Exhibit 10.4
June 30, 1999
Patrick Scott
President & CEO
Fisher Broadcasting Inc.
100 Fourth Avenue N.
Seattle, WA 98109
Re: KATU/Portland, OR
Dear Pat:
If approved by your station, this document will constitute a side letter
amendment to the existing affiliation agreement between American Broadcasting
Companies, Inc. (hereinafter, "ABC" or "Network") and your station (hereinafter,
the "Amendment"). ABC reserves the right to terminate this Amendment if
comparable side letter amendments have not been accepted by non-owned ABC-
affiliated stations representing 66% coverage of the country by July 16, 1999.
I. INVENTORY SWAP/NFL CONTRIBUTION
A. 8 Additional Primetime Spots per Week to Your Station from Network:
1. 2 "A" program spots per week
2. 4 "B" program spots per week
3. 2 "C" program spots per week
4. Dividing the Network's weekly primetime program schedule into
one-thirds, the "A" spots shall come from spots appearing in the
top rated one-third, the "B" spots shall come from spots
appearing in the middle rated one-third, and the "C" spots shall
come from spots in the lowest rated one-third of the Network's
primetime program schedule. The allocation and placement of the
spots will be made within 60 days prior to the start of each new
Network television season.
B. To Network from Your Station
1. A total annual payment by your station of $600,901. This payment
will be made through an equal monthly reduction from your
station's Network compensation. The payment has been
calculated on the basis of the following methodology: A $45
million aggregate annual payment by non-ABC-Owned stations
through monthly deduction from Network compensation, and to the
extent there is inadequate Network compensation to cover the
payment, through equal monthly payments. The amount of payment
required of each Station will be based upon the pro-rata
percentage of the station's market coverage of total U.S.
television households (excluding coverage by ABC-owned stations)
which amounts to 74.888%. The amount of the annual $45 million
payment by non-owned ABC stations will be reduced in proportion
to any increase in the present percentage of coverage of U.S.
television households by television stations owned or operated by
ABC or its affiliated companies. (E.g. if ABC's coverage were to
increase to 30%, the aggregate annual affiliate payment would be
reduced to $41,528,877.) If that were to happen, the amount of
payment required of your station would be reduced
correspondingly.
2. 10 Children's spots per week.
C. Children's Clearances:
Your station shall maintain its current level and time period
scheduling of Children's clearances.
ABC warrants that during the three year term of the agreement, the
Network will continue to provide the quantity of educational and
informational programming that satisfies the FCC's Children's
television rules (currently three hours per week) and that Network-
supplied commercial matter in all Children's programming will not
exceed FCC restrictions, ABC will indemnify and hold your station
harmless against any breach by the network of the Children's program
and commercial content warranty.
D. Term: The provisions of this Section I (Inventory Swap/NFL
Contribution) shall have a term of 3 years beginning August l, 1999.
E. Guarantees Against Dilution During the Term of the Inventory Swap/NFL
Contribution Plan:
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1. The Network agrees that it will afford your station commercial
units of the same number and length and with substantially the
same placement as during the l998-l999 Network television reason.
The Network will also add the two (2) units per hour of inventory
for your station to auto racing, golf and horse racing as set out
in the body of Pat Fili's June 4, 1999 letter. (A copy of that
letter is attached).
2. Network agrees that apart from the program categories listed in
the body of Pat Fili's June 4, 1999 letter, and except as might
arise in the enforcement or negotiation of individual contracts,
Network will continue to offer your station the same cash
compensation currently offered.
3. Your station guarantees that it will maintain at least its
current level of clearance and time period scheduling of "The
View,"and "Politically Incorrect" through July 3l, 2000.
II. SOAP CHANNEL PARTICIPATION
A. Soap Channel Cable Service Revenue Sharing:
1. Your station, along with other affiliates accepting the terms set
forth herein (including ABC Owned Stations) will have an economic
participation in The Soap Channel Cable Service by receiving one
of the following annual distributions, whichever is greater:
a. $0.01/month per revenue-generating Soap Channel subscriber
in the affiliate's market.
b. 15% of total annual subscriber revenue generated in the
affiliate's market capped at $0.03 per revenue-generating
sub/month.
c. 10% of total subscriber revenue generated in the affiliate's
market, without a cap.
d. 15% of annual net profits generated in the affiliate's
market.
