• by Wayne Friedman , June 30, 2006

CBS has struck a new a digital media deal with the CBS affiliate board--a deal linked to an extension of CBS's NFL cost-sharing agreement with its affiliates.

Like other network groups before it, such as Fox, this agreement frees up CBS in making other digital media deals. The deal is said to be on par with the Fox agreement--affiliates get anywhere from 12.5 percent to 25 percent of advertising revenue or consumer transaction fees for digital programming.

CBS needed to strike this new agreement--one that still needs approval of its entire affiliates station group--because an existing, older agreement had CBS giving affiliates 50 percent of extra revenues that CBS would gain from extra advertising sales or consumer transaction fees for programming. This was deemed too generous, according to CBS stations' executives. It prevented CBS from making many wide-ranging digital media deals.

For instance, it made a VOD deal with Comcast Corp.--but only in markets where CBS owned TV stations. This was made in order to avoid any station conflict problems, as well as avoiding any revenue split with non-owned CBS stations. In addition, CBS would also only put programming on its own site--www.cbs.com, in order to avoid conflict with its affiliates.

Still, like other networks, CBS did make an iTunes deal--this for single episodes of shows such as "CSI," '"CSI: Miami," "CSI: NY," "NCIS," "Numbers," and "Survivor." For this deal, CBS--according to executives--has been shelling out 50 percent of its consumer transaction revenues to its affiliates.

Stations say CBS had the leverage of the NFL deal, where stations contribute to the $500 million yearly fee to the league in exchange for valuable local advertising revenue in the games. Under the new digital agreement, the NFL agreement is extended for three years.

Under the new deal, CBS affiliates could get more revenues: Affiliates will also receive a "bounty" for any Internet user traffic they deliver to CBS.com or other CBS-owned Internet sites. This will encourage stations to use their valuable on-air time to help support CBS-related Internet activities.

"It's probably not disadvantageous to the affiliates," said Bill Carroll, vice president and director of programming for Katz Television Group, about the deal. "For CBS to succeed in these new areas, it needs to have the affiliates promote them. What's your motivation to promote? A share in the revenue. But no one knows exactly what it is going to be."