ABC’s Payment Cut to Affiliates Sparks Debate

Despite objections from its ABC Network affiliates, Capital Cities/ABC Inc. is pressing ahead with a plan to reduce payments to broadcast stations carrying its programming.

On the surface, the sum at stake appears paltry. Analysts have estimated that ABC will save about $2.5 million, or 2% of what the network pays annually to its affiliates. The reductions are less drastic than initially proposed, and will generally be applied to stations in the top 100 markets, cushioning any blow to smaller affiliates.

But the move--made over the weekend at an industry meeting in New Orleans--has been sharply debated by other broadcasters and analysts who question the wisdom of ABC’s strategy.

“ABC hoped to have all the networks follow suit,” one analyst noted, but instead, NBC seized the opportunity to increase its affiliate compensation by $4 million and CBS is pondering a plan to encourage greater use of its non-primetime programming.

NBC appears to be saying, “ ‘We’re in here for the long haul. If you’re an ABC affiliate and you’re unhappy, switch,’ ” said I. Martin Pompadur, a former top ABC executive who is now managing ML Media Partners, a limited partnership investing in media properties.

ABC Runs Risk

Some reductions could have been negotiated on a station-by-station basis, Pompadur said, instead of antagonizing the entire affiliate group. ABC runs the risk of seeing annoyed affiliates increase their preemptions of ABC programming, further weakening the network that ranks third in prime-time ratings.

“My personal opinion is that it’s a mistake,” said Stanley S. Hubbard, chairman of Hubbard Broadcasting Inc., whose flagship station--KSTP in St. Paul-Minneapolis--is an ABC affiliate.

“Because of satellites, networks no longer have the exclusive ability to tie stations together,” Hubbard said, calling the ABC move ill-advised “at a time when (networks ought to) bend over backwards to try to prevent stations from carrying other programming.”