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No Dough, No Show

Emmis Television has fired the latest, and loudest, shot in its campaign to get cash for its DTV signals. The TV-station group pulled the digital signal of its Omaha, Neb., CBS affiliate, KMTV(TV), off the local Cox-owned cable system. The signal contains CBS's HDTV programming.

It's not that the hard line is new, says Emmis TV President Randy Bongarten, "It's never been our intention to do long-term deals without cash compensation. It's just the first time that we've had to take something back."

Cox had been carrying the DTV signal under a deal struck by previous management. The CBS HD service was part of Cox's digital tier, which it offers at no extra charge as part of its digital package.

Emmis has 16 stations but only one other, WKCF-TV Orlando, Fla., has a digital cable deal, also struck under a previous owner. In other markets, the issue has yet to surface, or, as in Albuquerque, N.M., there are no deals, although negotiations continue. Going forward, however, the policy is now clear: no cash, no carry.

Emmis also is seeking cash for analog carriage, says Bongarten, and is negotiating deals in Omaha and Albuquerque. But there are no plans to pull the analog signals or ultimatums, he says.

Neither Bongarten nor Cox would say how much cash Emmis is asking for the stations' signals.

Emmis Chairman Jeff Smulyan has long maintained that broadcasters undervalued themselves in the initial round of analog retrans negotiations, pledging to investors at a December 2002 conference that it was time to get cable to pony up.

The troops have gotten the message. "We fumbled the football the first time with our analog signals," said KMTV General Manager Jim McKernan. "We're not going to fumble it this time with our digital signal. It's the most valuable asset we have."

Emmis's move in Omaha came after a year of fruitless negotiation and has triggered a lively PR battle. After Cox prompted subscribers to complain to KMTV about the loss of the service, McKernan fired back with an e-mail to subscribers and on-air spots blaming Cox. McKernan also met with Nebraska's U.S. senators to solicit their support.

Cox spokesman Bobby Amirshahi, who calls KMTV's HDTV signal "important but not vital," is still talking of getting back to the negotiating table, while maintaining that the company will not pay cash. "The answer is no," he says.

However, Amirshahi has offered other things of value for KMTV's signals: marketing help, dial position and commitments to buy ads on the station.

If the negotiations do resume, there will soon be a new face on the Cox side. The company just named Percy Kirk to head the Omaha system, moving him over from Cox in Arizona.

McKernan said he was happy to hear that Cox is willing to negotiate. With the Super Bowl, March Madness and other sports coming up on CBS—the kind of programming that drives digital cable subscriptions—it didn't make sense not to negotiate, he says.

But he also makes it clear that Emmis has drawn a line in the sand. "Any settlement is going to involve them paying us cash per subscriber for our digital signal. There is not going to be any other settlement involved. There is not going to be any other compromise."