Networks and affliate system- who pays who?

[BMR]

Hi, another 'ignorant Brit' question. Even though UK television has changed beyond recongnition in the last 20 years, it's still very different from US TV- in particular we don't have an affiliate system, and most stations broadcast nationally.


What exactly is the relationship between a network and its affiliates? Do affiliates 'bid' for the right to show network shows, then insert their own commercials? Or do networks buy time on affilates? Or something else?

 

[PTBoardOp94]

It varies. A lot.

In the largest cities (New York, LA, Chicago, especially) the networks own and operate their affiliates. In major cities (thinking Baltimore, Denver, Nashville, Indianapolis), the networks might pay for carriage on the stations. In small markets (Dothan, AL, Macon, GA, Bowling Green, KY), the stations might pay the networks. And I'm sure there are a few stations in large markets that are paying the networks for their programs and networks paying small-market stations for carriage.

The key point: Every station (or ownership group, sometimes) negotiates its own terms with its network.

The advertising situation is mixed. All network and syndicated shows are a mixture of local ads inserted by the station and national ads inserted by the network. The mix varies from show to show but usually heavily favors the network.

 

[BMR]

Thanks.

 

[TexasTom]

Adding a bit to the above answer:

Aside from the major market stations that are owned by the networks themselves, it used to be common practice for the networks to compensate their affiliates for the carrying the network programming (and advertising). The historic basis for that relationship goes all the way back to the days before television when national radio shows were either sponsored by advertisers or were "sustaining" programs carried as a public service. The networks paid their affiliates to carry the sponsored shows, and generally allowed them to carry the sustaining shows for free.

That model carried over into the early days of television, and the practice of paying the affiliates compensation for carrying the commerical programming of the networks carried continued into the nineties. How much that compensation would be could vary dramatically from market to market, and depending on the strength of a local affiliate. A successful VHF affiliate in a major market might get very generous compensation indeed, whereas a third-rated UHF affiliate in a smaller market might have received only a small token payment. But until the nineties, some sort of compensation was common.

But starting in the nineties, the networks started asking their affiliates to kick in some money to cover the cost of certain high profile and expensive programming (typically sports programming). And compensation started getting reduced as network audiences dropped. At this point, some stations were asked for "reverse compensation" -- paying the network for programming, instead of being paid for carrying the network programs.

Today, these trends have continued to the point where compensation being paid to stations is now the exception instead of the rule. Reverse compensation is increasingly the rule, essentially flipping the historic network/affiliate relationship on its head.