• by Wayne Friedman , April 14, 2006

Fox has become the first network to strike a major agreement with its affiliates giving them a portion of revenue made from Fox's programming that lands on the Internet, VOD services, mobile phones, or iPods. Other networks are currently working up similar new media deals with stations.

In the six-year deal, Fox affiliates will receive 12.5 percent of the revenue--advertising or from paid downloads--from any program that runs on a 'non-linear' platform after its prime-time broadcast run--that means Internet, VOD, or iTunes program distribution, for example. A cut of this business for stations grows to 25 percent of revenue when it runs before airing on the network.

In 2006, Fox can re-purpose 60 percent of its prime-time programming on 'non-linear' platforms; 80 percent in 2007 year; and 100 percent in year three of the deal. A Fox spokesman did not return phone calls by press time.

"It's a good deal in that they are sharing revenue," said Bill Carroll, vice president and director of programming for Katz Television Group. "This continues their 'partnership.' But what it's all going to mean, nobody knows. If it's going to turn out to be significant revenue loss for stations, I see stations wanting to revisit this in six years. If it has a substantial impact for its over-the-air ratings, it's going to be an issue."

Up until this point, Fox hasn't participated in making many wide-ranging new media program deals--because of the lack of an agreement with its stations, only making new media deals in markets where it owned stations.

Walt Disney and NBC Universal, on the other hand, have had the freedom to make deals. For example, each made separate deals with iTunes. CBS Corp. made deals with Google Video and Comcast Corp.

With new media programming deals an obvious threat to TV stations' traditional business of selling advertising revenue from linear network scheduling of programs, networks had to make provisions to keep their traditional, and still major, revenue-producing partnerships. Program analysts assume that as partners, stations will also help in the marketing of non-linear, new media deals.

Other networks are also in the process of making similar deals, according to executives.

CBS, according to executives, has an existing affiliate provision for a new media deal that currently gives CBS affiliates 50 percent of after-market new media revenues. But this deal point was made some years ago--and didn't reflect the current rash of new media program deals currently on the market. Station executives say, however, that those deals will soon expire. CBS is looking to make a new one at a much lower percentage--akin to the Fox deal. CBS spokespersons didn't return phone calls by press time.

ABC doesn't have any provisions for new media sharing revenues with its affiliates, according to executives--thus the freedom it has had to make a wide variety of deals that cut into stations' territories, such as with iTunes Music Store and arrangements that put shows on its own Web site, www.abc.com. An ABC spokeswoman would only say, concerning possible stations' revenue split for new media deals: "We are still trying to figure it out."