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.
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.
“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.
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.