Tabbed a "seasonal inventory exchange test," the two sides have agreed on a schedule where dozens of commercial slots (avails) that each owns would be swapped (or moved around) during the September-December period.
Highlights of the fall program are threefold. Affiliates have the chance to gain 30-second avails in sports events, if they give ABC more promo space. They have the opportunity to pick up inventory in "World News Tonight," where they typically have none. And they can get more avails towards the end of certain months, when demand for their time is higher.
Unlike the first two phases of the Inventory Exchange System (IES), knowing the opportunity is coming well in advance could allow affiliates time to lay out a better selling strategy. Another difference for the fall: no cash will be exchanged for the avails. Each side gets new inventory, without taking some risk by committing to spend money before going to market.
While the affiliate board and ABC negotiated on which avails would be exchanged come September, the affiliates opted for more inventory during the last two weeks of several months -- a period when the auto category tends to spend more with them. ABC, for its part, generally has less volatility in demand from a timing perspective -- especially if the scatter market is strong.
In the fall, ABC would be giving affiliates some coveted new turf, notably sports. In Dallas, for example, the station may be eager to grab time in a University of Texas football game; the Boston station wants to sell commercials in a Celtics game.
Affiliates also can also gain inventory in "World News with Diane Sawyer," a show they have traditionally been shut out of, though they received some time there last fall via the IES. The chance for a local advertiser to be the only one in the newscast could be an opportunity to stand out. "All of a sudden you look a little bigger than your competitors," said Bill Hoffman, general manager of the Atlanta affiliate.
The "seasonal" test was laid out to affiliates in a Webcast last week, led by Bill Fine and Dave Boylan, the respective general managers of the ABC affiliates in Boston and Miami. The pair have been effectively deputized by the affiliate board to work with ABC on the IES since the system launched last fall.
The continued expansion of the IES comes as networks and affiliates have been in disagreement on how to share dollars now coming in from cable/satellite/telco TV operators. Fox and its affiliates are in the middle of a battle on that front. At ABC, other issues that rankle include the network streaming shows on the Web and sports events moving to ESPN.
"You've got to work toward having a relationship with the network, where you can separate tough business conversations and know there's another part of your relationship that can be beneficial," said Boston's Hoffman, who also chairs the affiliate board.
"The board is finding unique ways to work with the network to generate more revenue with more strategic use of our commercial inventory," said Miami's Boylan, the board vice chair. "We are optimistic we can be as effective in finding ways to address other issues ABC affiliates are working on with the network ... issues such as stronger late-news lead-in programming; getting more sporting events on ABC; and getting higher ratings for "Good Morning America."
A request to speak with ABC CFO Jim Hedges, who has been overseeing the IES, was not immediately granted.
So far, the IES has had three successful go-rounds, each where cash was exchanged. Affiliates had opportunities to buy a package of inventory from ABC in October and November. That allowed them to re-sell it for higher prices due to demand from political and holiday advertisers.
Then, in January, a slow time for affiliates, came a reverse, where affiliates could collect cash from ABC for 16 spots they owned.
When the fall initiative is finished, a period of extensive analysis will take place; a mutual decision will determine the "seasonal" dynamic. "There will be an evaluation period by both sides to figure out if it's something we want to be part of ... our dossier in our IES portfolio," Hoffman said.
Driving the IES on one level has been ABC head Anne Sweeney, now overseeing the network and its owned-and-operated stations, as she's looked at the two businesses holistically. If the owned stations can help make the ABC group at large more money, then why not go for it?