NBC, Affils Form Alliance

Apr 24, 2006  •  Post A Comment

There’s NBC. Now there’s NBBC. Really.

While the affiliate bodies of ABC, CBS and Fox are focused on getting a small piece of the on-demand-programming revenue pie being made off downloaded content by their networks, NBC and its affiliates have decided to pool video content into a common pie whose costs, assets and revenues they will share.

The endeavor, dubbed The National Broadband Co.-NBBC for short-will aggregate video at the national level. The video will either be created by the 230 or so NBC affiliates and NBC owned-and-operated stations, available from the NBC Universal library or user-generated.

The effort, will have both business-to-consumer and business-to-business aspects, according to Terry Mackin, Hearst-Argyle executive VP and past chairman of the NBC affiliate association. Mr. Mackin continues as chairman of the affiliates’ futures committee that oversees NBC Weather Plus, the first NBC-affiliates joint venture.

Representatives of some 180 stations voted unanimously to approve the NBBC joint venture at last week’s annual NBC affiliates meeting in New York. The NBBC likely will launch late this year.

“It serves people who want to buy video through the video syndication market, and there will be a branded portal for people to see all kinds of video,” Mr. Mackin said. Another part of the plan, he said, involves “programming that could exist in the library of network of programming that never aired, behind-the-scenes types of footage that would be interesting for lots of reasons.”

Mr. Mackin and NBC Universal Television Group President and Chief Operating Officer Randy Falco stressed that NBBC is very different from the recent agreement Fox Broadcasting and its affiliates reached that will allow Fox more freedom to spin off its prime-time programming into on-demand platforms and give affiliates a share of the resulting revenues.

NBBC is a legal joint venture. NBC is the majority partner this time, unlike the 50-50 structure of Weather Plus, but it once again will manage the joint venture.

“Significant sums of launch capital” have been committed by both sides so far,” Mr. Mackin said.

Mr. Falco said another distinction is that “a lot of the other deals you are hearing about and that are being announced at other networks between them and their affiliate bodies oftentimes come about as a result of crises. They don’t talk to each other, and all of a sudden there’s an NFL deal to be negotiated or some other thing, and then suddenly they have this new announcement about a downloading, revenue-sharing kind of a business. That’s just not what happens here. We have, for the last three years, been in an ongoing, constant discussion about creating new businesses, new revenue streams and really reinventing the partnership that exists between NBC and its affiliates.”

“When we come together, the NFL [isn’t] a crisis. It was just part of a conversation,” Mr. Falco said.

National Football League games are coming back to NBC this fall after an absence of eight years. The affiliates will not be asked for cash contributions toward the $600-million-per-year cost of the six-year rights contract. Instead, as it does with Olympics coverage, NBC will have the majority of the primest prime-time ad spots, with stations front-loaded into the pregame show that will be hosted by Bob Costas. Sources familiar with those discussions told TelevisionWeek that the agreement would involve affiliates giving some late-night Saturday ad spots in return for a “Sunday Night Football” inventory split that would be equal to, if not slightly better than, the split on ABC’s “Monday Night Football” (TelevisionWeek, April 17).

No one on the conference call after the affiliates meeting would discuss the “Sunday Night Football” structure except in general terms.

“We’ve had discussions; they are ongoing,” Mr. Mackin said. “As spirited as that discussion is, it is very positive. You should expect us to have some sort of business opportunity to announce at some point.”

“I would say though we are prioritizing the National Broadband Co., compared to the revenue share of [on-demand] portable devices as that market exists right now. The revenue share for the portable devices would be a small opportunity compared to this [NBBC] business, a very small opportunity,” the Hearst-Argyle executive said.

“The success of this [NBBC] business would pay both of us handsomely,” Mr. Mackin said.

Mike Steib, the general manager for Weather Plus and NBBC and Mr. Mackin’s primary partner on the futures committee, said that neither collaboration should be likened to YouTube, the fast-growing Web site on which users share their videos. NBBC is about “unlocking the value that exists in [the partners’] digital video assets.”

Mr. Steib said the capital committed to NBBC so far is “bigger than Weather Plus.”

Details are being fleshed out now and an announcement is expected in weeks. The news, however, is not to be expected before the upfront presentations to advertisers in May.

Also discussed at the affiliates meeting last week was the launch of WeatherPlus.com, a Web site Mr. Mackin described as an integral component of the Weather Plus business plan.

In other matters, Mr. Mackin was succeeded as affiliate chairman by Marci Burdick, the senior VP of Broadcast for Schurz Communications.

Asked whether there had been discussion during the meeting about the loss of long-time “Today” co-host Katie Couric to CBS News and the choice of “The View’s” Meredith Vieira to take Ms. Couric’s place next to Matt Lauer, Ms. Burdick said there were “several questions, all positive,” about Ms. Vieira.

“We appreciate as affiliates everything Katie Couric has done for the ‘Today’ show and has done for us as affiliates. I also say that personally,” Ms. Burdick said. “My dad was diagnosed with colon cancer, and I said to the physician, ‘I know more from watching Katie Couric on TV about this disease than what you’re telling my dad.'”