Affils no longer feeling love

Local stations left out of corporate decisions

When Bob Iger and Steve Jobs announced their landmark deal to let viewers download ABC hits such as “Desperate Housewives,” the Alphabet didn’t even bother to give its hundreds of local stations a heads up.

Welcome to the life of a network affiliate, circa 2006.

On the surface, things still seem fine. At last week’s CBS affil confab, station reps partied like it was 1969, filling Las Vegas’ Bellagio Hotel with the sort of glad-handing and good spirits that might be expected for a No. 1 network.

But just as on Wisteria Lane, things aren’t always what they seem.

Not long ago, local stations were the only real outlet nets had to distribute their content. Now, it seems every day brings news of a t deal to put shows on platforms from iPods to cellphones — with affils lucky to get a taste of any resulting revenue.

What’s more, the days of affil compensation are all but over. Nets that used to pay stations to carry their shows now ask affils to essentially pay them to help offset the costs of sports rights deals, like the NFL packages owned by CBS and Fox.

Then there’s the FCC. It’s pushing stations to spend millions to covert to high-def ASAP, while at the same time stepping up its role as a watchdog against indecency and against video press releases masquerading as news.

And if you’re one of the hundreds of stations that spent years building brand equity as either a WB or UPN affil, guess what? You find yourself betting on risky start-ups CW and MyNetworkTV — or going it alone as an independent.

“Twenty years ago, it was a much easier business,” concedes Meredith Broadcasting’s Paul Karpowicz, whose group owns 14 stations.

But don’t break out the Kleenex for affils just yet.

For one thing, when the balance of power favored affils, “They squeezed the hell out of us,” remembers one veteran network warrior.

And after initially bitching about moves like ABC’s Apple deal — “disappointing and unsettling” is what the head of ABC’s affil board called it in a letter to the net right after the announcement — stations are beginning to wonder if new media might rep a new paradigm for network-affil relations.

In the past two months, Fox and NBC have both announced agreements with affils that lay the groundwork for revenue-sharing from digital platforms. Eye affil board topper Doreen Wade says she expects to present stations with a financial proposal that includes elements of new media “within a few weeks.”

As advertisers make more noise about spreading coin from nets to the ‘Net, station groups with outlets in multiple cities also see an opportunity to cash in by selling ads on their local Web sites.

Some stations are already letting viewers download specialized newscasts with customized advertising, while syndicators like Sony and Telepictures have recently announced deals to share coin from local station Webcasts of shows like “Two and a Half Men.”

“Control has shifted from the broadcasters to the consumers,” says Frank Schurz Jr., whose Indiana-based company owns eight stations spread across four networks. “They’re making the choices, and we’re going to have to respond to it.”

In other words, stations can complain about not getting a heads-up on a deal, or they can figure out ways to make money from new technologies.

CBS Corp. prexy-CEO Leslie Moonves says while things have undoubtedly grown tougher for affils, their pain is no greater than that of the whole TV biz.

“Most stations are still profitable,” he says, expressing confidence that nets and affils will figure out a way to bridge the digital divide.

“A lot of this stuff is five-months-old,” Moonves says.

Besides, Moonves argues, networks like CBS have a vested interest in keeping local stations happy.

“We own 40% of our affiliates,” he says. “Their problems are our problems.”

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