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CBS after inventory from affils

Apr 2, 2001  •  Post A Comment

CBS may want its affiliates to pony up local ad inventory to the network.

That’s the word from Viacom President and Chief Operating Officer Mel Karmazin as he struggles to redefine the network/affiliate relationship. Viacom owns CBS and UPN. Last week Mr. Karmazin said he needs to find a “new paradigm” in dealing with affiliates. Speaking at a luncheon of the Hollywood Radio and Television Society at the Beverly Wilshire Hotel on March 28, Mr. Karmazin said the network provides a lot of premium programming for affiliates, and, “It’s illogical that there is an expense item on our books that says that we are going to pay them to carry that programming.”

Asked later what the parameters of this “new paradigm” are, Mr. Karmazin told Electronic Media, “I don’t have a preconceived idea about it. I’m open to new ideas. It doesn’t have to be money, necessarily. Maybe inventory. All I know is that the relationship has got be more positively skewed in favor of the network, and it’s not now.”“I think that’s remarkable that he’d say that,” responded Alan Frank, president of the Post-Newsweek Stations. The company has two CBS affiliates, and Mr. Frank is also chairman of the Network Affiliated Stations Alliance. NASA recently filed a petition with the Federal Communications Commission to investigate allegations of network abuse (EM, March 12).

“I think a remark like that, suggesting that we might give the network back more inventory, just shows how out of touch

Mel is with the situation,” Mr. Frank said. “The networks have been adding inventory and time periods for years, at the expense of the stations. It reminds me of something Larry Tisch would have said.”

A comparison of Mr. Karmazin to former CBS Chairman Larry Tisch was also made by Alan Bell, president of Freedom Broadcasting, owner of five CBS affiliates. “Whereas Larry was greedy and stupid, Mel is greedy and smart. Whatever differences I have with Mel, I like and respect him. Unlike Larry, he knows our business, the business of stations. What Mel must really know in his heart of hearts is that the network/affiliate relationship is out of balance in all respects, not just at the network level.”

There’s an old Chinese saying, Mr. Bell noted, “When you put your foot in the river, your foot is never the same. But neither is the river. So when you examine a network/affiliate relationship that’s out of balance, you have to look at all its facets, because it’s all interconnected.”

What’s been missing for a long time from most network/affiliate interactions, Mr. Bell said, “is the component of intelligence on the network side.”

He said he’s cautiously optimistic about the CBS/affiliate relationship “because there’s no question that Mel’s a smart guy. He might lack patience and be short-tempered, but he’s smart.”

As for Mr. Karmazin’s suggestion that affiliates might need to give CBS more ad inventory, Mr. Bell said, “Anything is negotiable.”

Reacting to the NASA filing, Mr. Bell said, “That’s what you get when you scare affiliates. This is a power struggle that’s been going on for years.” He said this kind of petition has been filed before, in 1941, 1957 and 1977. “Each time, whether it’s involved radio or television, it’s about the rights of affiliates vs. the rights of networks. And the issue will never go away, because of the disparity of the size between the two groups. And right now it’s really the station cap that affiliates most care about.”

Emmis Communications Chairman Jeff Smulyan agrees that “nobody is making it in this relationship as it’s now structured.” Emmis owns one CBS affiliate, KOIN-TV in Portland, Ore. “We’re all feeling the pinch,” he added.

But Mr. Smulyan has long held the belief that the networks and affiliates need to stop sniping at one another. “The real culprit is that most of the American public is paying for programming, but it’s all going to cable, though most of the viewing is of the local affiliates.”

During his HRTS comments, Mr. Karmazin spoke about the FCC granting a waiver for Tribune Co. to be exempt from cross-ownership rules in its recent acquisition of the Los Angeles Times, though it also owns WB affiliate KTLA-TV in the nation’s second-ranked market. He used it as an example to argue for lifting the 35 percent national ownership cap on TV stations. CBS’s merger with Paramount Stations Group has the combined station holdings at 41 percent coverage and faces divestitures and swapping of TV stations to be in compliance.

While suggesting that such CBS affiliate group owners as Gannett Broadcasting and Cox Broadcasting are looking for the cross-ownership caps to be lifted, Mr. Karmazin said it appears somewhat “incongruous” for those same groups to fight the broadcast networks’ lobbying for a lifting of the station ownership caps. Even though the FCC had recently voted against currently seeking a proposal to lift the caps, Viacom has filed with the courts seeking legal relief on the issue.

Addressing the subject of the NASA petition at the FCC, he said its aim was “seeking to prevent” CBS’s efforts to get the courts to hear its case for deregulation.

Mr. Karmazin also advocated that the FCC lift the ownership cap and said he is hopeful the FCC will grant Viacom a permanent waiver of dual-network ownership of CBS and UPN, the latter of which he said the company would be forced to shut down if it didn’t get permanent relief.

He said he would be open to offering Fox an equity stake in UPN if it meant keeping the network viable. Fox owns UPN’s affiliates in the top four markets, which it acquired from Chris-Craft/United Television for $5 billion.

Furthermore, the Viacom topper said that while the other networks have canceled their May or June affiliate meetings (some in favor of individual regional meetings), CBS is the only network planning to hold the traditional confab at the end of May in Las Vegas.

Referring to the affiliate meeting, Mr. Karmazin said, “Our affiliates may be working off 30 [percent] to 50 percent [profit] margins, while our [broadcast] network operations work with higher overhead and thinner margins, but we’re still paying for them to suck up our shrimp.”