per year. Because the network made the request after already picking up the rights to March Madness, affils have taken their time examining how to respond.
Finding the right fit
“There are a number of configurations,” said Bob Lee, chairman of the CBS Affiliates Advisory Board and prexy-general manager at WDBJ Roanoke, Va. “We’re trying to find middle ground that makes sense for the network and the affiliates … . We haven’t been able to find a one-size-fits-all yet.”
That’s partly because the NCAA tourney is worth more in some markets than in others, particularly depending on which colleges play.
“There are different resolutions for what works for an affiliate in Amarillo and Albany,” he said.
CBS affils have helped the net defer the costs of sports rights before. The stations continue to help out on the Eye’s expensive NFL package in exchange for certain program exclusivity guarantees.
According to Lee, CBS and its affils may readdress the NFL agreement in September, when a window opens up for both sides to renegotiate.
Then there’s Les
Although the situation’s potentially contentious, Viacom prexy-chief operating officer Mel Karmazin diffused the tension by quipping that he may also need some extra cash to pay for CBS chairman-CEO Leslie Moonves’ new three-year contract with the net: “One aspect you won’t like,” he joked, “is once we get this NCAA thing cleared up, we need additional compensation for Leslie.”
CBS Sports chief Sean McManus also made a small plea to affils to help out during his presentation at the meeting earlier in the day.
“Time to time we will need the financial assistance of our affiliates,” McManus told station leaders. “We appreciate the support you’ve given us in the past and look forward to your support in the future.”
McManus didn’t say whether that may also include playing a role in the Eye’s bid for rights to carry the 2010 Winter and 2012 Summer Olympic Games. But he did say the net would ponder “what’s in the best interest for CBS and its affiliates before committing to any bids.”
“We’re analyzing it very carefully,” McManus said.
Should the net wind up with the Olympic Games — which is far from certain — CBS affiliate relations prexy Peter Schruth said the network would take a “most favored nations” approach to station contributions.
Schruth said he had a good understanding of what the other nets expect from their affils and that he’d ask for the same.
“We’ve got a general understanding that (the affils will) most likely participate at the same level as the other networks,” he said. “We’re amenable to discussing an exchange of value or contribution so our network will not be at a disadvantage. We don’t think at this point it’s needed.”
Lee said the affiliate body would listen to a pitch but that he didn’t see “anything in the pipeline that would require that approach.”
Beyond issues of affiliate contributions, CBS kept most of the day’s presentations lighthearted — including an early-morning perf by the Village People.
But the net also brought out the big guns — Karmazin and Senate Commerce Committee chief Billy Tauzin — Thursday to soothe affiliates agitated over the expected FCC rule changes.
Pending FCC changes
Karmazin said Viacom’s interest in relaxing ownership rules demonstrate the company’s investment in broadcasting — and its desire to expand those holdings.
“I know some of us are on different sides,” Karmazin said. “But it’s relevant to how much we love the TV business and how anxious we are to expand in the TV business. It’s an asset we feel good about.”
Tauzin (R-La.), meanwhile, made sure to address what he called “the elephant in the room.”
With the FCC poised to push further deregulation through the industry, Tauzin (speaking from Washington via satellite) essentially told affils that the rule changes were inevitable. In other words: Get over it.
“My best advice is to put this behind you quickly and pull ranks,” he said. “We’ve got much larger battles to fight than this fight about who owns what station.”
Perhaps hoping to soothe affil execs agitated over the expected changes, Tauzin said the FCC had no choice but to revisit its ownership rules.
“Any restriction on ownership has to be carefully justified or the courts will throw it out,” he contended. “The FCC is doing what they’re obliged to do. This is going to happen, and no one should think FCC is doing it on their own.”
The politico added that he thought it was “disheartening” that the webs and their affils were on opposite ends of the issue.
“I know this one is vexing because it does pit one against the other,” Tauzin said. “The truth is networks and affiliates must work closely together. Your real enemies are not within the room; your competitors are really outside the room.”
Separately, Karmazin said he believed the recent strong advertising upfront marketplace bodes well for the economy in 2004.
“This was the first opportunity for advertisers to make (it known) how 2004 might be,” he said. “The way the upfront is going, I feel good about the general economy.”
Karmazin said cable, syndication and local stations should also feel the positive effect of the gangbusters broadcast upfront. In particular, he said Viacom’s cable outlets had received their budgets from the ad agencies — and if the company wanted to, it could close its upfront “in an hour.”
But, he added, the cablers were still holding out for higher rates.
All of those issues aside, Lee said the two-day affils confab was “more a celebration than a slugfest.”
“CBS affils have a lot to be happy about right now,” he said.