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CBS affiliation moving to Tribune's WTTV


The Frog

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This point was raised in a Poynter article about the switch:

If Media General becomes concerned that LIN may be on shaky ground with CBS, is it possible that this switch or the threat of any other CBS affiliate removals on LIN's 10 other CBS stations could jeopardize the planned merger? Keep in mind, LIN and Media General haven't even decided which stations they'll sell off in conflicting markets, and they announced the sale six months ago.

 

At the very least, there needs to be a $100 million adjustment in price. That is the value that was lost because LIN tried to play hardball with CBS. Indy is an oversignaled market - they were stupid to do that. CBS was also stupid to not tell LIN they were signing with WTTV to give them one final shot at keeping their affiliation. But then again, if they wanted to send a message then I guess it was no skin off their nose. The $100 MM came out of someone else's pockets.

 

I didn't realize that WTTK has a stick essentially where everybody else does - in the northern part of Marion County. The only downside I see is that they are roughly at 500 kw, which is half power for a UHF (1000 kw). The Big-3 are in lots of markets where they are on a station with that kind of power ... like Detroit, where both stations have flea power .... but with two signals, they may not care. WKEF and WOSU both run about the same ERP and while WOSU doesn't have an awful signal, it's still not as stable as the others. But compared to WISH's VHF signal it probably is an upgrade for them.

 

But then again, who cares about signals anymore? I still think if WISH and WTHR had it to do over again, they would have stayed on UHF if for no other reason than the spectrum value.

 

WJXT is number one in their market (by far) as a news-heavy independent. They seem to have what counts as standard TV station fare these days: Reruns of Everybody Loves Raymond, Dr. OZ and Queen Latifah twice a day, and news.

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sanewsguy chastised me before for using department store analogies, but let me kick around this one for you all ....

 

Back in the early part of the 20th century, this was a nation of mostly family operated department stores. Because they could see where things were going, consolidators such as May Company, Allied Department Stores and Federated Department Stores (now Macy's) started merging with all the chains. Family tended to stay in place for one or two generations, but once the families started losing interest in running their stores they put corporate guys in there to run their operations.

 

In order to have scale to compete, I wonder if it's time that the WFMJ's, WHIZ's, WLEX's, WBNS's, KOTV's and the KFMB's of this world started banding together in a similar manner? I don't think it would necessarily need to be a formal merger ... just have them all run by a single corporate office that does things for them like the big chains do.

 

I really, really, really hate the idea of local ownership falling by the wayside. I really, really, really hate corporate ownership too. Could this be some way to have the best of both worlds?

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Although LIN/WISH hasn't made a public statement on the switch, this note did show up in LIN's 2nd Quarter Financial Report that was filed with the SEC yesterday:

 

Note 10 — Subsequent Event

 

On August 11, 2014, we received notice from CBS Television Network, a division of CBS Inc. that it will not renew the network affiliation agreement for WISH-TV in Indianapolis, Indiana when that agreement expires on December 31, 2014. We are currently evaluating the impact of this event, including assessing the recoverability of the carrying value of the intangible assets associated with this television station.

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At the very least, there needs to be a $100 million adjustment in price. That is the value that was lost because LIN tried to play hardball with CBS. Indy is an oversignaled market - they were stupid to do that. CBS was also stupid to not tell LIN they were signing with WTTV to give them one final shot at keeping their affiliation. But then again, if they wanted to send a message then I guess it was no skin off their nose. The $100 MM came out of someone else's pockets.

 

Could LIN try to pull what Nexstar did in Fort Wayne and sue CBS and/or Tribune? It sort of worked for them, Nexstar and Granite reached a settlement and WFFT got back its Fox affiliation. They could cite the same thing that Nexstar did with the case of WPTA and WISE, too much control of major network affiliations, since the WTTV/WXIN duopoly would maintain affiliations with three of the five major broadcast networks in addition to This TV and Antenna TV (although the latter two don't matter as much). Like Tribune, LIN has several Fox affiliates in its portfolio, most of which are similar in format to WXIN; they could try to sue to get that affiliation or get back the CBS affiliation.

 

In this case, Indianapolis has enough stations for affiliations with six networks; even though it apparently is not a violation of the affiliation agreement, the fact that The CW is being busted down to a subchannel in Indianapolis probably doesn't sit well with them, even though it was one of the network's parents that caused it to happen. If they sued, LIN could also cite the point that LIN didn't receive warning that CBS would take its affiliation elsewhere and allege that it did not fairly negotiate with WISH on reverse comp as well as any potential damage it could incur with the merger with MG.

