Net-Affil Peace Raises Troubling Reality

America is filled with strife these days as soaring oil prices and falling house prices cripple the economy and extreme weather ravages the countryside.

But today there is peace in the land of TV broadcasting.

Representatives and the major broadcast networks and their affiliates last week hand-delivered to key FCC officials what amounts to a treaty formally ending seven years of hostilities between them.

“This is clearly a win-win,” said Post-Newsweek Stations CEO Alan Frank after making the rounds at the agency with other affiliate and network representatives. “It’s a big day.”

The treaty was, in fact, a “joint request” asking the FCC to affirm some long-standing rules designed to protect affiliates from overbearing networks.

In effect, the four-page document withdraws a complaint that the affiliates filed with the FCC seven years ago alleging all sorts of network abuse and brings to an abrupt end a proceeding looking into the matter.

Central to the affiliates’ complaint was the charge that the networks were interfering with the affiliates’ rights to preempt and reject network programming — rights guaranteed by FCC rules.

Citing the FCC’s option-time rule, the affiliates also said that Fox was out of line in placing claims on affiliates’ digital spectrum.

The affiliates also alleged — with good cause, I would add — that the networks were interfering with stations sales by using affiliation agreements to secure a kind of right of first refusal on sales.

The affiliates’ complaint generated a plenty of ill-will and millions of dollars in legal bills over the years.

So it is, as Frank said, a “big day” when these long-time partners can publicly declare peace and put out a statement saying they are going to work together on “common issues … in an ever more competitive media landscape.”

But I’m not sure that this happy state has arrived because the network and affiliates were able to work out their differences over program preemptions. That was never the real issue.

From where I sit, it had far more to do with the networks’ changing strategies.

Peace has come because the networks are no longer interested in owning more TV stations and are thus no longer a threat to the affiliates.

Seven years ago, it was a different story. The network wanted to raise the FCC cap on station ownership and buy more stations, figuring that that was the best means of capturing a better return on their hefty investment in primetime programming.

The affiliates of that day rightly feared that the networks would take away their businesses or their jobs.

Everybody remembers how then-NBC CEO Bob Wright bullied his way into San Francisco when KRON went on the market. He didn’t get KRON, but he eventually got his O&O in the top 10 market, virtually destroying Young Broadcasting in the process.

And the more stations the networks owned, the tougher it would be for the remaining affiliates to resist the demands of the networks. They were already cutting back on network comp. Next to be trimmed would be the affiliates’ inventory share.

The affiliates’ FCC complaint against the networks was always a small part of the larger battle being waged at the FCC, in Congress and before the federal courts over the station ownership cap.

The networks wanted to raise the cap or get rid of it entirely. The affiliates wanted to keep it as tight as possible, even if it meant taking sides with proponents of regulations and crippling the NAB. At this time, the four big networks quit the NAB; to date, only two, ABC and NBC, have returned.

The issue was settled when Congress passed a law capping station ownership at a level that would allow CBS and Fox to keep the stations they had and allow ABC and NBC to grow — if they wanted to.

But sometime over the past two or three years, the network decided that owning more TV stations wasn’t such a good idea anymore.

As if one, they turned their sights to the Internet and to trying to figure out how to exploit it as an alternative outlet for their programming.

Ironically, after all the spilt blood in Washington, the networks have been shedding stations. Just the other day, the FCC approved the sale of eight Fox stations to Local TV LLC.

And the stations being spun off aren’t all in small markets. Fox included WJW Cleveland in the Local TV deal. In March, NBC put WTVJ Miami (DMA 16) on the market.

So, with the networks no longer after their livelihoods, the affiliates can relax. They can call off the legal attack dogs at the FCC and declare peace.

But I am left with this thought that should give pause to TV stations owners and managers:

Seven years ago, the affiliates may have feared a network takeover, but at least they could take comfort in knowing they had a business that the networks coveted. They no longer can.