25 years ago: The deal heard around the world

25 years ago this week, Fox’s Rupert Murdoch changed the TV world by inking a deal to trigger the biggest affiliation switch in history. 

It goes back to what happened on December 17, 1993.

The networks were complaining about paying too much for sports – the NFL in particular – as the packages were losing money and looking to pay less in the next contract.

Enter Fox. The then-seven year old network best known for Bart Simpson, Al Bundy, and “90210”decided to jump in the bidding for the next NFL package. With a bid of $1.6 billion for NFC games from Fox CEO Rupert Murdoch over CBS, the NFL awarded the then-fledgling network the rights – stunning the broadcasting world, ending the Tiffany Network’s 38-year hold on the sport. Fox was willing to take a loss on the deal in order to build up its network, who expanded to seven nights a week in 1993.

Fox’s station lineup was made up of mostly UHF stations as during the analog era, didn’t have the same signal strength as VHF stations. And Fox was looking to upgrade its affiliate roster – not to mention keeping current affiliates in the fold and away from new offerings from Paramount and Warner Bros., who were starting up new networks as the fin-syn rules (which kept the studios from owning broadcast networks) were expiring.

Enter New World Communications, run by financial magnate Ronald Pearlman. The then-22 year old company produced movies and a few TV series, such as daytime soap Santa Barbara and The Wonder Years. In 1993, the company purchased a majority stake in SCI Television – billionaire George Gillett’s old station group, giving them control of six stations including CBS affiliates WJBK in Detroit, WAGA in Atlanta, and WJW in Cleveland. In May 1994, New World purchased the Argyle Television and Great American (formerly Taft) Broadcasting groups, with four stations each. New World also purchased another station, CBS affiliate WTVT in Tampa.

In negotiations that were kept secret, Fox announced on May 23, 1994 that it acquired a 20 percent interest in New World. But then came the bombshell – as part of the deal, New World agreed to switch twelve of the fifteen stations it owned to Fox – eight of them belonging to CBS in a huge blow to owner Larry Tisch. Now, there have been affiliation switches before, i.e. Atlanta’s WSB jumping to ABC from NBC in 1980, Milwaukee’s WITI dropping top-rated ABC for CBS in 1977 in a contract dispute, or Miami’s WSVN losing NBC to WTVJ. But this was something on a whole new level – twelve stations switching to the same network – all at once.

The announcement shocked everyone in the business – particularly those who were affected by the changeover. New World’s local news operations went from working with one of the prestigious Big 3 networks to one with little history and known for more youthful programming. But New World believed this was the right thing to do – especially given how CBS wasn’t able to attract young viewers.

According to the book “The Fourth Network: How Fox Broke The Rules And Reinvented Television” by Daniel M. Kimmel, negotiations moved at a quick pace, and New World wanted compensation for losing network daytime programming (Fox didn’t program the daypart) with Fox agreeing to invest $500 million in the company and each agreed to produce syndicated programming for each other (which turned out to be the ill-fated Garbielle Cateris and Mark L. Walberg talk shows.)

New World Pictures, circa 1990.

The Fox affiliate meeting in June 1994 was not really a fun place to be. Instead of Fox running a victory lap (acquiring football and upgrading its affiliate lineup), existing stations were angry accusing them of a lack of loyalty, fearing their station could be next. Meanwhile, some industry observers were accusing CBS owner Larry Tisch of not stepping up to the plate to invest in New World when they had the chance.

The big three networks success of finding replacements were various: some were straight swaps as CBS and NBC quickly nabbed the former Fox affiliates in Cleveland and Kansas City; other markets such as Detroit, Tampa, and Phoenix had more complicated three-way swaps; and a few markets were just difficult – CBS wound up buying a low-rated UHF station in Detroit (WGPR), and nearly didn’t have an affiliate at all in Milwaukee as they made a last-minute deal with independent WDJT mere days before the December 11 deadline. The situation was even more dire in Birmingham, Ala. where ABC had to sign two stations to replace WBRC-TV (their switch didn’t take place until September 1, 1996.)

As the months wore on, the New World stations prepared for the switch with Cleveland first up September 3 and Kansas City September 12. Affected stations hired extra personnel to man phone lines to answer calls from confused viewers. Network stars such as David Letterman, Dan Rather, and Connie Chung pitched in to help cut promotional spots for new CBS affiliates.

Stations not involved in the swaps boosted their promotional budgets touting they were staying with the same network partner. Eventually, CBS being downgraded to UHF in a few markets took its toll as for one week in 1995, CBS finished fourth in overall viewers behind ABC, NBC, and Fox. The switches were complete by the fall of 1996, and ex-CBS stations who lost football were glad to have it back.

