NBC, Affiliates Agree on New Incentive Plan

The traditional system by which network-affiliated TV stations are paid by their respective network for carrying its programming and advertising is being revamped at the annual NBC affiliates convention here this week.

Instead of a straight deal in which the network and its affiliate agree to a fixed fee that is based largely on how the station ranks in its market, NBC and its stations have agreed on a new “incentive-driven” compensation plan that could see rates vary.

Unlike NBC’s attempt last fall to cut its approximately $145-million annual compensation budget, the new plan initially will provide about the same amount of compensation dollars, though they may be redistributed to the benefit or loss of given stations.

Each station’s slice of the pie, moreover, could also grow or shrink in subsequent years depending on NBC’s overall profitability.

In a news conference during the convention, which began Sunday and ends today, NBC Television Network President Pierson Mapes said that the network would base its re-evaluation of each of its 208 affiliated stations on four criteria: Its local audience ratings in the 4-8 p.m. time slot leading into prime time; its performance at other times of the day; the size of its market, and “subjective” evaluation of the station’s effectiveness in promoting NBC shows, along with consideration of other financial factors affecting the station.

Mapes also said that compensation would be affected by how much NBC programming a given station clears. Questioned whether that policy would interfere with Federal Communications Commission rulings preventing networks from interfering with a station’s right to refuse unsatisfactory programming, he said a station would have to fail to clear the majority of NBC programs in order to suffer significant compensation loss.

Mapes added that in the first year of the new plan, NBC will avoid any major changes in station compensation by “capping the spikes” at 20%--that is, no station will increase or lose more than 20% of its current compensation regardless of performance.

Having compensation dependent not only on individual station performance but also on NBC’s overall success as a network “gives great incentive for everyone to pull their oars in tandem” and may provide a model for ABC and CBS in the future, Mapes said.