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Broadcasting & Cable
01/18/99
By Schlosser, Joe
Page 1; No. 3, Vol. 129
REPRINT
COMMENTARY
Brief mention of XENA in article about how a group of stations might be changing how first run syndication of TV shows is done in the USA.PRIMARY SOURCE
Sinclair riles syndicators with planned auction of broadcast time Have the rules to the syndication game changed? That's the question many TV programmers and station executives were asking last week after the Sinclair TV station group sent a letter to 20 Hollywood studios inviting them to bid on packages of weekend air time on their stations. In the letter from Sinclair's top programmer, Bill Butler, the nation's 10thlargest station group asked for staffing bids of just less than $ 1 million on two packages of weekend time slots on 34 stations and one package on 32 stations. The stations range from WTTA-TV Tampa, Fla., the nation's 14th-largest market, to WMMP-TV Charleston, S.C., market number 120. The Sinclair offer comes at a time when weekend time periods for expensive first-run action series like StarGate SG-1 and off-network hours like The X-Files are in short supply. As a result, many studios have held back on planned production of hour-long shows. Typically, stations pay programmers to air their programming or the stations and programmers agree to split advertising time But programmers paying stations is nothing new. Stations in top markets like New York and Los Angeles often ask for and receive cash to deliver programs to their large audiences. Still, the Sinclair proposal did not sit well with most syndication executives. "It's completely arrogant and obnoxious," said one top executive, who pointed out that Sinclair wants a minimum of six minutes in each hour for advertising. "How are syndicators going to make any money? If this is what it's going to take in these size markets to get cleared, it's going to inhibit any kind of first-run development in the future." "This is the most disgusting letter I have ever read," said another irate syndication executive. "It is pure pompousness on their part." Many of the top syndicators are divisions of major studios. Some of them threatened to pull movie advertising from Sinclair if it sticks to its demands. "Collectively we spend tens of millions of dollars on their TV stations," said one executive. "If we all got together or even individually and said, 'You know, they are not good business partners and we can find other places to spend our money,' that million dollars they are asking for weekend slots would go away in a hurry, I promise you," another executive said. "We spend a fortune on advertising with their stations. They're playing with fire because there is a lot of [expletive] that could quickly turn against them." Others charged that Sinclair is sitting on a monopoly because it is running two stations in 17 of its 36 markets through local marketing agreements (LMAs) and trying to take advantage of that leverage through actions like last week's letter. According to BROADCASTING & CABLE, Baltimore-based Sinclair's 56 stations collectively cover 23.8% of the nation's 99.4 million TV homes. The 17 markets in which it operates a second station include Pittsburgh (market 19); Baltimore (24); Raleigh-Durham, N.C. (29); Nashville, Tenn. (30), and Milwaukee (31). FCC officials last week were telling irate syndicators to contact the Justice Department with any monopoly claims, but they also said they are looking into whether to prohibit local marketing agreements that allow some broadcasters to circumvent the ban against owning two stations in a market. Bill Carroll, vice president and director of programming at TV rep firm Katz, says the Sinclair move could set a precedent. "If this were to become the norm for weekend programming, it would certainly seem that the logical next step would be to look at Monday through Friday programming, but I don't know that either side wants to take it in that direction," he says. "This certainly isn't intended to be a slap in the face; it's intended to give their [syndicators'] shows the respect and attention they deserve," Sinclair's Butler says. "When you give a specific time period on a specific station in a specific market and you pretty much promise the show isn't going to be pre-empted and can't be messed with, that is a pretty good opportunity in today's environment." Many stations in New York and Los Angeles have been getting paid for years and Sinclair has asked for "comp" in certain situations before. Butler also says Sinclair executives are only attempting to maximize the value of the station group's available weekend time in a market where there are more shows than "decent" time periods. The company is receiving calls on a daily basis for new action hours and off-network series, he says. The letter is pure economics, supply and demand, he says. "We have been wrestling with a way to add more structure to the way we handle this," Butler says. "Every year we have a number of shows that offer compensation for big clearances and we wanted to add more structure to that. We wanted to treat everybody equal and not play favorites. We figured the best way to do that was to make sure people got specific times and specific stations so they could predict their value." The Sinclair letter offers three lists of markets, all containing 34 of Sinclair's stations with weekend time periods. Packages A and B are deemed to have better time periods and are available to stations at a minimum bid of $ 993,820. Package C starts at a minimum asking price of $ 967,088. The clearances, Butler says, collectively represent more than 21% of U.S. TV homes and that the asking prices are based on a "valuation of the displaced barter." All interested syndicators were instructed to contact Butler by noon last Friday, Jan. 15. Sinclair's intentions were to conclude a deal by the end of next week's NATPE convention in New Orleans. The letter also came with 10 specific guidelines, many of them irking syndication executives. "In Sinclair's sole discretion, if the quality of the actual