Kellner Bets on CW

As The CW and Fox's My Network TV prepare to launch this fall, veteran TV executive Jamie Kellner is watching closely. An early architect of Fox Broadcasting and founder of The WB, he understands the challenges of starting a network. Although he has been out of the TV-network game since leaving Turner Broadcasting in 2003, Kellner still has a stake in TV as chairman/CEO of station group ACME Communications, which recently aligned seven stations with The CW. He talked to B&C's Allison Romano about the broadcast business and why he has his money on The CW.

Two of the biggest media companies in the world—Viacom and Time Warner—couldn't make UPN and The WB work. What makes you think The CW will work?

When we started The WB, it triggered the launching of a competitive network. Having the two networks competing against each other took everyone's eye off the ball: the viewers, advertisers, programmers. There were one too many networks. Merging the two will keep more focus on this network as the place for young-skewing shows and for advertisers to get younger demographics.

For viewers, those people that preferred UPN shows or WB shows can now have both. If the marketing is successful, they will merge the identities together, and, hopefully, they will do it in a clever way.

Your station group, ACME Communications, considered pitches of both The CW and My Network TV. Why go with The CW? Did your history with The WB sway you?

History factored in zero. Our responsibility is to grow our stations and make them as valuable as we can. It was all about the reality of what each network has to offer. One is launching with two new shows, and anyone who has ever been in the network-TV business knows that launching new programming is a risky venture. The odds of one show out of 10 to work is not very good. The odds of having two work and to launch a new programming network with them are zero.

With The CW, you take a network with proven track records that is building the best schedule from both The WB and UPN, versus [My Network TV's] new programs that are unproven. It was not a difficult decision.

Some station owners have balked at The CW's affiliation terms, which include reverse compensation and only three minutes of advertising an hour in prime. What concerns did you have?

I am a realist. I wish we got more advertising time on The CW, but do I think it is possible for the network to give it to us? No. You want a financially healthy network so they can justify investing in programming and promotion and developing the audience.

If a station was the fifth-ranked station in the market and if it picks the wrong network and the sixth picks the right network, in two years, that station will be more important and more valuable than the station that passed on The CW. This is a big opportunity for station operators to make the right decision, and that is based on the strategy, the programming and the people.

I'd like to compliment [Twentieth Television head] Bob Cook and Fox for having figured out how to take programming they've already developed and fill the needs of their major-market stations. Until proven, I have to look at it as a dangerously risky strategy.

What impact will the new networks have on the ad market? Won't there be more supply than demand?

There is already too much supply in some ways; that's why cost per thousands [CPMs] have gone up slowly in recent years.

It's also why The CW strategy is so important. It's differentiated by the younger audience that is not easily found on other networks' schedules.

You have a whole group of buyers who need you to succeed and are willing to pay higher CPMs to reach that audience. The CW will get CPMs similar to The WB.

My guess is that they will be profitable this year. The CW has a built-in advertiser base, and, by closing down one network, they will put pressure on their inventory and will be able to gain ground with the demo. I think the network is going to have a great year.

Broadcast networks are distributing shows on Google, cable VOD and their own Web sites. How is this hurting your stations?

As a station owner, you want a fair share of revenue. It is many years out before you'll have any usage level that will impact the ratings, but all modern technologies have potential to damage overall delivery of the network.

It is not affecting us in the next few years, but broadcasters should fight to get a fair share of the revenues. A lot of the value comes from creating the demand over the broadcast network. Both sides have to recognize that they need each other to succeed.

If you were making up The CW schedule, what shows would you pick?

Gilmore Girls and Smallville. Friday nights will probably be wrestling; it is low-cost programming, and it will get a number and fills a difficult slot. America's Next Top Model is a good show; so is Everybody Hates Chris. There are a lot of successful shows.