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On the surface, it does look like CBS may not have been negotiating in good faith...CBS was in talks with WISH/LIN and then just went out and signed-up with WTTV/Tribune. That's what it "looks" like, at least at this point, and if that is the case, LIN might have a case. On the other hand, if LIN were to sue CBS to get WISH its CBS affiliation back, wouldn't that likely potentially sour CBS when it comes to LIN's other CBS affiliates? CBS could actively seek out new affiliates in LIN's other CBS markets, at least in markets where such a switch would be practically viable for CBS. On top of that, if CBS were to go back to WISH, WTTV/Tribune would likely sue CBS for breach of contract, and that could also put the Indianapolis CW affiliation in jeopardy, assuming part of the rationale for CBS moving to WTTV was to assure a CW affiliation on WTTV (albeit on a sub-channel) and pacify Tribune's trepidations about the performance of the CW.

 

And I doubt if any of this is sitting too well with the Media General folks. Thanks to LIN, Media General just lost a big CBS affiliate that the company was counting on as part of the merger.

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Is CW locked into WTTV until 2016? Could they just be putting on a subchannel to keep it out of WISH hands?

Yes to both questions. I suppose it's possible CW might be able to terminate their agreement with WTTV if an offer of moving to a primary channel versus a subchannel presented itself. However, if your trying to prove a point to LIN and WISH why would you help them out? Remember who owns half of the CW.

 

 

What going to happen with LIN/Media General stations that affiliated with CBS and with the future of the contracts with the network?

They will likely cave to CBS' demands and re-up the rest of their affiliations.

 

Even though somebody said WXIN contract is up with FOX in 2016; it would behoove WISH to align their station with FOX. Lin/Media General should be on the phone right now having talks about moving FOX to WISH-TV. If that were to happened CW could move to 59, or 8 would be an Indy outlet like KTVK, WJXT.

LIN can call the folks at Fox all they want but, Fox has a contract with Tribune for a few more years. Unless, Lin wants to pay all the damages when Tribune sues Fox such a scenario is unlikely to happen. WISH is SOL on affiliation front. LIN decided to play chicken and lost big time.

 

This point was raised in a Poynter article about the switch:

If Media General becomes concerned that LIN may be on shaky ground with CBS, is it possible that this switch or the threat of any other CBS affiliate removals on LIN's 10 other CBS stations could jeopardize the planned merger? Keep in mind, LIN and Media General haven't even decided which stations they'll sell off in conflicting markets, and they announced the sale six months ago.

In my mind, no. They will likely re-up the rest now. Letting CBS walk or telling them to take a hike out of spite could be seen as a breech of fiduciary duty. And, That could present more issues.
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This is from the preemption thread on RadioDiscussions:

 

In 1994 when WAGA announced they were switching from CBS to Fox, they began piecemeal pre-emptions of CBS shows, starting with The Price Is Right and the entire Saturday morning kids line-up. At the last minute, then-independent WVEU (today CW's WUPA) stepped in and cleared Price until CBS found a new affiliate, which is now WGCL.

Do you think this would happen with WISH?
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Yes to both questions. I suppose it's possible CW might be able to terminate their agreement with WTTV if an offer of moving to a primary channel versus a subchannel presented itself. However, if your trying to prove a point to LIN and WISH why would you help them out? Remember who owns half of the CW.

 

 

They will likely cave to CBS' demands and re-up the rest of their affiliations.

 

LIN can call the folks at Fox all they want but, Fox has a contract with Tribune for a few more years. Unless, Lin wants to pay all the damages when Tribune sues Fox such a scenario is unlikely to happen. WISH is SOL on affiliation front. LIN decided to play chicken and lost big time.

 

In my mind, no. They will likely re-up the rest now. Letting CBS walk or telling them to take a hike out of spite could be seen as a breech of fiduciary duty. And, That could present more issues.

 

Could this situation make the decision of which stations to divest in Birmingham/Providence/Mobile easier to decide? I can see LIN renewing with CBS, and then sell off the affiliates in those markets.

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This is from the preemption thread on RadioDiscussions:

 

 

Do you think this would happen with WISH?

 

If they really wanted to eff with CBS and Tribune, they could move the shows to WNDY or maybe even to their fill-in translator or just downgrade all their shows to SD. At this point what do they have to lose?

 

Here's an idea: Let the ION station in Bloomington air all the preemptions (Comcast Channel 17 and AT&T 63). That should be enough to stick it to them.

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Could LIN try to pull what Nexstar did in Fort Wayne and sue CBS and/or Tribune? It sort of worked for them, Nexstar and Granite reached a settlement and WFFT got back its Fox affiliation. They could cite the same thing that Nexstar did with the case of WPTA and WISE, too much control of major network affiliations, since the WTTV/WXIN duopoly would maintain affiliations with three of the five major broadcast networks in addition to This TV and Antenna TV (although the latter two don't matter as much). Like Tribune, LIN has several Fox affiliates in its portfolio, most of which are similar in format to WXIN; they could try to sue to get that affiliation or get back the CBS affiliation.

