WB, Tribune Close to Affil Pact

Jan 16, 2006  •  Post A Comment

The WB Network and Tribune Co. are in the home stretch of their months-long negotiations to reach a new affiliation agreement that would retain Tribune as a partner in the broadcast network.

An agreement could be struck sometime in the next several weeks, a WB spokesman confirmed.

The partners are said to be ironing out issues related to the economics of any alternative distribution deals the network might strike. Though no deals have been announced yet, The WB is expected to follow in the footsteps of other networks that have made deals involving video-on-demand, downloads of episodes and wireless content.

Another area that might be up for discussion is the structure of the partnership itself.

The WB spokesman described the negotiations as amicable, and he stressed that both sides are keen to continue working together-something Tribune executives have articulated repeatedly as well.

The fate of the network has long been a topic of conversation in Hollywood and on Wall Street given its ratings challenges and most recently a round of high-level layoffs that affected top executives in areas such as scheduling, casting and comedy development. Last fall there was speculation that Time Warner might look to sell the network to another media company, though officials at The WB, Time Warner and Tribune have repudiated those rumors.

People familiar with the situation said the pact would likely be a long-term agreement in which Tribune would continue to hold a minority stake in the network. Currently, Tribune owns 22.5 percent in the network and 19 stations that are WB affiliates; Time Warner owns the rest of the broadcast network.

The companies currently are working through their second one-year contact extension, with this one expiring at the end of the current television season.

As it stands now, Tribune is protected against any red ink the network incurs because it has written down to zero the value of its stake in The WB. That means Time Warner shoulders that cost. Also, the current agreement specifies a cap on the losses at the network that Tribune funds as a stakeholder.

People familiar with the matter stress that the network’s losses aren’t massive and that it faced a rough patch two years ago; The WB of today is close to breaking even.

The WB at a Glance

Ownership structure: Time Warner, 77.5 percent; Tribune, 22.5 percent

Launched: 1995

Current contract: The second of two one-year contract extensions, set to expire at the end of the 2005-06 television season

The current deal: Tribune pays Time Warner for programming and gets a cut of any profit the network makes. Though the network was profitable as recently as 2003, Tribune didn’t get any profit that year because Time Warner’s Warner Bros. unit must first recoup startup losses. In 2005 Tribune no longer booked losses from the network because its stake in The WB was written down to zero.

Source: The companies