The Fox-New World deal even had an effect on markets who weren’t involved. The aforementioned Scripps-ABC deal and a CBS-Group W deal sent the three major networks to new homes in Baltimore (in the case of WBAL, back to NBC); speaking of the CBS-Group W deal, it had wide-ranging implications with 1995 affiliation switches in Boston, Denver, and Salt Lake City – not to mention CBS trading WCAU to NBC (with KYW going to CBS) in Philadelphia while in Miami, where NBC dumped longtime affiliate WSVN when it bought WTVJ-Ch. 4 in 1987 (the switch took place in 1989), CBS returned to the Ch. 4 position it occupied – as WFOR, knocking WTVJ to the weaker Ch. 6, formerly known as CBS-owned WCIX (the call letters are now used by a station in Champaign.)

By 1997, the major networks had grown tired of paying compensation to affiliates to carry their programming as costs surged, and Fox was no different. Rather than continuing to pay New World in comp, parent News Corp. decided to buy the 80 percent of New World it didn’t own, thus making New World stations Fox O&Os, giving them 22 stations covering a little over a third of the country (non-Fox New World stations in Boston and San Diego were sold off long ago.)

It was the acquisition of NFC Football that led New World’s stations to strike a deal with Fox. This is from Fox’s first NFL season from 1994, Fox Box and all. (Awful Announcing)

Since then, there has been major changes in the network-affiliate relationship with the balance of power shifting to the networks. The first example of this was in 2001, when NBC broke up with San Francisco’s KRON after it was outbid to buy the station, affiliating instead with San Jose station KNTV, now an NBC O&O. A year later, Jacksonville’s top-rated WJXT broke up with CBS over “reverse compensation”, a model pioneered by The WB and what all the networks were shifting towards. Networks were making demands with affiliates due to rising costs (such as the NFL and the cast of Friends‘ pay raises) and started limiting program pre-emptions. All of this while broadcast groups were seeing a rise in “retransmission consent”, i.e. cable and satellite companies paying stations to carry their signal. Soon after, the networks wanted a piece of that, too.

Since 2008, there have only been a handful of switches, in San Diego (twice), Boston (again), Raleigh, Indianapolis, Peoria, South Bend, and even Chicago involving The CWtwice (there was also an affiliation switch between Spanish-language networks in 1989.)

The television landscape is of course, far different today than it was in 1994; the advent of digital television put UHF and VHF stations on the same footing, though this hasn’t helped CBS stations in Atlanta, Cleveland, and Milwaukee, where their local news still trail their competitors by a large margin. CBS-owned WWJ in Detroit and ABC affiliate KDNL-TV once had news operations but were dismantled due to low ratings. And Fox’s standing has improved in numerous markets, including Atlanta, Cleveland, and New Orleans (where an affiliation deal with former ABC affiliate WVUE was made separately through a deal with the former SF Broadcasting.) Broadcasters’ eroding shares were an issue in the 1990s due to the expansion of cable and satellite TV and is an even bigger issue today, thanks to streaming services and DVRs.

Of course, this hasn’t stopped Rupert Murodch from making more earth-shaking deals. In 2001, he bought the Chris-Craft station group, the core of UPN, giving them duopolies in top markets such as New York, Los Angeles, and Minneapolis, adding UPN affiliate WPWR in Chicago a year later (UPN and The WB would later merger to become The CW.) In 2007, he sold some of the old New World stations to a new company called Local TV, who was swallowed up by Tribune. And recently, he sold the 20th Century Fox film studio to The Walt Disney Company for $71.3 billion, retaining only the Fox entertainment network, Fox News, Fox Sports, FS1, FS2, and the Fox O&Os to form a new company called Fox Corporation.

And CBS has been rejuvenated due to reacquiring the AFC packages of games in 1998, then bringing young viewers back to the network in 2000 thanks to the successful launch of Survivor, leading the network to return to the top of the ratings in total viewers with hits CSI, Everybody Loves Raymond, Two And A Half Men, The Mentalist, NCIS, and The Big Bang Theory. But the person who guided CBS to success – Les Moonves – was ousted recently due to a sexual harassment scandal.

As the business faces a whole lot of challenges in the 21st Century, it helps to look back at what helped shape the business today. Whether you love or hate Rupert Murdoch – and there are plenty of people in both camps – you have to give the man a lot of credit for taking chances no one else would make. Fox wouldn’t be where it is today if he hadn’t made any of these moves. And the industry is better off for it.

For a market-by-market breakdown of each New World market affected by the affiliation change, click here to go to T Dog Media’s Slideshare page.

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