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ABC, AFFILS IN TALKS ABOUT JOINT NEWS VENTURE

The parties are said to be making progress toward a joint venture to run ABC News Now. A deal would give the fledgling 24-hour channel a local dimension and a big boost in distribution.
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Still determined to be a major player in 24-hour news and take on CNN and Fox News Channel, ABC has resumed talks with its affiliates about forming a joint venture to operate ABC News Now, the network's fledgling broadband news channel.

ABC executives and representatives of the affiliates have had a series of meetings over the past couple months, the most recent just last week. Both sides report good progress. But, says an ABC News representative, "nothing is imminent or final."

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With the backing of the affiliates, ABC News Now could one-up the more established cable news networks by offering local news segments.

A deal would also provide a badly needed boost to the channel's distribution. ABC affiliates could broadcast the service on their digital channels or feed it directly to cable systems for distribution. Either way, they could use their retransmission consent rights to negotiate for carriage on local cable systems.

The affiliates believe that they bring plenty to the table. In addition to distribution and local news coverage, they can help market the service. "We have the ability to promote it and drive it," said one affiliate source.

Currently, ABC News Now is a subscription-supported service distributed primarily over Web sites and mobile phones. The service goes for $4.95 a month or $39.95 a year. It can be sampled for free on the abcnews.com site.

But the ultimate business model for the service is far from settled, sources say. The networks and the affiliates have discussed keeping it a pay service as well as converting it to an advertiser-supported operation.

The parties seem to be headed down the same road as NBC and its affiliates. Working together, they created NBC Weather Plus, a 24-hour weather service mixing national and local reports. That joint venture launched in November 2004.

ABC News Now debuted in 2004 and distinguished itself with its extensive coverage of the presidential campaigns. It was available over the Web and was broadcast digitally by the ABC O&Os and around 70 affiliates.

In January 2005, ABC withdrew the service from the marketplace for retooling. Three months later, it remerged as a "multimedia news initiative" with its eye on cable, satellite, broadband and wireless outlets. At the time, ABC said the ABC-owned TV stations were supporting the venture by providing content and that it anticipated deals in the upcoming months with affiliates. But the deals never materialized.

Talks between the network and the affiliates about the news service have heated up just as those about video on demand and affiliate exclusivity of network programming have cooled. The VOD talks were triggered by ABC's decision to sell some of its hottest primetime programs—Lost and Desperate Housewives—via the Apple iTunes download service.

Right now, ABC is limited on how much of the primetime schedule in can "repurpose" for VOD and other uses by terms of the deal in which the affiliates agreed to help ABC pay for Monday Night Football. But the National Football League deal expires this summer and ABC will be free to repurpose its entire schedule if it chooses.

The affiliates are hoping that they can cut themselves in on the VOD dollars by partnering with ABC. Among other things, they have discussed marketing downloads within their local markets. An affiliate source said the VOD talks are on a completely separate track than the ABC News Now talks.

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