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Inside the WB/UPN Merger: The Increasing Importance of Affiliates

CwThe WB and UPN television broadcast networks, having failed to improve their audience ratings, will merge to form the CW Television Network to lure younger viewers, to be owned 50-50 by UPN parent CBS and WB co-owner Time Warner. 16 stations owned by the Tribune Co. will become affiliates, but will lose the Philadelphia, Atlanta, and Seattle markets to CBS.

With the fragmentation of media, it is harder than ever to create a successful television series. Even Monday Night Football ceased to be as profitable as it used to. The NFL/ESPN deal provided a powerful way for ABC to sustain the franchise without losing the property to any of their competitors.

CBS has long struggled with developing additional networks beyond its flagship. ABC in particular zoomed off to a fast start with ESPN, and improved its position after Disney purchased it. Even NBC flourished after GE acquired it, building networks like Arts and Entertainment, Court TV, American Movie Classics, Bravo, Sports Channel America, and the History Channel. More importantly than economies of scale, these mini-networks provided a hedge against the biggest risk: the ability of any network to develop compelling programing. Both the WB and UPN were created at a time when the studios began realizing the value of so-called weblets.

But with affiliate agreements expiring, cost-cutting and pink slips rampant at the WB, emerging video distribution platforms hungry for content, and a newly energized CBS management willing to rethink how it ran its business -- there was an opportunity to make a change. Programming will be a merged effort, taking the best of WB and UPN, including "Smallville," "Gilmore Girls," "Everybody Hates Chris," "Girlfriends, "Veronica Mars" and "Smackdown."

This kind of combination may have gotten its start from long-standing discussions on combining the newsgathering operations of CNN and CBS News, which as I've noted before, is torn by the economics of maintaining local news bureaus around the world, that are actually staffed by people that know the local lay of the land.

Bottom line: the financial contribution made by ancillary video distribution platforms - whether cable, satellite, IPTV or iPod - is only going to increase in years to come. And, like it or not, this is going to create more tension between the networks and affiliates.


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