Tribune To Keep KCPQ And Fox Affiliation

In a surprise development, Tribune Media and 21st Century Fox have kissed and made up over their affiliation fight in Seattle,with Tribune retaining both KCPQ and its Fox affiliation.

Last month, Fox told Tribune that it was terminating its affiliation for KCPQ and offered to swap its MNT affiliate in Chicago, WPWR, for KCPQ. Then, at the beginning of October, Fox announced it was buying KBCB in the Seattle suburb of Bellingham, Wash.

This morning, the two announced a new multi-year extension of the Fox affiliation for KCPQ through July 2018, which is concurrent with the timing of seven other Tribune Broadcasting Fox affiliation agreements.

As part of the agreement, Fox has withdrawn its previous termination notice, with Tribune agreeing, as of Jan. 1, 2015, “to pay additional programming fees to Fox for the primetime and sports content provided by the network,” according to the announcement. Including this additional programming fee, Tribune said it expects that, for the term of the agreement, KCPQ will deliver profitability in excess of its previously disclosed 2013 annual EBITDA of $13 million.

Fox wanted KCPQ as part of its strategy of owning stations in markets with NFL teams playing in the National Football Conference. Fox holds the rights to the NFC games.

Wells Fargo senior analyst Marci Ryvicker commented on the news: “Tribune highlights that even with the new affiliation programming fee (most likely materially higher), they ‘expect KCPQ will deliver profitability in excess of its previously disclosed 2013 annual EBITDA of $13 million.’ While we believe a $0.75/per sub/per month is the average fair market value rate for reverse [compensation], we think Tribune is likely paying higher (we have heard they might be paying over $0.90/sub in Indianapolis so would assume this is somewhat similar) although we don’t know the exact split (likely above the 65-35 we anticipate for the industry).”

Ryvicker continued: “Overall, this is a very positive announcement in our view. 1) It sounds like affiliation agreements in the space are being struck on a long enough timeframe for retrans renewals to stay one step ahead or at least keep up with reverse renewals. 2) Based on the commentary in the release, retrans is likely also going higher. 3) This should help to remove the concern over the network-affiliate relationship.”

“We are pleased to have secured a multi-year agreement with Fox to extend our affiliation with KCPQ-TV in Seattle through July 2018,” said Peter Liguori, president-CEO, Tribune Media. “Tribune is not only Fox’s largest local affiliate group, but also has a far-reaching business partnership with Fox on nearly 20 syndicated programs as well as Salem, a WGN America original series. Today’s agreement illustrates the value both parties place on resolving issues on mutually satisfactory and beneficial terms.”

“KCPQ is an outstanding station driven by the high-quality local news, entertainment and sports programming offered by the station and its continued affiliation with Fox,” said Larry Wert, president of Tribune Broadcasting. “This extension serves the community of Seattle, and reinforces the vibrancy of our station group.”