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NAB: Fox Affiliates, Network Hash Out Hot Issues

Complete NAB 2011 Coverage

A marathon Vegas meeting between the Fox affiliates and the network's key executives saw the station folks vent their concerns about what they deem to be onerous reverse compensation fees. The meeting ran close to four hours, and by some estimates around 40% of it was dedicated to give and take over sizeable fees tied to stations' affiliation agreements.

Fox is demanding 25 cents per subscriber from affiliates in markets 1-125 in the first year of the deal, climbing to 50 cents by the fourth year. Fox affiliates in smaller markets follow a relatively less expensive rate card. Fox President of affiliate sales and marketing Mike Hopkins fielded question after question on the topic from affiliates who felt the fees would seriously drain their cash flow. After Hopkins held the hard line amidst such barrage, one affiliate noted, "This guy's got ice water in his veins."

The meeting was much anticipated by industry watchers, as the row between Fox and its affiliates got nasty-and went public-in recent months. Both sides seemed determined to keep the negotiations out of the press, and to show a united front in Vegas amidst their differences.

"The meeting was a very open and honest dialogue between the network and its affiliates," said Fox affiliates board chairman Brian Brady moments afterwards. "It's exactly what you need. When you're partners, you need to communicate."

There were around 150 people in the closed-door meeting, the doors carefully monitored by a pair of guards. NAB President/CEO Gordon Smith, who'd addressed a general NAB assembly this morning, spoke to the Fox contingent as well on hot button regulatory issues such as broadcasters' spectrum and retrans.

Network brass at the front of the room included Jon Hookstratten, Mike Hopkins, Maureen O'Connell, Preston Beckman, Mike Darnell, Kevin Reilly and Peter Rice. Darnell, for one, updated the affiliates body on American Idol and the ballyhooed fall debutant X-Factor, which the network stressed was a very different performance show than Idol.

The Fox affiliates board met yesterday afternoon. Brady did not let on much about that meeting. "We talked about a lot of things, including the paradigm-shifts in the industry," he said. "Like everyone else, we're trying to figure it out."

Some on the affiliate side recognize that they must help the network foot the bill for programming, to keep marquee TV events from shifting to pay television.

Most affiliates were very reluctant to share details of today's meeting, while some suggested that nothing out of the ordinary went on in the Hilton ballroom. Some thought they detected a more conciliatory tone from Fox brass when it comes to the so-called "program fees," while others said Fox did not seem to give an inch.

"Fox does not appear to be flexible with their retrans demands," said one affiliate GM who asked to not be named, "and I think most stations left still wondering how this will all pan out."

Later in the day, Fox issued statements in which both the network and the affiliates board expressed their commitment to the partnership.

"Meeting with our local affiliates once again reaffirmed just how valuable our partnership is to Fox and to each of their local communities," said Fox's Hopkins. "Every day, viewers across the country start and end their days with their local news and entertainment programming, and that's an incredibly powerful connection that only local stations provide."

Affiliates board chairman Brady's statement read:
"We appreciate the opportunity that Fox gave us to voice our questions and concerns today, and we're grateful for their ongoing dedication to quality. We are aligned in our goals to create a material dual revenue stream business for both the stations and the network."