• by Wayne Friedman , August 7, 2006

Come fall, ABC.com will have a new, technologically advanced Internet broadband player--and a new digital financial and ad deal with its TV station affiliates.

"We are in discussions with our broadcast affiliates," says Albert Cheng, executive vice president of digital media of Disney-ABC Television Group. Cheng wouldn't reveal many details--although it won't be a revenue-sharing arrangement similar to what other networks, such as Fox and CBS, have struck with stations.

"We'll partner with our stations, but we'll have a different approach," he says.

In fact, Disney-ABC struck a non-revenue-sharing deal with stations in May and June, when it conducted its streaming video trial, says Cheng. Included in that arrangement was an agreement for station affiliates to insert promos in among the three 30-second spots for "Desperate Housewives," "Lost," "Commander-In-Chief" and "Alias."

Early this year, Fox and then CBS made wide-ranging revenue-sharing deals with their TV affiliates for digital, Internet, mobile and VOD programs.

In Fox's deal, stations receive 12.5 percent of all advertising and user fee revenues in their specific market, if a show runs on digital screens after its network play. This percentage will jump to 25 percent if a show runs digitally before running on the network.

While CBS didn't disclose specifics of its deal, executives say CBS stations got virtually the same revenue-sharing arrangement as Fox's. Until this new deal, CBS had given stations a more favorable split--a whopping 50 percent of the revenue earned from digital program sales. CBS renegotiated a lower fee deal by using a new NFL programming TV agreement--inked with CBS stations at the same time--as leverage. Given the NFL's lucrative local ad potential, CBS used it as a bargaining chip in the digital discussion.

At NBC, stations have a 50-50 revenue-sharing agreement for NBC Weather Plus, the digital programming service that provides local and national news. NBC also has a joint venture with NBC's broadband effort, the National Broadband Company, which will deliver news and library content on the Internet. A spokeswoman would not disclose financial terms.

Although NBC has made a programming deal with iTunes Music Store, it doesn't have a station deal. NBC doesn't have a video-on-demand agreement with its stations, either.

In a few weeks, ABC will announce the new digital TV deal for stations, unveil some technological improvements to its broadband player, and reveal which specific programs and advertisers will run on ABC.com this fall.

For its May-June streaming video test, ABC.com users couldn't turn off any 30-second message on ABC.com's broadband player. But users were allowed to interact with a commercial. All this gave ABC some surprising results when it came to viewer attention to ad messages. Some 87 percent of users could recall the advertiser that sponsored the episode they saw. "This is substantially higher than on network television," says Cheng.

Now, TV advertisers are demanding viewer-engagement deals from traditional linear TV programmers. In this new world, says Cheng, such user recall is a big plus.