 

In this case, Indianapolis has enough stations for affiliations with six networks; even though it apparently is not a violation of the affiliation agreement, the fact that The CW is being busted down to a subchannel in Indianapolis probably doesn't sit well with them, even though it was one of the network's parents that caused it to happen. If they sued, LIN could also cite the point that LIN didn't receive warning that CBS would take its affiliation elsewhere and allege that it did not fairly negotiate with WISH on reverse comp as well as any potential damage it could incur with the merger with MG.

 

I don't think that's really a bad idea whether there are legal merits or not. Someone could make a decent anti-trust claim and maybe settle out to get Fox on 8 as the consolation prize?

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Do you think this would happen with WISH?

The ultimate benchmark for affiliate preemptions happened in Miami, in 1988.

 

WTVJ, a CBS affiliate at their inception, was bought by NBC in the summer of 1987... but was forced to run CBS programming until January 1989. WSVN owner Ed Ansin was so ticked off at NBC buying a station that he took NBC to court and forced them to honor WSVN's existing affiliation agreement. It got so bad that WTVJ's GM, an NBC employee, was actually disinvited from CBS's upfronts in May 1988.

 

Consequently, WTVJ cleared all the NBC shows that WSVN preempted (mostly daytime fare and whatnot) and WCIX - a nominal indie/Sunday night Fox affiliate that CBS actually bought shortly before the end of 1988 - aired all the CBS shows that WTVJ was dropping to accommodate the WSVN-preempted NBC shows.

 

So no, I don't think any station or market will ever see a mess of that magnitude.

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The ultimate benchmark for affiliate preemptions happened in Miami, in 1988.

 

WTVJ, a CBS affiliate at their inception, was bought by NBC in the summer of 1987... but was forced to run CBS programming until January 1989. WSVN owner Ed Ansin was so ticked off at NBC buying a station that he took NBC to court and forced them to honor WSVN's existing affiliation agreement. It got so bad that WTVJ's GM, an NBC employee, was actually disinvited from CBS's upfronts in May 1988.

 

Consequently, WTVJ cleared all the NBC shows that WSVN preempted (mostly daytime fare and whatnot) and WCIX - a nominal indie/Sunday night Fox affiliate that CBS actually bought shortly before the end of 1988 - aired all the CBS shows that WTVJ was dropping to accommodate the WSVN-preempted NBC shows.

 

So no, I don't think any station or market will ever see a mess of that magnitude.

 

Well, Fox ran WBRC for a year as an ABC affiliate, though by most accounts that was a far more amicable situation.

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Could LIN try to pull what Nexstar did in Fort Wayne and sue CBS and/or Tribune? It sort of worked for them, Nexstar and Granite reached a settlement and WFFT got back its Fox affiliation. They could cite the same thing that Nexstar did with the case of WPTA and WISE, too much control of major network affiliations, since the WTTV/WXIN duopoly would maintain affiliations with three of the five major broadcast networks in addition to This TV and Antenna TV (although the latter two don't matter as much). Like Tribune, LIN has several Fox affiliates in its portfolio, most of which are similar in format to WXIN; they could try to sue to get that affiliation or get back the CBS affiliation.

 

In this case, Indianapolis has enough stations for affiliations with six networks; even though it apparently is not a violation of the affiliation agreement, the fact that The CW is being busted down to a subchannel in Indianapolis probably doesn't sit well with them, even though it was one of the network's parents that caused it to happen. If they sued, LIN could also cite the point that LIN didn't receive warning that CBS would take its affiliation elsewhere and allege that it did not fairly negotiate with WISH on reverse comp as well as any potential damage it could incur with the merger with MG.

If they really want to go the antitrust route...Good Luck. I really think Lin would be "tilting at windmills" if they went that route. It's not all that comparable to Ft. Wayne. Granite adding Fox in Ft. Wayne gave them control of 3 of the "big 4" plus the 2 netlets (CW and MNT). They also had 40%+ of the ad market prior to adding Fox to the fold. Not to mention there was an JSA/SSA involved that Granite likely didn't want exposed and brought under major scrutiny...remember this was prior to the FCC's big JSA crackdown. In a market the size of Indianapolis there is little chance Tribune is close to that percentage of ad revenue now and I doubt they'd even approach it post CBS pick-up. And, Tribune doesn't have to worry about exposing JSA/SSA's as part of a suit.

 

Needless to say I'd bet Nexstar agreed to all (or, most of) Fox's terms upon reacquiring the affiliation for WFFT. And, funny all their concerns over Granite's "anti-competitive" behavior and domination of the ad market pre-Fox didn't matter anymore. Nexstar wanted a "do-over" and Granite didn't want their JSA/SSA "exposed". So, they settled and that's what happened.

 

Unlike Nexstar/WFFT they be able to get a "do-over". Lin/WISH choose to play a game of chicken and lost...End of story.

