FAMILY FEUD

Affiliates Fight TV Networks Over Issues of Ownership and Control

By Matthew Rose and Joe Flint
Staff Reporters of The Wall Street Journal

Jim Goodmon, chief executive of Capitol Broadcasting, has maintained a successful relationship with CBS for almost 20 years. His Raleigh, N.C., TV station, WRAL, is one of the most profitable CBS affiliates in the country.

THIS MONTH'S COVER STORY Adjusting the Set TV Faces a Technological Transformation as It Tries to Win Back Viewers

Family Feud Affiliates Fight TV Networks Over Issues of Ownership and Control

Fuzzy Picture With Billions at Stake, TV Networks Question Ratings Measurements

Outside the Lines ESPN's New Strategy Irks the Sports Leagues That Helped It Thrive

Mr. Goodmon is also one of the network's most vocal opponents in the battle over media ownership. At issue are sweeping Federal Communications Commission proposals that would ease restrictions on how many media businesses a single company can own.

The proposals would allow networks to own stations reaching as much as 45% of the nation's television households, up from 35% under current rules. Mr. Goodmon and other critics argue that allowing conglomerates like Viacom-which already owns the CBS and UPN networks, MTV, Showtime, Nickelodeon, Comedy Central, Paramount Pictures, Simon & Schuster publishing, the Infinity group of radio stations, and several other media businesses-to own even more outlets will stifle independent media voices.

But their fight is also being fueled by something far more parochial: the rising animosity between broadcast networks and their local affiliate stations, whose partnership forms the backbone of the TV industry.

They Need Each Other

Most of the nation's television stations are owned by independent companies that contract with the national networks, much as car dealerships are linked to auto makers. The local stations, or affiliates, usually take their network partner's prime-time lineup, morning and late-night show, soap operas and weekend sports events. The affiliates assemble the rest of the schedule themselves, either buying reruns and talk shows or making their own programs, like the local news. Networks need affiliates to reach the biggest possible audience and command higher rates from advertisers. Affiliates need strong network programming to help their own local ratings.

The two sides have jostled for years over how much control networks have over affiliates. In the early days of television, the networks were the weaker partner, and had to entice station owners to sign on with them. But today, affiliates say they're getting squeezed as the networks buy up more stations of their own. They complain that the networks increasingly interfere with the way they want to run their local stations, clamping down, for example, on longstanding "pre-empting" rules that allow affiliates to tinker with network programming lineups to cater to local audience tastes.

It's not just pride and independence at stake. Affiliates get to sell only a couple of minutes' worth of ads on network shows, and they have to give up more and more of their own airtime to promote network lineups.

For their part, the networks say affiliates have as much independence as before. And they say they have no choice but to buy up stations in this climate. The rise of cable and rapidly increasing programming costs are jeopardizing the network model of free television for viewers, they say; buying cash-rich stations will help the networks' profits.

Capitol Broadcasting is a powerhouse, both editorially and financially. It owns five television stations in North Carolina, as well as a radio station and two digital channels. Its Raleigh-Durham stations scoop up about 36% of all the TV revenue in that market.

Mr. Goodmon uses his pre-empting power to dump prime-time lineups, either for local basketball games or because he doesn't think the shows are appropriate for the community. WRAL, for example, axed CBS's Victoria's Secret fashion show in November 2002. Earlier this year, it refused to run CBS's "Cupid," a reality-TV dating show, saying it demeaned the institution of marriage. Instead, WRAL ran reruns of "The Andy Griffith Show," the folksy 1960s sitcom.

"I know they were grumpy about it, but that's the way it is," Mr. Goodmon says.

Likewise, WRAZ, Capitol's Fox affiliate in Durham, refused to run the first two seasons of "Temptation Island" as well as "Who Wants to Marry a Multi-Millionaire?" and "Married By America." WRAZ also re-edits promotional material from Fox when it's deemed too racy.

The networks complain that Capitol's cherry-picking of programs violates the spirit of the broadcaster-affiliate relationship. "I get that they don't entirely agree with everything we want to do, but this isn't a Chinese menu," says CBS Chairman Leslie Moonves. "You can't say I want 'Everybody Loves Raymond,' David Letterman, the Super Bowl and the Grammy Awards and then say I don't want 'Cupid.'"

Mr. Goodmon believes local stations, not networks, should have more say in programming decisions. At the same time, he wants to protect his lucrative local enterprise. He says he fears that if the networks grow more powerful they will simply ignore his station. He has long complained that networks no longer seek his input on programming at the early stage of a show's development.

XFL: Deal With It

When the networks began to grow after World War II, federal rules tightly restricted how many stations a broadcaster could own. So networks plied local stations with cash to persuade them to sign on. For decades, networks headed off fights by soliciting affiliates' opinions when drawing up schedules. And affiliates had lots of power to pre-empt network shows and run their own, which gives them the ability to sell many more ads during a broadcast.

The balance of power began to shift in the early 1990s after networks were allowed to acquire more local stations. For example, Viacom, through its ownership of CBS and UPN stations, now owns 39 stations, reaching 39% of the nation's audience, compared with 10 years ago when it owned six stations reaching just 19%. As the networks' power grew, they started to cut payments to locally owned affiliates for carrying their programs and in some cases even demanded payments from affiliates.

The result, say many affiliates: Networks, in effect, force programs down their throats without considering the local market. When NBC launched its controversial XFL football league with World Wrestling Entertainment, West Coast NBC stations objected loudly, since they would have to pre-empt their local news to carry the games. But their arguments with NBC failed, and they were forced to run the games.

Network executives and some station owners dismiss the suggestion that local affiliates are losing power. Even some stations owned by networks say they have plenty of latitude to make their own decisions about programming. "We operate exactly the same as Capitol Broadcasting," says Bernie Prazenica, general manager of the ABC-owned station in Raleigh. "You can't be successful if you don't understand the community."

What do you think of the FCC proposal to allow companies to own more media businesses? Write to us.