Charlotte Move Puts Fox Affiliates On Edge

Fox’s standard affiliation contract makes clear that Fox has the right to take back an affiliation immediately when it acquires a different station in the market. “Everybody is nervous as all get out” that Fox may have other markets in its sights, said one Fox affiliate group operator, who spoke on condition of anonymity. Fox's Jack Abernethy said the motivation behind the Charlotte buy was to get an O&O in another NFC market.
TVNewsCheck,

Fox’s decision to take its network affiliation in Charlotte, N.C., away from incumbent Bahakel Communications in the wake of its $18 million pending acquisition of Capitol Broadcasting’s WJZY (CW) and WMYT (MNT) there, has Fox affiliates fretting that the network may be considering similar moves in other markets.

In the deal at issue, Fox has put the station’s existing 27-year Charlotte affiliate — Bahakel’s WCCB — on notice that it plans to switch affiliations after the deal closes — rather than simply offering to buy WCCB first, according to Jim Babb, Bahakel EVP and COO.

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“Everybody is nervous as all get out,” said one Fox affiliate group operator, who spoke on condition of anonymity.

Fox affiliates have reason for some concern because Fox’s standard affiliation contract makes clear that Fox has the right to take back an affiliation immediately when it acquires a different station in the market, several sources with direct knowledge of the affiliation agreements confirmed. The affiliation contracts for ABC, CBS and NBC generally only allow the network to switch affiliations after an existing affiliation term expires, the sources said.

The Charlotte deal underscores how dramatically the network-affiliate relationship has changed since the days when networks paid their affiliates compensation to carry network programming. Now networks regularly demand ever-higher fees from their affiliates — so called reverse compensation — when their affiliation agreements come up for renewal, believing that they deserve a share of the retransmission consent payment that affiliates collect from cable and satellite operators.

One non-station TV industry source said Fox’s Charlotte deal was, like network demands for payments from affiliates, designed to “capture the value from the network. They [Fox] created tremendous value in these stations with their network, and they’re entitled to realize that value,” the source said.

Brand Connections

Fox Television Stations President Jack Abernethy said that the move was motivated by desire to acquire an O&O in another market with a National Football Conference team (the Carolina Panthers). “We paid a lot of money to acquire those football rights,” he said.

James Goodmon, Capitol Broadcasting president-CEO, told TVNewsCheck that the company and Fox had been discussing the sales of the stations — and the Fox affiliation renewal of another Capitol Fox affiliate, WRAZ Raleigh, N.C., at the same time — since May.

Along with signing the station sales deal, Goodmon said the companies had agreed to an affiliation agreement renewal for WRAZ. That station’s existing deal with Fox expires June 30, and the new one begins July 1, Goodmon said. He declined to discuss additional details about the terms of the new affiliation agreement, including its expiration date.

“We’ve had a long relationship with Fox in Raleigh, and that’s going to continue and we’re closer than ever,” Goodmon said.

As part of a major Fox affiliation deal for 19 TV stations announced last May, Sinclair Broadcast Group gave Fox an option good through March 31 this year to buy at fair market value Sinclair MNT affiliates in three of four designated markets: Raleigh, N.C. (WRDC/MNT and WLFL/CW); Las Vegas (KVMY/MNT and KVCW/CW); Cincinnati (WSTR/MNT); and Norfolk, Va., (WTVZ/MNT).

If Fox opted to exercise the option, it could have given the network the same kind of leverage over the Fox affiliates in the Sinclair markets that it got over WCCB in Charlotte. But a Fox source tells TVNewsCheck that the company is not “exercising our option on the Sinclair stations.”

“Our new agreement firmly extends KVVU’s affiliation with Fox through Dec. 31, 2017,” said Art Slusark, a spokesman for Meredith Broadcasting, which owns KVVU, the Las Vegas Fox affiliate.

