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EXECUTIVE SESSION WITH DIANA WILKIN

CBS Wants Affils To Pony Up For Programs

TVNewsCheck, Feb 23 2010, 8:37 AM ET

Having watched their affiliates pile up new revenue from retransmission consent over the past few years, CBS has joined other networks in asking their affiliates for what's been called "programming fees," "license fees" or "reverse compensation."

By whatever name, it's money going from the pocket of the affiliate to that of the network.

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Here, in an interview with TVNewsCheck Editor Harry A. Jessell, CBS Affiliates Relations President Diana Wilkin says that most, if not all, the CBS affils have accepted the fact that they will have to pay to air NCIS, The Big Bang Theory and Survivor. Some have already cut deals, she says, declining to discuss terms.

She also acknowledges that affiliates are being asked to pay a bit more to tap into the CBS Newspath news services, but promises that any if CBS renegotiates its March Madness deal with the NCAA it will not result in added expense for the affiliates.

If any network executive should sympathize with the affiliate, it should be Wilkin. Prior to joining CBS as chief affiliate wrangler two years ago this month, she ran the CBS affiliate in West Palm Beach, Fla. (WPEC) and the CBS/Fox duopoly in Jacksonville, Fla. (WTEV/WAWS). She also sat on the CBS affiliate board.

An edited transcript:

I understand that CBS is now asking for license fees from the affiliates. How do you justify that?

I wouldn't call them license fees. Are we looking for compensation, yes. CBS brings enormous value to the affiliates, No. 1 programming, exclusivity, national promotion. We have seen how all have changed and we are looking for support from our affiliates financially.

If it's not a license fee, what is it?

It's an individual negotiation. We aren't approaching it as a one size fits all. It's loosely based on what we perceive the value to be of an affiliation in a given market, and that can vary.

Is it a function of the retransmission consent dollars that the stations receive?

Are we specifically tying our agreements to a retrans share? No we're not. But we believe that CBS represents a substantial portion of the retransmission consent fees that stations and groups receive.

So it's not some kind of retrans formula.

No.

What kind of push back are you getting from the affiliates on this?

Interestingly enough, we have had, I would say, support. Honestly, the vast majority if not all of our affiliates understand that the business model has changed. We have actually already completed some deals. So, this is not a point of major contention in our discussions.

I haven't heard of any CBS deals yet.

Yeah. We keep things pretty confidential and quiet here.

I will try to work on that.

Good luck with that. We're in conversations with a lot of groups and I fully expect us to have deals done. We both want to have a strong network and strong affiliates. We're No. 1 and we plan to stay No. 1.

Can you give me a range of what kind of compensation you're seeking?

I really can't. That's an individual conversation with an owner and again, as I have mentioned, the conversation varies depending on a number of factors.

So the concept of reverse compensation is acceptable to the affiliates. It's just the number that's being negotiatied.

Again, it's hard for me to sort of give you a one-size-fits-all kind of answer to this. It isn't. There're many factors in every negotiation that make it an individual conversation. Are we looking for a greater contribution from our affiliates on numerous levels? Yes we are.

Nexstar CEO Perry Sook and, I believe, others say that they are willing to pay networks reverse compensation, but only if the network can help them get more retrans dollars from the cable and satellite operators.

That's Perry's position. I understand that. He and I have had numerous conversations about that. You know, we are confident from literally penny one that the affiliates compensation via retransmission consent is derived from the fact that it's a CBS affiliate.

Some affiliates are wondering about renegotiation of the rights for the NCAA basketball tournament. The affiliates are already paying a fee to help pay for the rights. How will a new deal affect the affiliates?

First of all, there's been no announcement on what the deal will be with the NCAA moving forward so it's hard for me to speculate on something we don't have finished. However, you know, our NCAA agreement with the affiliates is a value exchange agreement. It's much broader than NCAA alone. I don't anticipate we will be renegotiating that agreement.

So they're not going to end up having to pay more under that plan.

I'm not even sure how to answer that. There | More …

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Comments (10) - Post a comment

Deuceatdeuce1 Nicknameposted 161 days, 16 hours, 30 minutes ago
Midsize and smaller markets are still adjusting to not having network comp. Retrans has not yet filled this void. The poor economy is pushing several groups & stations to the brink of bancruptcy. No time to raise the fees for the affils. As a small market with no home NFL team we lose money on NFL. As for Newspath, it is as much - if not more- for the Network O&O's. If the network didn't have the O&O's Newspath would go away.
Fred Benson posted 161 days, 15 hours, 55 minutes ago
Diane: You have the wrong CBS affiliate in Jacksonville. WTEV "CBS 47 On Your Side" is the CBS affiliate in Jacksonville, WAWS is the Fox affiliate in Jax, also known as FOX 30 WAWS.
Harry Jessell posted 161 days, 7 hours, 11 minutes ago
You are correct, sir. She ran the both stations as a duopoly.
HopeUMakeit Nicknameposted 161 days, 15 hours, 53 minutes ago
This is total BS. CBS Morning is a dog. It drags all of its affils down the drain with it. CBS Daytime has few if any local avails. Count the local avails in Y&R. Count the local avails in Big Bang, for that matter count the local avails in NFL or Letterman before the end o 1stt half. CBS already has its retrans compensation. they took it back when they won back AFC Football. Moonves is chasing the wrong dollar.
PSIPthing Nicknameposted 161 days, 15 hours, 2 minutes ago
A decade ago, the chief engineer of a CBS affiliate in the northwest told me that his station and many other CBS affiliates had been paying "negative net comp" and "NFL monies" to CBS, and had for years. So, I wonder what is actually new here? Retrans monies?
Thomas Scanlan posted 161 days, 12 hours, 26 minutes ago
I was surprised to see Diane say the deals were so confidential between CBS and affiliates. Last I knew any 'deals' become part of the overall affiliation agreement, and as such, must placed in the station's public file. If that's still the case, I would expect to see TV NewsCheck or TV Broadast or other publication do some digging and give us a report on the typical CBS deals.
Sugarbear Nicknameposted 161 days, 11 hours, 36 minutes ago
There's no question that certain network programs bring a great deal of value to affiliates, but there's also no question that certain shows are weak and hurt affiliates. The trouble with all of the networks is that their deals are so lopsided that the affiliates get virtually nothing in return for the value brought to them, other than a few adjacencies. If good ole Les is licking his chops to get some of that retrans money he might want to bring his lunch 'cause he's going to find out that affiliates have a certain trick up their sleeves as well.
Scout Nicknameposted 161 days, 11 hours, 32 minutes ago
I think the proper question to ask for this article is - "other than the CBS owned & operated stations ponying up their portion of national network comp, how many other station deals were done" Everybody knows the profit margins at the O&Os are tremendous compared to network margins. All four networks are trying to grow their business this way. If CBS tanks in 5 years, will the amount of reverse compensation be reduced?
Bullmoose Nicknameposted 161 days, 10 hours,
Hey, fellows! Take a deep breath. Diana is only doing her job. All of the deals are ultimately going to become fodder as there are no secrets in the television business. Tom Scanlan is an experienced broadcaster who has put this issue in proper perspective.
fondmemory Nicknameposted 161 days, 8 hours, 7 minutes ago
If you are a CBS affiliate you should do some research and compare your local avails to that of your competing NBC and ABC station. CBS stations have at least 15,000 (correct) less local units a year to sell than NBC stations! There needs to be fair and equitable adjustments made before asking CBS affils for more money.
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