Can one ever have enough leverage -- particularly if you're at a station negotiating with a network bent on grabbing a slice of your retransmission consent revenue? Here are some creative ideas on different ways to make Fox listen to reason.
JESSELL AT LARGE
Note To Fox Affils: Create Some Leverage
Listen up all you Fox affiliates.
On Friday, April 8, the eve of the NAB convention, you’re all going to pre-empt Fox’s regular lineup and in its place you’re going to air a two-hour telethon to benefit…well, you name it – Japan, Haiti, United Way, MDA, Habitat for Humanity.
You’ll be doing a lot of good for whatever cause you select.
You’ll also be doing a lot of good for yourself. And I don’t mean in just that touchy-feeling spiritual sense. I mean in that bottom-line, you-can-take-it-to-bank sense.
You see, right now you have a problem. Each of you are in (or soon will be in) a tough renewal negotiations with Fox over the sharing of your retrans revenue. From stations in markets 125 and higher, Fox wants 25 cents per pay TV sub, per month. That’s more than a lot of you are getting from the cable and satellite operators.
The problem is you don’t have enough leverage in those negotiations, which leaves your profit margin vulnerable. So, the thing you got to do is go out and get some – leverage, that is.
BRAND CONNECTIONS
How?
That Friday night telethon.
Cutting off Fox from 60% of its potential audience will remind Fox that its affiliates actually do have some value and that it might not be in its own best interest to squeeze the financial life out of them.
If one night doesn’t shake Fox up, knock out another. There are plenty of deserving charities.
And once you’ve saved the world, you could plug in some of your own for-profit programming – say, a popular movie with limited commercial interruption. You’re creative people. You’ll think of something. And, remember, you get to keep all the inventory.
My communications law brain trust tells me that there is not much Fox could do legally about the pre-emptions because of the FCC’s right to reject rule. It entitles affiliates to bounce any network programming if they decide it is “unsatisfactory or unsuitable” or if they decide the replacement programming is of “greater local or national interest.”
I can think of lots of things with “greater local or national interest” than Kitchen Nightmares. You can, too.
And my anti-trust law brain trust tells me that broadcasters banding together to jettison hunks of Fox’s schedule would not expose them to an anti-trust suit from Fox. Of course, you may want to check with your own counsel before risking treble damages.
The funny thing about leverage is that you can never get enough of it. So, here are some other ideas for getting some.
Slap Fox with an “unlawful tying” suit. This is a principle of business law that says a wholesaler can’t make you buy its lousy products in order for you to buy the products you really want, which is precisely what all the networks do, if you think about it. If you want Idol, you have to take Fringe. In broadcast syndication, this is called block-bloking. MCA was nailed for it in the 1990s by a federal appeals court.
Boycott the the Fox upfront. When May rolls around, you should make it known through TVNewsCheck and lesser publications that you are unhappy, that you will not be going to New York and that you will be taking a hard look at each of the new shows in the fall lineup to determine whether it is really worthy of your valuable airtime. It will be sort of a bluff, but, trust me, Fox executives don’t want to be talking to agencies about an affiliate revolt while they are trying to dazzle them with new shows and to stick ‘em with big rate hikes.
Refuse to promote any of the new Fox shows. According to B&C’s Mike Malone, at the end of February, Fox spent a bundle to fly a broadcaster from each affiliate to Los Angeles to get them all jazzed up about promoting the X-Factor, what Fox and producer Simon Cowell expect will be the second coming of Idol. The hell with that. If Fox wants to promote the X-Factor in El Paso, Dayton, Augusta and nearly 200 other markets, they can pay for it just like everybody else. Besides, isn’t Fox’s hard line on retrans premised on the belief that the affiliates are not that important anymore?
Those are some radical ideas, and, as you may know, some of them are actually rattling around among the firebrands in your ranks.
Any one would certainly get Fox’s attention.
None would be easy or without cost.
All would require a level of cooperation I have seldom seen from you or any of the other affiliate group. Sinclair, one of the largest and most potent Fox affiliate groups, has already made a separate peace.
What’s more, pre-empting or sabotaging Fox programming is ultimately self destructive. To the extent you damage X-Factor and whatever else Fox is working on for the fall through lack of promotion and support, you damage yourselves.
You would also risk some serious blowback. There’s a lot of nasty things Fox could do in retaliation, and uber boss Rupert Murdoch has demonstrated repeatedly in his long career that he enjoys nothing more than a confrontation.
Maybe these tactics are too drastic.
But you do need to make some demonstration to earn some respect before your next negotiation.
In the summer of 1998, Nick Evans, then the owner of a several TV stations, tried to get tickets to Dave Letterman’s show from CBS for some advertisers and friends, but kept getting jerked around by CBS.
Finally, Evans had enough. He pulled Late Night from his stations for two or three days, replacing it with the likes of Married…with Children and Judge Judy.
It’s not clear what happened next from the accounts of the time, but CBS finally woke up and found seats for Evans’ friends. I bet they were pretty good ones, too.
There’s a lesson here.
