Fox Broadcasting Co. has revised its retransmission consent plan to win the support of its affiliates, in the process dangling a big, bright carrot before stations by offering them five-year affiliation agreements in exchange for cooperation on the matter.
Fox also pledged: not to use the Fox name in any way in connection with the basic cable service (which it will create as part of its retransmission consent end-run deal with Tele-Communications Inc.); to delay the broadcast of any Fox Broadcasting program at least two years before it airs on the cable channel; and to carve out two hours, from noon to 2 p.m., for local programming on the basic service.
After wrangling throughout the weekend, and receiving the various concessions , Fox’s affiliate board unanimously endorsed the outline — still being dubbed “a work in progress”– urging affiliates to adopt the agreement and work with Fox to extend the plan throughout the cable industry.
At a press conference Thursday, Fox Broadcasting chairman Lucie Salhany and affiliate board chief Gregg Filandrinos agreed that the response to the changes had been “very positive.”
The initial Fox-TCI deal called for Fox to provide the multiple-system operator with a basic cable channel for which the weblet would receive 25 cents per subscriber each month, with 7.5 cents going to affiliates based on the number of subscribers in their broadcast area.
As an alternative, Fox is offering affils 5 cents, plus a 25% equity stake in the service, divided based on market size.
Revisions detailed to stations at Fox’s twice-annual affiliates convention by senior VP Preston Padden included the extended affiliation deals — securing, he said, “longer term, bankable Fox affiliation agreements”– and the two local hours on the cable service, allowing stations to insert up to four local promos each day for their early fringe programming block in addition to nine minutes per hour for local advertising sales.
Fox had previously engaged in two-year affiliation deals, and Padden admitted that the term probably wouldn’t have been expanded had Fox not been seeking to gain approval of the TCI arrangement.
Filandrinos, general manager of Fox’s St. Louis station KDNL, said Fox ultimately “agreed to everything we wanted” and that he felt most stations would embrace the proposal.
How cable systems will feel about the local time provision remains at issue. Padden acknowledged that the only substantive talks thus far have been with TCI, which he said welcomed the prospect of generating additional local product.
Affiliates, who voiced concerns about the cable service competing with their programming, also seemed to accept Fox’s contention that it would be significantly less prominent than Fox Broadcasting, which, Padden noted, will spend $ 500 million on original programming next year compared to $ 100 million for the still-unnamed cable venture.
“If by not launching this new channel, we could assure that we and you would face no new competition (from cable), then this question would make a lot of sense,” Padden said.
He added that the reality is broadcasters are “powerless” to prevent the spread of new services, but the cable channel will be “competitive by cable standards, (but) will not pose a threat to our audiences.”
The plan would also ensure existing VHF channel placement for Fox stations and maintain 100% of existing cable carriage, including markets where affiliates overlap on the same cable system. That matter could be resolved by placing out-of-market stations on less desirable dial positions.
Webs follow suit
The proposed Fox-TCI arrangement has led to similar strategies on the part of the other networks, such as ABC, which is floating the idea of a second ESPN all-sports channel that would receive a monthly subscriber fee in lieu of direct retransmission payments (Daily Variety, June 3).
However, the other webs are hitting stumbling blocks on certain suggestions, such as all-news channels, which would compete with CNN and local cable news services. Only about 35 Fox stations currently have news departments, however, and while they may offer news updates there are no plans for local news within the two-hour cable block.
Fox will hold workshops on the retransmission issue with affiliates today and urged them not to accept must-carry deals even though the cable pact won’t be officially worked out prior to the FCC’s June 17 deadline for stations to declare which route they’ll pursue. Fox said its owned-and-operated stations will opt for must-carry only on small cable systems on the fringe of their markets.
Stations will be free under the Fox-TCI structured agreement to negotiate for their own second channels on cable within their market, provided that it doesn’t interfere with the Fox plan.