Fox Broadcasting’s hard-ball negotiations with Tribune Media paid off for the network.
Tribune said on Friday it agreed to pay higher programming fees to keep the Fox affiliation for its Seattle station through 2018.
The two sparred after Tribune balked at paying more for KCPQ-TV to continue carrying Fox’s prime-time shows and sports, including NFL football games. The dispute was also fueled by Fox’s desire to own a station in a lucrative NFL market that is home to the Seattle Seahawks.
The new deal gives Fox a bigger cut of the revenue from Tribune’s carriage agreements with cable companies and other pay-TV providers. Station owners kick back some of their fees to the network mother ship.
With the soaring cost of sports rights, the networks are leaning harder on their affiliates to recoup some of their programming costs.
During the dispute, Fox gave early notice to Tribune that it would terminate the affiliation. Then it ratcheted up the pressure by acquiring a nearby station, KBCB-TV in Bellingham, Wash., for $10 million.
“As part of the extended affiliation agreement Tribune has agreed, as of January 2015, to pay additional programming fees to Fox for the prime time and sports content provided by the network,” Tribune said in a statement. Fox had no comment.
While the exact financial terms weren’t disclosed, Wells Fargo analyst Marci Ryvicker estimates Tribune is paying in the ballpark of 90 cents per subscriber a month, which is “likely above the 65/35 we anticipate for the industry.”
Tribune said that even with the stepped up fees, the station would deliver pretax profits in excess of last year’s $13 million.