Citing low profits, CBS announces plan to charge affiliates fees for programs

May 31, 1992|By New York Times News Service

NEW YORK -- CBS announced a plan yesterday that would radically alter the way the television network deals with its affiliate stations, by charging the stations fees to carry certain programs.

To explain the need for the change, the network cited low profits and increased competition from cable networks, the Fox network and program syndicators.

In the announcement, issued after a meeting of the affiliates in New York, Anthony Malara, president of affiliate relations for CBS, called the plan "the most significant change in the economic relationship between a network and its affiliated stations in 25 years."

The move is expected to be vigorously opposed by many stations. It could lead to some stations' seeking to leave CBS for a different network, or to stations' carrying fewer CBS programs than they did in the past.

In various markets, if stations leave CBS, viewers might have to lose certain CBS programs, or look elsewhere for them.

Neither NBC or ABC officials could be reached for comment, but in the past, when one network has changed its compensation system, the others have followed.

Networks traditionally have paid stations compensation for carrying a programming schedule to establish and maintain the coast-to-coast distribution needed to air commercials on a national basis. The compensation has varied, depending on the size of a station's television market.

But in the last several years, as new owners have come to control the networks and as profits have diminished, many efforts have been made to change the compensation system. Reductions have already taken place at all three networks.

CBS is in a position of strength now and apparently felt able to take this step because of the significant comeback in its performance, especially in prime time in the past year. The network is predicting that its programs will be even more popular in the next television season.

Last year, CBS cut its compensation to stations from $150 million to $121 million. CBS said that amount still left the network paying the most in compensation, although it is generally thought to have the best lineup of stations. NBC instituted a plan to base compensation more on the individual performance of a station.

CBS's chairman, Laurence A. Tisch, has been among the most adamant in seeking to change the compensation system, which he has criticized as outdated.

He has been known to feel that CBS stations have the benefit of being able to sell local commercials on network programs and should not require further inducements to carry the network schedule.

The CBS network lost money last year, furthering the corporate pressure to seek the reductions in compensation payments.

Starting Jan. 1, the network intends to impose what it is calling an affiliation charge. Though the network also said it was not cutting the compensation paid to stations, the charge amounts to a virtual exchange of dollars.

Stations still would get compensation, but they would have to pay the charge to CBS at a varying rate, depending on market size.

CBS said very little would be paid for hit programs, which stations would pre-empt. But more would be paid for weaker programs that are often the target of syndicators willing to pay compensation themselves to stations to carry those programs.

"Common sense says that we should not pay the same amount for '60 Minutes' or 'Murphy Brown' as opposed to other programs that are not so highly rated," Mr. Malara told the affiliates.

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