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2. The term "market" means your station's DMA. Revenues generated
in a DMA adjacent to that of an ABC affiliate but in which no ABC
affiliated station exists shall be credited to an ABC station or
stations outside that DMA based upon their respective viewing
shares in that DMA.
3. The term "cable service" includes the distribution of programming
by any video delivery system now known or hereafter devised,
including, but not limited to, television stations, satellite,
wireless, telephone and cable systems.
4. The terms "revenue-generating Soap Channel subscriber" and
"subscriber revenue" mean the subscriber fee paid by the cable
service, without regard to launch fees.
5. The term "net profits" (as used in this section) means gross
revenue less any costs incurred by The Soap Channel cable
service, subject to independent audit.
6. The term "Soap Channel Cable Service" means that programming
service that was announced by ABC on April 8, 1999. If that
service is partially owned by ABC or is merged with the Soap
Channel announced by Sony, the affiliate participation in annual
net profits as set out in paragraph II. A.(l)(d) will be diluted
in the same proportion as ABC's interest in the service.
Affiliate participation under the formula set out in paragraph
II. A.(l)(a)-(c) will not be subject to dilution or reduction.
B. Daytime Clearances:
Your station shall maintain current level and time period scheduling
of clearances for the following ABC Soaps: General Hospital, All My
Children, One Life To Live and Port Charles, or for any replacement
soap opera programming.
C. Exclusivity: ABC has immediate repurposing rights for its soaps for
the purposes and as provided in this section II for the term stated in
paragraph D below.
D. Term:
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1. The term of the provisions of Section II of this Amendment shall
be for the duration of your station's ABC affiliation agreement.
2. The same terms of Soap Channel Participation will apply during
the term of the renewal of current affiliation agreements.
III. EXCLUSIVITY
A. Entertainment:
1. Series: ABC will not repurpose any Primetime Entertainment
series episode within 180 days of the end of its original airing
on the Network or the expiration of that television season
(Sept.-Sept.), whichever is earlier. (In no event will ABC
repurpose any such series episode within 90 days of the end of
its original airing on the Network.)
2. Made for TV Movies, Mini-Series and Specials: ABC will not
repurpose within 60 days of the end of original airing on the
Network.
3. Awards Shows and other timely Specials: ABC will not repurpose
within 48 hours of the end of original airing on the Network.
4. ABC will not promote the repurposed Entertainment programming
prior to its original airing on the Network. ABC will obtain
contractual commitments from licensees imposing the same
promotion limitations, but ABC will have no liability to
affiliates in the event of a breach by such licensee.
5. The above notwithstanding, ABC will be free to repurpose up to
25% of the Primetime Entertainment schedule without any
restrictions.
B. Sports:
1. Programs: ABC will not repurpose any Sports program in its
entirety within 48 hours of the end of its original airing on the
Network.
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2. Excerpts: ABC will not repurpose excerpts (defined as 40% or
less) of any Sports program within 4 hours of the end of its
original airing on the Network.
3. Highlights: ABC will continue to be free to use highlights drawn
from any Sports program anytime after its original airing on the
Network. The term "highlight" is defined by reference to custom
and practice within the broadcast industry.
C. News:
1. ABC has immediate and unrestricted repurposing rights for
breaking news coverage unless it has preempted Network
programming for such coverage in which case it will have
unrestricted repurposing rights immediately following the
preemption of Network programming for such coverage.
2. ABC will not repurpose any "hard" News program (e.g.,WNT &
Nightline) within 4 hours of the end of its original airing on
the Network, and any timely News program (e.g., GMA) within 2
hours of the end of its original airing on the Network. Upon
request by ABC, affiliates will not repurpose in the same time
period in which ABC is airing "hard" News any News program
content that has been provided by ABC.
3. ABC will not repurpose any "soft'' News program (e.g.,
Newsmagazines) in its entirety within 60 days of the end of its
original airing on the Network. ABC may repurpose excerpts of
any Newsmagazine program within 60 days after the end of its
original airing on the Network if the new program does not
contain more than 50% of any one original Newsmagazine program
and the original Newsmagazine program titles are not used unless
modified (e.g., "Best of 20/20").
