Friday, April 9, 1999

Fox move
delivers big blow

The network says it will
be taking back ad slots
from its affiliates

Staff and wire reports


Times are tough at Fox affiliate KHON channel 2, despite the television station's continuing dominance of local news ratings.

Already facing lost revenues from its recent "clock time" initiative, the station recently was notified the network will take 20 prime-time commercial slots each week that its affiliates had been allowed to sell for themselves.

The move, which News Corp.'s Fox network has the power to do unilaterally, will cut from 90 to 70 the number of 30-second commercials affiliates can sell.

"It's a considerable financial blow to us at a time when doing business in Hawaii is tough enough," said Kent Baker, vice president and general manager at Fox affiliate KHON channel 2.

Baker wouldn't say how much the station will lose but noted KHON's recent conversion to "clock time" -- starting prime-time programs on time -- is also cutting into advertising revenue.

KHON and ABC affiliate KITV channel 4 since January have been sacrificing about seven minutes of prime advertising time nightly to start news and network programs on time. Both have raised prime time advertising rates -- up to 35 percent, some clients say -- to offset the loss.

The price advertisers pay for commercial time depends on the ratings for individual shows. The New York Times estimated the network would gain between $50 million and $100 million a year; Variety said it would be between $150 million and $200 million.

Fox wouldn't say, and declined comment yesterday on the planned change.

While it still makes money, Fox's profit margins have been shrinking as a result of factors that are similarly affecting rival networks: Programming costs are increasing at the same time as the audience size is declining.

ABC has been involved in contentious negotiations because of its attempt to get affiliates to kick in part of the cost of broadcasting NFL games.

Both Fox and CBS worked out deals with its stations to allay part of those costs.

While the new move by Fox will hurt, Baker said the network's allocation of 90 slots a week was generous by industry standards. It breaks down to about six 30-second spots per hour of prime time vs. four per hour at KITV.

But KITV General Manager Mike Rosenberg said he thinks Fox will find a way to sell the spots to its affiliates at discounted rates rather than take them back.

"All the networks are looking for additional revenue streams," said Rosenberg, noting ABC's new plan to launch a soap opera on both its affiliates and a cable station.

Some broadcasters have wondered whether networks would try to change the long-running system where NBC, CBS and ABC pay affiliates an annual fee to carry their programs.

Star-Bulletin reporter Peter Wagner and
the Associated Press contributed to this report.

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