Fox Agrees to Pay Television Writers Same Rates as the 3 Major Networks

One of the key gains made by the Writers Guild in its contract settlement with the studios is Fox’s agreement to pay television writers the same rates paid by the major networks.

The network, launched by News Corp. in 1986, pays writers a fraction of what ABC, NBC and CBS fork over in “residuals”--payments for each time a rerun airs--thanks to a contract provision negotiated when it was a start-up.

Although it still is not officially considered a major network under the federal definition, Fox has agreed to pay writers the same rates the big networks do. Under the agreement Friday, Fox, which is paying 66% of what the Big Three pay, will immediately jump to the 80% level, with a subsequent increase of 10 percentage points each year until it reaches 100%.

Wall Street analysts aren’t too worried about the cost to Fox. Jessica Reif Cohen of Merrill Lynch estimates that Fox would pay $4 million to $5 million a year more to writers once it becomes a full-fledged network. That’s hardly noticeable for a company that is part of the News Corp. empire, which Chairman Rupert Murdoch has built into the world’s fifth-largest publicly held media company in a mere two decades.

Even Fox knew it was pushing its luck in arguing to keep the start-up discount. As early as 1994, Fox was emerging as a big-time network when it outbid CBS for the NFL in a cunning maneuver that reshaped the television landscape.

And since 1998, Fox has been on the verge of overtaking NBC for the lead in the key demographic that are coveted by advertisers.

Analysts are betting that Fox will take more market share away from ABC and NBC in the advertising selling season that kicks off in mid-May. New successes such as “Boston Public,” a resurgence in “Ally McBeal” and returning favorites such as “Malcolm in the Middle” have boosted its ratings by 7% season to date among viewers 18 to 49 years old.

By comparison, ABC’s ratings have dropped 18% in the same period among those desirable viewers.

Under federal guidelines, a network must have 16 or more hours of programming in prime time to be considered a true network. While the Big Three program 22 hours each, Fox still has only 15.

Being defined as less than a network allowed Murdoch to flout rules that until 1996 prohibited studios from owning major broadcast networks. The ban was designed to protect independent production companies that competed with the studios for time slots on the networks. As a result, Fox had a head start over the other studios in using its own air time to build franchises it produces such as “The Simpsons.”

The rules were relaxed in 1996 when networks cried financial hardship and asked for the rights to profit from the shows on their air. As a result, Walt Disney Co. was able to scoop up ABC and Viacom purchased CBS last summer.