CBS cuts affiliates into new media pie
July 7, 2006
The CBS network has made a deal with its affiliate board over alternative digital media distribution. The agreement, if approved by stations, frees up CBS in making alternative digital platform deals, while giving affiliates from 12.5 percent to 25 percent of advertising revenue or consumer transaction fees for digital programming.
Under the agreement, CBS will have increased flexibility to make programs available on emerging platforms such as digital streaming on the Internet. At the same time, CBS affiliates will have the ability to promote the digital offerings on-air and receive a share in the proceeds, including video-on-demand and subscription video-on-demand offerings.
Affiliates will also share revenue for any traffic they deliver to CBS.com and other CBS-owned Internet properties that result in participation/viewing of ad-supported content. This is supposed to give stations incentives to use on-air time to help support CBS-related Internet activities.
News reports said CBS needed to strike a new agreement because an existing agreement had CBS giving affiliates 50 percent of extra revenues that CBS would gain from extra advertising sales or consumer transaction fees for programming. This percentage hindered CBS from making many wide-ranging digital media deals.
The deal will extend to CBS's NFL cost-sharing partnership with its affiliates by three years and allow both parties to benefit from new media opportunities.