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CBS to get affiliate help
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May 29, 1998: 6:43 p.m. ET
Stations will help Tiffany network pay its $4 billion football bill
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NEW YORK (CNNfn) - CBS Corp. on Friday won an unprecedented agreement from network affiliates to help cover the $4 billion it is paying the National Football League bill to broadcast American Football Conference (AFC) games.
At an affiliate meeting in Los Angeles late Friday, the CBS Affiliate Advisory Board announced the unique agreement, which helps to ease the tab that CBS has previously paid to compensate affiliates for carrying network programming.
Networks such as CBS and NBC pay out an estimated $200 million a year in affiliate compensation costs. However, because networks now face higher programming costs and rely solely on the sale of national air time for revenue, network executives have put more pressure on affiliates to share in costs.
"The whole dynamic is changing. The old model of revenue which is just pure ad sales has to change in order to be profitable," said one network executive who requested anonymity.
The new CBS agreement, which has been endorsed by a "substantial" majority of stations, calls for certain affiliates to receive less compensation and other stations to even pay for broadcast rights. The exact terms of each affiliate arrangement depends on the size of the market and whether or not the market has an AFC team.
"Small market stations will obviously pay less," a CBS spokesman said.
In exchange, local affiliates will receive an inventory of air time to sell in order to generate revenue. Exact financial details of the agreement weren't disclosed.
For the consumer, the agreement will appear seamless. Any commercial time not filled by national ad spots will be sold to local sponsors.
"You would see more spots sponsored locally like your local car dealership," the network executive said.
-- by staff writer Robert Liu
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