Harry A. Jessell is editor of TVNewsCheck. You can e-mail him at [email protected].
Comments (10)
Matthew Craft & David K. Randall says:
March 25, 2011 at 3:56 pm
Whatever the merits of your argument that Fox affiliates should push back against their network’s retrans demands, you go over the line in suggesting that FRINGE is a “lousy product.” It’s consistently one of the best-written and acted shows on television. As for forcing Fox affils to buy it in syndication — well, that makes no sense, even in FRINGE’s alternate universe!
Barb Palser says:
March 25, 2011 at 4:05 pm
What about not purchasing any of 20th’s syndicated shows and refusing to purchase their News Edge service, and not providing them with the local coverage that they want) They want your help covering the tornadoes in your market? Forget it. You don’t need us anyway FOX, remember?
matt fess says:
March 25, 2011 at 4:08 pm
I have always stated that FOX needs the affiliates to make X-Factor a mega-hit, the likes of American Idol, and the affiliates need the X-Factor to help make them the best local station in the market. A clear case of two entities needing each other. FOX I must say has handled this equation miserably with the retrans issue. They cut a deal with Time Warner to supply a FOX feed in case of disputes in TW markets. Ever since Chase returned, FOX seems to have lost sight of strong affiliate relations. I kind of like lots of what is said here and it could well come to some of this if FOX does not put their ego aside and realize they need affiliates. Perhaps not promoting XFaxtor at all makes sense here.
Teri Green says:
March 25, 2011 at 4:41 pm
Well first of all FOX owns TV stations in 35.598% of the Nielsen markets. TV stations with weak programs will be more than happy to take the leftovers and boost their ratings. And this doesn’t even count all the station owner groups that would be scared to death to risk losing #1 Fox for NBC or the CW
Remember in the 90s when FOX upgraded from UHF to VHF stations. FOX previously had said, how dedicated it was to the “little guy” and how they were “all in it together.” Then FOX just dumped the weaker UHF stations and never looked back.
Don Richards says:
March 25, 2011 at 4:44 pm
In this high-stakes game, won’t the aggressive push-back by affiliates just motivate Fox to do what they are ultimately going to do anyway…turn the broadcast network into a cable/satellite-only network and thumb their nose at the affiliates (who are just a pain in Fox’s butt)? Fox has never had any interest in their affiliates. News Corp owns stations in the top markets which they can continue to own and operate…the rest of the country can be reached through a FoxNet cable/satellite channel. And if you are successful in calming Fox down…for this round…don’t you think you’re just providing Fox with more justification to convert to a cable/satellite network?
Peter Grewar says:
March 25, 2011 at 4:59 pm
If Fox dumped it’s affiliates, I’m sure it could become a very successful cable-only network of the magnitude of USA or TNT. Only problem is that those networks earn a fraction of the prime-time viewership that Fox currently enjoys as a broadcast network. While they’d gain subscriber fees that would ultimately well exceed the 25 cents that they’re trying to get from their affiliates’ retransmission deals, they’d lose a fair chunk of advertising revenue as a result of drastically smaller audiences — and they’d lose the valuable promotional platform that they currently have from the audience reach of those broadcast stations.
Jill Colvin & Catherine Lucey says:
March 25, 2011 at 5:30 pm
Too many wimpy groups like Sinclair throwing the affiliate body under the bus to make this work but I’d certainly participate. For many small stations FOX is grabbing more than our free cash flow, so there isn’t anything worse they can do. I’d love to air a Telethon for Japan and bump FOX Friday and saturday. Maybe tape delay X-Factor till latenight for the premiere. Damaging any show doesn’t scare us because they have a lousy track record of hits and if we can’t keep any profits, what’s the point.
Shelley Clark says:
March 25, 2011 at 10:42 pm
The impact on FOX will be well beyond the network. Twentieth Television syndication will be impacted, MYNet will be impacted and FOX network will collapse or forced into cable network mode. Affiliates brought you to the party, now you want to say goodbye to them, be careful what you wish for.
Jim Bales says:
March 26, 2011 at 9:57 am
The “comments” are better than the article. BUT, why don’t the commentary nicknames put their real names in?; this Fear Factor is the true and sad “Post A Comment” commentary!
Charles Cantu says:
April 4, 2011 at 6:08 pm
Great article. But I agree with post above..careful what you wish for. Not many remember that a group of very important stations boycotted Fox in the early days by refusing to air thier Saturday night programming. Those stations left the network and Fox found alternative stations. The former Fox stations then formed what became UPN and are now owned by Fox as MyNetwork affils. While always firm and very demanding, in the end Fox has always also been willing to work out a deal. The idea mentioned above regarding providing the network news content is a strong concept. Negotiate a deal that will allow you to subtract a content fee from the retransmission bill due Fox each quarter. Start charging when you work a network project. Building a successful Idol try out is a huge task with real costs in materials and (wo)manpower. Mark ’em up and subtract those costs. Look for bill backs that Fox has come to take for granted and you will find a new revenue stream to offset those new fees.