production is significantly less than Sinclair's expectation of the production, Sinclair will be entitled to adjust the time periods at the conclusion of the May 2000 ratings period," guideline No. 9 states. As for the threats from the Hollywood studios, Butler said Sinclair executives are not worried. "I am disappointed that individuals are taking this as anything more than the straightforward facts that we have laid out," he says. "These are specific time periods with specific stations. This is business and it's handled with respect." Not all syndicators were upset. Studios USA Domestic Television President Steve Rosenberg, whose Hercules and Xena air on a majority of the Sinclair-owned stations, says he won't be paying for airtime anytime soon on the stations, but understands the group's intentions. "I would much rather get a letter from [Sinclair] saying we demand to pay you $ 20 million for the right to clear your action hour--that would be a great letter," says Rosenberg. "But I'm not expecting it. In terms of this announcement, however, I'm not outraged as it is not necessarily a surprise. And in some strange way, I almost admire it." And another top syndication executive said if it were not for the sheer "stupidity" of the letter itself, someone probably would be willing to pay the million-dollar minimum asking price. "If they would have done it without the letter, I'm sure someone would have paid for it, but with the letter we are all going to laugh about it," the syndicator says. "Whoever makes a deal now with Sinclair, we will all laugh at them and know they got suckered into this deal. I can promise you there is not a 1% chance that I will make this deal. I would rather not launch a show than pay this kind of ransom." As for Butler, he's going to sift through any offers he receives and hopefully conclude a deal by the end of the month. "I think it's funny that the New York crowd [stations] has done this forever," Butler says with a laugh. "Sinclair didn't invent this. If you put out a letter for 34 markets, it's much more complicated than just saying one time period on one particular New York City station." SINCLAIR BROADCAST GROUP Package A Suggested minimum bid:$ 993,820 DMA STATION TIME PERIOD 14 Tampa WTTA Sat. 5 p.m. 15 Minneapolis KLCT Sat. 10 p.m. 19 Pittsburgh WCWB Sat. 11 p.m. 24 Baltimore WNUV Sat. 10 p.m. 25 Indianapolis WTTV Sat. 5 p.m. 29 Raleigh-Durham WLFL Sat. 4 p.m. 30 Nashville WUXP Sat. 4 p.m. 31 Milwaukee WCGV Sat. 4 p.m. 32 Cincinnati WSTR Sat. 8 p.m. 33 Kansas City KSMO Sat. 5 p.m. 34 Columbus WTTE Sat. 4 p.m. 35 Greenville/ Spartanburg/Asheville WFBC Sun., 9 p.m. 37 San Antonio KABB Sat. 4 p.m. 39 Birmingham WTTO Sat. 9 p.m. 40 Norfolk WTVZ Sat.11 p.m. 42 Buffalo WUTV Sat. 6 p.m. 44 Oklahoma City KOKH Sat. 6 p.m. 47 Greensboro/ Winston-Salem WUFN Sat. 6 p.m. 54 Dayton WRGT Sat. 6 p.m. 56 Las Vegas KVWB Sun. 8 p.m. 58 Charleston WVAH Sat. 5 p.m. 61 Richmond WRLH Sat. 6 p.m. 62 Mobile/Pensacola WEAR Sun. 11:30 p.m. 64 Flint/Saginaw/ Bay City WSMH Sat. 4 p.m. 67 Lexington WDXY Sat. 7 p.m. 70 Des Moines KDSM Sun. 10 p.m. 74 Syracuse WSYT Sun. 11 p.m. 76 Paducah KBSI Sat. 5 p.m. 80 Portland, Me. WGME Sat. 11:30 p.m. 84 Madison WMSN Sat. 6 p.m. 92 Tri Cities, TN-VA WEMT Sat. 10 p.m. 110 Peoria WYZZ Sun. 10 p.m. 114 Tallahassee WTWC Sat. 1 a.m. 320 Charleston, S.C. WMMP Sun. 6 p.m. Excerpts from Sinclair letter * Sinclair Communications, Inc invites you to evaluate three lists of markets and stations with specific time periods, for weekly hour programs for the Fall 1999 season. You are also invited to submit a firm offer for the purchase of one or more of these clearance lists. * Attached are three lists of markets, stations and time periods. The lists are designated as "A" Time Period, "B" Time Period and "C" Time Period and offer the times and stations indicated. Time Periods "A" and "B" are for thirty-four (34) markets. Time Period "C" is for thirty-two (32) markets. These clearances are for weekly hour programs, with a barter split of seven (7) minutes (national)/seven (7) minutes (local), but no more than eight (8) minutes (national )/six (6) minutes (local). * The invitation is being sent to other qualified parties. If your company is interested in participating in a negotiation for any or all of these three market lists, please contact me by Noon (ET) on Friday, January 15, 1999, to begin negotiation. It is our intention to conclude negotiations the following week or by the conclusion of NATPE, 1999. Your offer should conform to the following stipulations, procedures and guidelines: * The minimum bid price for Time Periods "A" and "B" is $ 993,820 per list. The minimum bid price for Time Period "C" is 967,088. * Only offers that are specific as to the amount of consideration will be considered. The compensation is for the clearance, and is non-commissionable. net dollars. * In markets where Sinclair owns, manages or programs two stations, a second weekly broadcast will be scheduled Monday-Sunday, 9:00 a.m.-6:00 am. In single Sinclair station markets, the second run shall be optional, at the station's sole discretion. * Once an agreement has been executed, the agreement is non-cancelable and the contracting party shall be fully liable to Sinclair for the full amount of the agreed upon compensation. For example, if a planned for program is never produced for the Fall 1999 season, or is cancelled mid-season, the contracting party shall be fully liable for the total amount of the agreed upon compensation. * At Sinclair's sole discretion and as part of the firm offer process, Sinclair, in its sole discretion, may require payment, guarantees in the form of escrow payments, third party guarantees acceptable to Sinclair, in its sole discretion, or such other payment arrangements, which Sinclair deems desirable. * In Sinclair's sole discretion, if the quality of the actual production is significantly less than Sinclair's expectation of the production, Sinclair will be entitled to adjust the time periods at the conclusions of the May 2000 ratings period.
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