 

On the surface, it does look like CBS may not have been negotiating in good faith...CBS was in talks with WISH/LIN and then just went out and signed-up with WTTV/Tribune. That's what it "looks" like, at least at this point, and if that is the case, LIN might have a case. On the other hand, if LIN were to sue CBS to get WISH its CBS affiliation back, wouldn't that likely potentially sour CBS when it comes to LIN's other CBS affiliates? CBS could actively seek out new affiliates in LIN's other CBS markets, at least in markets where such a switch would be practically viable for CBS. On top of that, if CBS were to go back to WISH, WTTV/Tribune would likely sue CBS for breach of contract, and that could also put the Indianapolis CW affiliation in jeopardy, assuming part of the rationale for CBS moving to WTTV was to assure a CW affiliation on WTTV (albeit on a sub-channel) and pacify Tribune's trepidations about the performance of the CW.

 

And I doubt if any of this is sitting too well with the Media General folks. Thanks to LIN, Media General just lost a big CBS affiliate that the company was counting on as part of the merger.

By all accounts CBS and Lin were in negotiations, I've seen nothing disputing that fact. The affiliation agreements for most of Lin's CBS stations expire on December 31, 2014*. So, I'd fully expect them to be discussing renews. However, by all accounts they reached impasse and have been unable to come to terms on the sticking point(s).

 

The affiliation agreements for most (or all**) of Tribune's CBS stations expire on June 30, 2015. Given they recently entered the final year of their deal(s) it's likely they recently struck up discussions on a renewal. And, with the impasse CBS was/is having with Lin it would shock me if during the Tribune negotiations someone mentioned "Hey, what about Indy?" We'll never know but, I'm personally of the belief it was CBS that asked the question and presented the opportunity to Tribune.

 

I personally don't believe this is some sort of "master plan" on the part of Tribune. They had an opportunity present itself and seized on it. This is why I said yesterday Tribune was in the right place at the right time. And, decided CBS wanted to send a message to Lin (and other groups). What better way for them to do it then to go after one of the "jewels" of Lin. Plus, CBS has added benefit knowing the affiliation will be falling into the hands of a pretty good group in Tribune.

 

I've already expressed my feelings on the whole Tribune and CW thing elsewhere. But, this had nothing to do with the CW...except maybe agreeing to move it to subchannel.

 

*Exceptions:

KIMT expires on June 30, 2015

KOIN expires on September 18, 2016

WKBN expires on January 31, 2017

WLFI expires on December 31, 2017

 

** I can't find the end date for WTVR's deal.

 

Could this situation make the decision of which stations to divest in Birmingham/Providence/Mobile easier to decide? I can see LIN renewing with CBS, and then sell off the affiliates in those markets.

That is certainly possible and at this point wouldn't shock me.
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I don't think that's really a bad idea whether there are legal merits or not. Someone could make a decent anti-trust claim and maybe settle out to get Fox on 8 as the consolation prize?

 

Tribune can do this fair and square, since they already own the stations, and WTTV's current market share falls below to where they could have been snatched up by Tribune if they weren't already owned by them.

 

Once WTTV gets into the top 4 (which is inevitable....could WRTV become the 5th ranked station?) AND Tribune decides to sell (which won't happen). THEN a buyer couldn't get both WXIN and WTTV because of their rankings in the market. The fact that the CW is on a subchannel is irrelevant in the eyes of the FCC. (and would hold little weight otherwise).

 

This is why Clear Channel was able to snatch up CBS to put on WTEV, then a low-ranked UPN station that was easy duopoly bait. CBS raised WTEV's ranking to the point when Clear Channel cashed out, Newport had to license out WTEV to High Plains, and then Cox had to license out WTEV to Bayshore Television.

 

Same can be said for WRAZ in Raleigh. Sinclair botched the FOX affiliation for WLFL, leading them to sign with WRAZ when it was easy duopoly bait.

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Where are you guys finding all of this information about stations' affiliation contracts and when they're set to expire and stuff?

 

For the public companies, the affiliation expiration dates are often in their annual reports, although LIN's doesn't have them, just the license expiration dates. Some affiliation agreements are also available at the FCC's public file database.

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Could this situation make the decision of which stations to divest in Birmingham/Providence/Mobile easier to decide? I can see LIN renewing with CBS, and then sell off the affiliates in those markets.

If that does happen, I would expect LIN-MG to fetch a very pretty penny for WIAT and WKRG. Because CBS. Because the SEC and Nick Saban. Because arguably, WIAT and WKRG are far stronger operations that WALA and WVTM.

 

But if this forced LIN's hand, so be it, I guess.

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Where are you guys finding all of this information about stations' affiliation contracts and when they're set to expire and stuff?

 

FCC ownership reports require the licensee to disclose all relevant agreements, including network affiliation agreements.

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