reverse compensation

{{Short description|Financial practice in American television}}

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.[http://www.metroactive.com/papers/metro/12.06.01/cover/kntv-0149.html The Story At 11], Jeff Kearns, Metro (Bay Area), December 6, 2001

The practice played a role in the 2006 affiliation drives of two newly announced networks, The CW Television Network and MyNetworkTV. The CW reportedly demanded reverse compensation from affiliates for an arguably proven, but still low-rated, prime time schedule; MyNetworkTV made no such demand and also allowed stations to keep more ad time than a traditional network would.[http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticleHomePage&art_aid=40247 TV Station Execs Debate Choice...], MediaPost Publications, February 24, 2006 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 MyNetworkTV instead, though in cases where Sinclair had market duopolies, eventually relented and affiliated the second stations with The CW before their launch.[http://www.mediaweek.com/mw/news/tvstations/article_display.jsp?vnu_content_id=1002115519 My Network TV Inks 17 Sinclair Affils], Katy Bachman, Mediaweek, March 6, 2006 Pappas Telecasting and Tribune Company, the two major station groups which did carry The CW, both filed for bankruptcy protection in 2008.[http://marketwatchinformationservices.org/news/story/pappas-telecasting-files-bankruptcy-blames/story.aspx?guid={BD3264A3-7A33-4F4C-A513-C5E210DC5C28}&dist=MostEmailHome Pappas Telecasting files for bankruptcy, blames CW ratings], Dow Jones May 10, 2008 Tribune, which operated the largest group of CW affiliates at the time of the network's launch, removed the network name from its stations' branding for a few years, until management changes returned the network branding to most of their affiliates.[http://tvdecoder.blogs.nytimes.com/2008/12/08/tonights-top-story-on-tribunes-tv-stations-its-bankruptcy-filing/ Tonight's Top Story on Tribune's TV Stations: Its Bankruptcy Filing], Brian Stelter, New York Times, December 8, 2008

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.