4. Politically Incorrect: ABC will not repurpose within 4 hours of
the end of its original airing on the Network.
D. Daytime:
1. ABC has immediate and unrestricted repurposing right for its
soaps as provided for herein. ABC will limit its repurposing of
its soaps to the Soap Channel Cable Service unless and until the
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launch of such channel fails. In the event that ABC repurposes
its soaps apart from the Soap Channel Cable Service, your station
will be entitled to an economic participation from such
repurposing by receiving an annual distribution based on 15% of
annual net profits generated by such repurposing in your
station's market. For the purposes of this paragraph only "net
profits" means gross revenue less any direct out-of-pocket costs
incurred by ABC in repurposing its soaps. The term "direct out-
of-pocket costs" means amounts paid by ABC to third parties
specifically and solely for the repurposing of the soap operas
(e.g. third party participations, residuals, rights clearance
costs and the like). The term excludes amounts paid to
Disney/ABC, any of their respective subsidiaries or any of their
employees, save residuals or third party participations that may
be owed to such employees. The calculation of net profits as set
out in this paragraph will be subject to independent audit. The
provision of this paragraph related to ABC's repurposing soaps
apart from a Soap Channel Cable Service and the right of your
station to an economic participation in such repurposing shall be
subject to the term limitations set out in paragraph E below.
2. ABC will not repurpose The View or any replacement programming
referenced in paragraph II.B above that is not a soap opera
within 4 hours of the end of its original airing on the Network.
E. Term: The term of the provisions of this Section III shall be
coterminous with the term of Section I (the Inventory Swap/NFL
Contribution Plan) of this Amendment.
IV. FURTHER FLEXIBILITY
The parties recognize that ABC may wish to repurpose certain
programming in a manner that is at variance with the limitations set
forth above. Your station authorizes the Network's Affiliate Board to
act fully on your behalf to accept or reject ABC's requests for such a
variance and agrees that neither the Affiliate Board nor those acting
on its behalf will be liable to you for the decisions it makes to
accept or reject a variance. The Affiliate Board will be required to
meet with ABC promptly upon
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receiving a request for such a variance, and will not act unreasonably
in withholding its approval.
V. MISCELLANEOUS
1. The geographical scope of exclusivity shall be your station's DMA
or any lesser area as may be required by the FCC under existing
rules.
2. The exclusivity provisions prohibit repurposing by any video
delivery system now known or hereafter devised, including, but
not limited to, television stations, satellite, wireless,
telephone and cable systems.
3. The prohibition against and the contractual provisions
restricting the pre-promotion of Entertainment programming (as
set out in paragraph III.A (4)) apply as well to all other
program classifications, e.g., news and sports.
4. If comparable side letter amendments are accepted by the
requisite number of affiliates, then as to those accepting
affiliates ABC agrees not to implement before August 1, 2002 any
of the measures outlined in the attachment to Pat Fili's June 4,
1999 letter entitled "1999-2000 Season Format Adjustments",
except the compensation reduction outlined in the body of that
letter which will be implemented as to all affiliates. With
respect to any affiliates who do not accept such a comparable
side letter agreement, ABC reserves all of its rights including
the measures outlined in the attachment to the letter.
5. If ABC should desire to program or create a channel that is
designed to repurpose a significant portion of any class of ABC
Network programming that involves the creation of an asset, ABC
agrees to enter into good faith negotiations about affiliate
financial participation in such asset but ABC shall be under no
legally enforceable obligation to come to agreement with
affiliates about any such participation.
6. In the event that your station's existing affiliation agreement
imposes greater clearance obligations than set forth herein,
those clearance obligations will continue to apply.
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7. The provisions of your station's existing affiliation agreement
relating to the application of FCC rules to clearance commitments
will continue to apply.
8. This Amendment shall be governed by New York Law.
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If your station wishes to agree to the Amendment, please execute the
enclosed copy of this letter in the space provided below and return it to me
before July 16, 1999.
Very truly yours,
John L. Rouse
Senior Vice President
Affiliate Relations
Accepted and Agreed to:
KATU/Portland, OR
By: _______________________
Title: ____________________
Dated: ____________________
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