TV Affiliates Now Must Pay Up
February 21, 2000
In a reversal of fortune for high yield issuer Granite Broadcasting, it now must pay NBC to broadcast the network's shows, at least in one city. Traditionally, networks paid the affiliates to air the programs.
Granite agreed to pay $362 million over 10 years for its station in San Francisco to be the NBC affiliate in that market, the country's fifth largest.
And it was the result of some of other high yield sectors, namely cable and satellite broadcasting, that helped enable NBC to strike the deal, sources said.
Granite officials could not be reached for comment.
In addition to the $362 million payment, NBC will receive warrants to buy 4.5 million shares in Granite, which would give the network an 18% stake in the affiliate.
The move came soon after NBC and its long-time San Francisco affiliate, Young Broadcasting, broke their ties due to Young's unwillingness to pay NBC the fee.
Last week an investor said this is a new type of arrangement in which networks, ironically, are benefiting from cable and satellite TV systems. That's because those other media give the networks more options, sources said, in terms of getting their content into the homes.
The affiliates are no longer the only method of transport, one analyst said, and there likely will be more of these types of arrangements whereby affiliates will be forced to pony up or lose out.