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Chris-Craft stations re-up with UPN

UPN and Chris-Craft signed a new affiliation agreement late last Tuesday night, one day after the existing agreement expired. The deal covers all eight of Chris-Craft's UPN affiliates. They are in the top 25 markets and reach 20.4% of U.S. television households. The deal was signed with the blessing of News Corp., which last year agreed to buy the Chris-Craft stations for more than $5 billion. If that deal goes through, as expected, it will give Fox duopolies with UPN affiliates in the top two markets and Phoenix. Also last week, the network renewed affiliate deals in four markets covering about another 1% of the country: Green Bay, Wis.; Bakersfield, Calif.; Boise, Idaho; and Lubbock, Texas.

According to UPN Chief Operating Officer Adam Ware, the network has just two more primary affiliate renewals coming due this year. They are in two small markets and expire at the end of the year, he said.

About a half-dozen renewals expire on Dec. 31, 2002, he said. Clear Channel, the largest UPN affiliate group outside of Paramount and Chris-Craft, still has several more years to run on its affiliate deal covering seven stations. Network-wide, affiliate deals are staggered, he said, with some coming up just about every year going out to 2010.

Three UPN stations dropped out of the lineup last week, switching to The WB, in Chattanooga, Tenn.; Shreveport, La.; and Waco, Texas. Those were decisions made a year and a half ago before Smackdown!
took off. At the time, the Chattanooga station sought compensation, and the network refused, said Ware. (The WB executives last week insisted they weren't paying any stations outside of Sinclair any comp.) The UPN programming there is now running later in the evening on the Fox affiliate.

In its press release, UPN said it was a "multiseason" agreement, which sources said meant the rest of this season and all of next season, or at least 18 months. There are options to extend the agreement beyond that time, sources said. Basically, the new agreement buys time for both Fox and Viacom to ponder their future involvement in UPN. Viacom wants the network to stop hemmoraging red ink as soon as possible and to start making a buck. Although it has other options, Fox needs programming for the Chris-Craft stations and has expressed support for the continuation of UPN. Fox executives also say they are open to the possibility of becoming an equity partner in the 5-year-old network. But talks along those lines haven't begun and won't, sources say, until after the acquisition has been completed. That's expected some time in the second quarter.

Although UPN has paid compensation to affiliates in the past, the new Chris-Craft deal does not provide for any. Viacom Chairman Mel Karmazin has stated in the past that he wants to wean affiliates at both UPN and CBS off compensation.

Ware would not comment on any of the specific terms of the new affiliate agreement. "But I will say emphatically that, as a general principal, we don't pay any compensation-cash or otherwise. That is a basic fundamental principal that we never vary from."

As for deals in which compensation has been part of the formula, Ware said, the network now believes "it is no longer fair for us to be paying stations compensation. We believe we create enough value that we don't have to enhance it with compensation in any form." And in some cases, UPN has negotiated what amounts to reverse compensation in the form of a percentage of the station's profit that is attributable to its affiliation. That's also a formula widely used by The WB.

Chris-Craft and Fox Station Holdings/Compiled by Elizabeth A. Rathbun