Published April 17, 2006
NEW YORK – Fox has reached a deal with its affiliated TV stations to share revenues from video-on-demand, the Web and other non-traditional ways of distributing hit Fox shows such as "American Idol."
Several networks have raised the ire of their affiliate groups in recent months with deals to offer replays of network programming through new channels like Apple Computer Inc.'s (AAPL) iTunes services and the Web.
Network-affiliated stations want a share from these new businesses and are concerned that they could take away viewers and advertising dollars from their own stations, which long enjoyed exclusive access to network shows.
In the latest move to upset traditional TV business models, Walt Disney Co.'s (DIS) ABC last Monday said it would offer full-length versions of "Desperate Housewives," "Lost" and two other shows for free on the Internet on the day after they aired. The shows will appear online in a two-month trial and will contain interactive ads that you can't skip through.
ABC also offers shows for sale on iTunes, while General Electric Co.'s (GE) NBC and CBS, which is owned by CBS Corp. (CBS), have cut deals with Comcast (CMCSA) to sell replays of hit network shows on VOD, or video-on-demand.
Cable operators are clamoring for more hit shows for VOD, but have had difficulty getting affiliates and advertisers on board.
The deal between Fox and its affiliates was worked out over the past several months and finalized last week, Brian Brady, the head of Fox's affiliate group, said Friday, confirming several news reports. Fox has more than 150 affiliated stations.
Brady described the six-year deal as "the beginning of a change in the relationship between the affiliates and the network," where both will be partners in creating a market for video-on-demand and other new kinds of platforms for network programs.
"Unlike the other networks, Fox has recognized the value in having a strong relationship with their affiliate body and the marketing muscle that relationship can bring to the projects we do together," Brady said.
Brady is CEO of Northwest Broadcasting Inc., the owner of five Fox-affiliated stations. Brady also owns two CBS affiliates in a separate company and has previously owned stations affiliated with ABC, NBC and UPN.
Scott Grogin, a spokesman for Fox, said the arrangement with the affiliate group allows the network to cut deals for other kinds of distribution "with full knowledge that our affiliates have preapproved the program."
Both Grogin and Brady declined to discuss the specific details of the revenue-sharing agreement. Fox is owned by News Corp. (NWS), the global media conglomerate controlled by Rupert Murdoch.
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