Turner Network Television's strategy of increasing license fees within its
existing carriage deals by shifting valuable programming to a new pseudo-network
could, if successful, change the dynamics of already complex and tense contract
talks with operators, industry executives said.
Looking to extract a 10 percent rate hike from existing affiliates in the
middle of multiyear contracts, Turner Broadcasting System Inc. is actually
selling a new network -- 'TNT Plus' -- which, as of Jan. 1, would offer all of
TNT's existing programming, including National Basketball Association and
National Association for Stock Car Auto Racing fare.
Operators with existing contracts that decline to ante up the rate increases
will continue to receive the 'current' TNT service, but without those marquee
The network's on-air look would remain the same, and TNT would provide
replacement content to fill in for blacked-out sports fare.
Industry sources called TNT's move a bold attempt to extract higher license
fees while not violating current agreements with operators.
All new contracts for TNT refer to the 'drama' channel as TNT Plus, not TNT,
sources close to the situation added.
Observers said it could be difficult for AOL Time Warner Inc.-owned TNT to
get the contract revisions it wants from such large affiliates as Time Warner
Cable, Comcast Corp., AT&T Broadband and Cablevision Systems Corp., as the
network's deals with those MSOs don't expire until at least the end of 2003.
The new arrangement escalates rates for TNT Plus by 10 percent per year for
the next five years, beginning Jan. 1. Operators with current TNT deals that
expire at year's end will have only the TNT Plus option from which to
Operators are worried that TNT's maneuver could open the floodgates for other
basic networks to ram through similar mid-contract rate increases, triggered by
new acquisitions or successful programs.