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Comments (18) -

jdshaw Nickname posted over 4 years ago
This story is more hype than substance. Fox is buying the two Charlotte stations from Capitol. Relax!
Bailusout Nickname posted over 4 years ago
FOX's motto: Trust us, would we lie to you?
commonsenseTV Nickname posted over 4 years ago
Heard of the expression, "crazy like a FOX?" The last thing you should do is take them at their word. FOX looks out for only FOX, the affiliates are a necessary evil to them.
reality Nickname posted over 4 years ago
"more hype than substance".... clearly said by someone with no skin in the game and no clue about current network/affiliate relations
elgato Nickname posted over 4 years ago
more hype than substance? Really? tell that to the folks who are likely to lose their jobs once the switch takes place. Fox has made an astute move here for pennies on the dollar.
tjxx Nickname posted over 4 years ago
Seriously. Has no one paid attention to these people,especially Rupert Murcoch, over the last 20 years. They are ruthless and distrustful..and he has surrouned himself and filled his organization with the same type of people...All for one and one for Fox at any cost!!! Do you not remember what just occurred with the Times of London..Wake up people
tjxx Nickname posted over 4 years ago
It is beyond a lot of people after the Times of London Scandal how Murdoch has kept his US broadcast license..Oh that's right..its called deep pockets
BennyJets Nickname posted over 4 years ago
What a bunch of hate filled hypocrites. All you can do is sling made up BS and liberal propaganda…as if you or your own companies don’t act in their OWN best interests. Get a clue yourselves and mind your own before firing accusations and insults based only out of bitterness rather than facts. You just HATE FOX, but not for what they stand for, but rather because you only want what they have..or wait…do you all donate your time for free? Don’t you maneuver for more and more money? Hypocrites!
Bailusout Nickname posted over 4 years ago
Hey Benny, take a Xanax and cool down. All the networks will screw you. It is just FOX won't even kiss you. CBS is closing in fast on FOX and keep your eye out for NBC now that comcast owns them. You don't have to be liberal to not like being screwed over.
ZumaHans Nickname posted over 4 years ago
Yeah, I hate Fox for being owned by an alien who was granted citizenship of convenience. who kowtowed to the Beijing Communists by converting his satellite operation to a government propaganda organ, and then proceeded to violate US laws (such as the Foreign Corrupt Practices Act). I want to see Fox prosecuted for their lawbreaking. And that makes me a liberal? So be it.
tjxx Nickname posted over 4 years ago
Hey Benny Jets..How many years have you worked for Rupert???
Roger Thornhill Nickname posted over 4 years ago
This is a big deal if you've been selling your station to advertisers as a Fox affiliate and setting your rates accordingly. Although they're not the only network to do this, Fox is notorious for dumping affiliates unexpectedly and with little notice. I know of a couple of low power stations who were Fox affils. but were dumped without warning as soon as a full power station in the market became available.
AZObserver Nickname posted over 4 years ago
Was this the Corpus Christi situation? They might have been better off staying on that LP than the mess of a full-power station they currently have!
Roger Thornhill Nickname posted over 4 years ago
Yes, it was in Texas.
ZumaHans Nickname posted over 4 years ago
Where is the challenge to this transfer? Some law firm is going to make a killing challenging the Fox Broadcasting licenses under the FCC fitness rules, precedent (see General Tire/RKO) and the Foreign Corrupt Practices Act.
commonsenseTV Nickname posted over 4 years ago
Benny, do not confuse distrust of FOX for liberalism. We are all capitalists out to make a buck, many of us like to think we do not wantonly screw people over for greed.
onthesidelines Nickname posted over 4 years ago
As a trivial sidenote, this isn't the first time that WCCB has been dumped by a network. Back in the late seventies, WCCB was dumped by ABC in favor of WSOC, which was then the market's NBC affiliate. When NBC was looking for a new station, they went to independent WRET (then owned by Ted Turner) instead of WCCB, which left WCCB as the new independent station in the market for the next decade (until Fox came along).
Ron Stitt Nickname posted over 4 years ago
Do you think the NFL tells a network "we'll give you a break on the renewal price due to our longstanding relationship?" Is that what a prime show star talent would say? I understand the pain, but the naivete is stunning.
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Ratings

Overnights, adults 18-49 for September 25, 2016
  • 1.
    5.5/18
  • 2.
    2.6/8
  • 3.
    1.2/4
  • 4.
    0.9/3
  • 5.
    0.5/2
  • 6.
    0.2/1
Source: Nielsen

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