Affils Slighted by Big 3’s VOD Deals

Nov 14, 2005  •  Post A Comment

Information, please.

That’s what affiliates still need from their respective networks about the agreements that have been announced in the past month to distribute once network-exclusive hits on cable, satellite or Web-based platforms. Without more information, local stations are in the dark as they try to figure out what’s in-or what’s agin’-’em in each of the repurposing deals.

Until the networks give their affiliates at least a clue about such things as effective length of the deals, whether or not further rollouts and ramp-ups are built into the deals and what the starting revenue splits, if any, look like, the affiliates don’t know whether to feel (a) excited, (b) threatened, (c) forgotten or (d) all of the above.

A month after ABC scored barrels of media ink for being the first network to announce its groundbreaking VOD deal under which Apple iPod users are able to download, commercial-free, such shows as “Lost” and “Desperate Housewives,” affiliates still are angry. They still have not been briefed on the deal except as to why the network feels the Apple deal does not violate prior agreements with them. In these prior agreements, ABC affiliates agreed to share the cost of NFL license fees, while ABC agreed to, among other things, cap repurposing of prime-time programs at 25 percent.

CBS has similar repurposing deals with its affiliates. Last week CBS announced it would make available four shows-intact with commercials-on video-on-demand services in certain markets served by Comcast cable TV systems. These markets are only served by CBS owned-and-and-operated stations, so they don’t affect affiliates thus far.

Fox, which does not rush to repurpose its programs on VOD, also has repurposing agreements with its affiliates.

Only NBC, which last week said it will offer some commercial-free network shows on a VOD service via DirecTV (and that it will webcast “NBC Nightly News” in full starting at 10 p.m. ET daily) is bound by no such repurposing limitations. That’s because the Peacock Network was shedding big-ticket sports in the mid-’90s, when repurposing agreements sprouted elsewhere as a way of giving affiliates something of value (exclusivity on brand-building programs) in return for their cash contributions.

NBC, however, has been a leader at working with its affiliates to develop joint ventures, such as the NBC Weather Plus digital channel and the network Olympics Web site. That left some NBC affiliates feeling uncharacteristically uninformed about the NBC-DirecTV deal late last week.

No Roadblocks

But an informal survey of affiliates indicated a consensus that the ABC-Apple deal, based on what had been reported in the media, seemed “the most thought out,” while the CBS-Comcast and NBC-DirecTV VOD announcements had a hurried, us-too air about them.

Some local station executives last week were particularly intrigued by CBS’s formula because it does not impact them immediately and because it is the only one that repurposes the programs with national commercials still in place, thus preserving the traditional business model even while offering it on a nontraditional platform. Local commercials, which often are more time-sensitive, will be removed for VOD repurposing by CBS.

In addition, CBS and its affiliates expect that if this experiment, which allows only a 24-hour VOD window, shows enough financial promise, it will be rolled out into other markets, in some sort of network/affiliate partnership arrangement. (There have been hints that Fox affiliates would also participate in a similar deal with their network when and if it decides to repurpose programming).

“Affiliates have always said if there is an opportunity, we don’t want to be in a position of roadblocking it. We just want to participate,” said the CEO of a group that includes stations affiliated with multiple networks.

A small-market operator expressed the strongest fear, that the VOD deals are more nails in the coffin of event viewing.

“It’s just one more time-shifting device that allows for more selectivity and narrower viewing,” he said.

But a veteran local and national TV executive noted that “no one knows how the consumer is going to respond” to the new VOD offerings. For one thing, the executive said, the appetite for VOD may be curbed by the likelihood that “anybody who has the ability to access VOD is likely to already have a DVR in their household.”

The group CEO expressed confidence that “all of these technologies will evolve and they will learn how to live side by side.”

A station group executive said, “If we’re going to build our future just on our network we’re going to have a problem, because we’re not going to have exclusive programming in the future. In the end,” he observed, “we don’t have any control over this.”

A consensus of affiliates contacted said they want networks to understand that with the affiliate bodies already feeling the loss of compensation for carrying network programs, they are understandably nervous at the thought of network programming being repurposed in ways that can undermine, if not erode, the value of local advertising avails-not to mention network lead-ins to the stations’ valuable late local newscasts.

“You can’t be our partners out of one side of your mouth and not be our partners out of the other side of your mouth,” said the group CEO.