NBC-Granite Deal Has News-Net Kicker

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NBC's and Granite Broadcasting Corp.'s $362
million affiliation agreement in San Francisco includes plans to create a local cable-news
service, which would compete with a regional network that's part-owned by AT&T
Broadband & Internet Services.

In a joint announcement on their deal last week, NBC and
Granite said they are exploring creating a San Francisco cable-news service through a
partnership of KNTV, which will become an NBC affiliate in 2002, with NBC Newschannel,
CNBC and MSNBC.

That cable all-news outlet will also turn to San
Francisco-based NBC Internet Inc. (NBCi) for interactive content, according to the
announcement.

"Our intention is to work with NBC to provide local
content in San Francisco," KNTV president and general manager Bob Franklin said,
"but we have yet to have substantive discussions on what that cable channel would
look like."

Under the 10-year affiliation pact unveiled last week,
Granite's KNTV, based in San Jose, Calif., will become an NBC affiliate.

In what could be a sea change in network-station financial
dynamics, KNTV will pay NBC $362 million over nine years for the privilege of being an
affiliate. NBC will also acquire warrants to purchase 18 percent of Granite equity.

Young Broadcasting Inc. -- the new owner of KRON-TV,
NBC's current San Francisco affiliate -- balked at compensating the network. So Young
Broadcasting said it would not renew its affiliate deal with NBC, and it would instead
become independent after Dec. 31, 2001.

From the KRON deal, Young Broadcasting got a 51 percent
stake in BayTV, a local news and information network that debuted in 1994 and now has 1.3
million subscribers. AT&T Broadband owns the remaining 49 percent of BayTV, offering
it broad distribution locally.

"Our cable-news service would be in competition with
that service," Franklin said.

It remains to be seen whether AT&T Broadband would
agree to carry a second, competitive San Francisco news channel, which may offer more of a
hard-news mix than BayTV. AT&T Broadband declined to comment, and BayTV officials
couldn't be reached.

Young Broadcasting chairman Vincent Young said,
"Whether a second [San Francisco cable-news channel] can be successful, I have no
idea."

Granite and KNTV officials said they have already been
talking with AT&T Broadband about getting cable carriage for the TV station in San
Francisco. That carriage will be critical to the broadcaster's success as an NBC
affiliate. But from this summer until 2002, when its NBC deal takes effect, KNTV will be
an independent.

To fill in programming gaps while it is an independent,
KNTV plans to increase local news from three hours to eight-and-one-half hours per day,
Franklin said. The additional staffers hired to do that news will also work on the
cable-news channel, he added.

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