Reverse compensation
Encyclopedia
Reverse compensation, in United States
broadcasting, is the practice of a commercial television station
paying a television network
in exchange for being permitted to affiliate with that network. The word "reverse" refers to the historical practice of networks paying stations to compensate them for the airtime networks use to run network advertisements during their programming.
Reverse compensation first appeared in the 1990s, with The WB Television Network
receiving reverse compensation from several stations. In 2001, San Jose, California
station KNTV
agreed to pay $362 million over ten years to become the NBC
affiliate for the Bay Area
market, the largest such agreement to date. Shortly after, NBC bought KNTV when the station's owner ran into financial difficulty.
The practice played a role in the 2006 affiliation drives of two newly-announced networks, The CW Television Network
and My Network TV. The CW reportedly demanded reverse compensation from affiliates for an arguably proven, but still low-rated, primetime schedule; My Network made no such demand and also allowed stations to keep more ad time than a traditional network would. As a result, several stations that seemed to be good candidates to become CW affiliates, including most WB- and UPN
-affiliated Sinclair Broadcast Group
stations, announced affiliations with My Network instead. Pappas Telecasting and Tribune Company
, the two major station groups which did carry The CW, both filed for bankruptcy protection in 2008. Tribune, which operates the largest group of CW affiliates, has been removing the network name from its stations' branding.
In Canada
, CTV
attempted to move from a traditional network affiliation contract to a reverse compensation model in the early 2000s, which played a role in the disaffiliation of CHAN-TV
in Vancouver
, British Columbia
and CJON-TV
in St. John's
, Newfoundland and Labrador
from the network.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
broadcasting, is the practice of a commercial television station
Television station
A television station is a business, organisation or other such as an amateur television operator that transmits content over terrestrial television. A television transmission can be by analog television signals or, more recently, by digital television. Broadcast television systems standards are...
paying a television network
Television network
A television network is a telecommunications network for distribution of television program content, whereby a central operation provides programming to many television stations or pay TV providers. Until the mid-1980s, television programming in most countries of the world was dominated by a small...
in exchange for being permitted to affiliate with that network. The word "reverse" refers to the historical practice of networks paying stations to compensate them for the airtime networks use to run network advertisements during their programming.
Reverse compensation first appeared in the 1990s, with The WB Television Network
The WB Television Network
The WB Television Network is a former television network in the United States that was launched on January 11, 1995 as a joint venture between Warner Bros. and Tribune Broadcasting. On January 24, 2006, CBS Corporation and Warner Bros...
receiving reverse compensation from several stations. In 2001, San Jose, California
San Jose, California
San Jose is the third-largest city in California, the tenth-largest in the U.S., and the county seat of Santa Clara County which is located at the southern end of San Francisco Bay...
station KNTV
KNTV
KNTV, channel 11, is the NBC owned-and-operated television station in the Bay Area market. It is licensed to San Jose, with its transmitter located on San Bruno Mountain, just south of San Francisco. It shares facilities in San Jose with NBC Universal sister station KSTS and CNBC's Silicon...
agreed to pay $362 million over ten years to become the NBC
NBC
The National Broadcasting Company is an American commercial broadcasting television network and former radio network headquartered in the GE Building in New York City's Rockefeller Center with additional major offices near Los Angeles and in Chicago...
affiliate for the Bay Area
San Francisco Bay Area
The San Francisco Bay Area, commonly known as the Bay Area, is a populated region that surrounds the San Francisco and San Pablo estuaries in Northern California. The region encompasses metropolitan areas of San Francisco, Oakland, and San Jose, along with smaller urban and rural areas...
market, the largest such agreement to date. Shortly after, NBC bought KNTV when the station's owner ran into financial difficulty.
The practice played a role in the 2006 affiliation drives of two newly-announced networks, The CW Television Network
The CW Television Network
The CW Television Network is a television network in the United States launched at the beginning of the 2006–2007 television season. It is a joint venture between CBS Corporation, the former owners of United Paramount Network , and Time Warner's Warner Bros., former majority owner of The WB...
and My Network TV. The CW reportedly demanded reverse compensation from affiliates for an arguably proven, but still low-rated, primetime schedule; My Network made no such demand and also allowed stations to keep more ad time than a traditional network would. As a result, several stations that seemed to be good candidates to become CW affiliates, including most WB- and UPN
UPN
United Paramount Network was a television network that was broadcast in over 200 markets in the United States from 1995 to 2006. UPN was originally owned by Viacom/Paramount and Chris-Craft Industries, the former of which, through the Paramount Television Group, produced most of the network's...
-affiliated Sinclair Broadcast Group
Sinclair Broadcast Group
The Sinclair Broadcast Group is an American telecommunications company that operates the largest number of local television stations in the United States. Headquartered in Hunt Valley, Maryland, it owns a total of 57 stations across the country in 35 primarily small and medium markets, many of...
stations, announced affiliations with My Network instead. Pappas Telecasting and Tribune Company
Tribune Company
The Tribune Company is a large American multimedia corporation based in Chicago, Illinois. It is the nation's second-largest newspaper publisher, with ten daily newspapers and commuter tabloids including Chicago Tribune, Los Angeles Times, Hartford Courant, Orlando Sentinel, South Florida...
, the two major station groups which did carry The CW, both filed for bankruptcy protection in 2008. Tribune, which operates the largest group of CW affiliates, has been removing the network name from its stations' branding.
In Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, CTV
CTV television network
CTV Television Network is a Canadian English language television network and is owned by Bell Media. It is Canada's largest privately-owned network, and has consistently placed as Canada's top-rated network in total viewers and in key demographics since 2002, after several years trailing the rival...
attempted to move from a traditional network affiliation contract to a reverse compensation model in the early 2000s, which played a role in the disaffiliation of CHAN-TV
CHAN-TV
CHAN-DT is a television station in Vancouver, British Columbia, Canada, broadcasting over-the-air on digital channel 22, and available via cable providers in the area on channel 11. Owned by Shaw Communications as a part of its Shaw Media division, it is the West Coast flagship station of the...
in Vancouver
Vancouver
Vancouver is a coastal seaport city on the mainland of British Columbia, Canada. It is the hub of Greater Vancouver, which, with over 2.3 million residents, is the third most populous metropolitan area in the country,...
, British Columbia
British Columbia
British Columbia is the westernmost of Canada's provinces and is known for its natural beauty, as reflected in its Latin motto, Splendor sine occasu . Its name was chosen by Queen Victoria in 1858...
and CJON-TV
CJON-TV
CJON-DT is a Canadian English language television station broadcasting on channel 21 in St. John's, Newfoundland and Labrador, with additional transmitters and cable coverage throughout the province. It is known on-air as NTV, for Newfoundland Television...
in St. John's
St. John's, Newfoundland and Labrador
St. John's is the capital and largest city in Newfoundland and Labrador, and is the oldest English-founded city in North America. It is located on the eastern tip of the Avalon Peninsula on the island of Newfoundland. With a population of 192,326 as of July 1, 2010, the St...
, Newfoundland and Labrador
Newfoundland and Labrador
Newfoundland and Labrador is the easternmost province of Canada. Situated in the country's Atlantic region, it incorporates the island of Newfoundland and mainland Labrador with a combined area of . As of April 2011, the province's estimated population is 508,400...
from the network.