CBS Corp. (CBS) has reached a deal with its affiliates concerning a multilevel agreement dealing with cost-sharing with the NFL and digital revenue. The agreement still needs to be approved by the affiliate body.
The new deal needed to be hammered out because affiliates wanted a piece of the action concerning the new platforms content was being distributed through, but CBS had to negotiate a much lower percentage than the current 50 percent of revenues currently offered via television. The high percentage has kept CBS from participating in a number of the digital media deals that are coming available more often.
One example is the video on demand deal they made with Comcast Corp. They were only able to offer it in markets where CBS owned the stations themselves. This avoided conflicts with the other stations along with keeping away from revenue splits. They also only offered programming on their own site - cbs.com so they wouldn't have conflicts with their affiliates.
CBS TV Network affiliate relations President Peter Schruth said:
"We're very pleased to have once again forged a mutually beneficial agreement with our affiliates, by sharing these costs with our broadcasting partners, we will be able to ensure signature, big-ticket programming like the NFL remains on CBS." NFL rights cost the network billions and the affiliates chip in for a portion of the cost.
"At the same time, this agreement also encompasses new business opportunities that expanding digital platforms create for the Network and its affiliates," said Schruth. "We recognize that in today's marketplace it's in our collective long-term best interest that the Network and the affiliates each leverage the full value of the assets they own."
The terms of the agreement frees up CBS to make programs available on multiple platforms like digital streaming over the Internet. The affiliates will be offered a percentage of the profits from promoting digital offerings on-air, which includes VOD. Affiliates will also receive percentages from any Internet traffic they send to the CBS.com web site or any other Internet properties they own.
Affiliates will receive from 12.5 percent to 25 percent of the advertising revenue or customer fees for digital programming.
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