NBC is developing a project code-named Genesis that could change the way network TV advertising is bought and sold.
When it is put in place in June, NBC will have the ability to simultaneously deliver commercials with different targeted messages to as many as 40 markets.
Affiliates are already fretting over the impact that NBC's plan--which will use digital technology to deliver programming and ads to stations--could have on their local sales efforts.
"The Genesis Project has not yet been approved by the affiliate board," said Ken Elkins, chairman of the NBC affiliate board and president-CEO of Pulitzer Broadcasting. "And it's not likely to be approved until NBC endorses some sort of cash payment" to compensate affiliates when NBC beams a targeted message into their community.
NBC Television Network President Neil Braun is looking to quickly resolve the issue so the broadcaster can focus on its battle with rival networks.
"The last pocket I want to take money away from is my affiliates," Mr. Braun said. "What we're trying to develop here is the opportunity for NBC and the NBC affiliates to take market share away from others."
Executives at ABC and CBS said they were unaware of similar initiatives at those networks.
The broadcast networks have long had the ability to send analog signals into individual markets, but have not easily been able to sell targeted commercials in more than seven or eight markets.
"Genesis changes the equation," said one affiliate executive familiar with the project. "Now NBC can go to a McDonald's or a General Motors and say to them, `We can give you a very cost-effective way of targeting your message to a number of markets.' "
Though the completion of the Genesis Project will allow the delivery of 40 different commercials simultaneously, NBC only has 18 satellite paths currently available.
"Long term, as I understand it, NBC will use digital compression so they can use one satellite transponder to send out multiple signals," said a second affiliate executive.
Some of NBC's daytime and news programming is currently being sent to affiliates in a digitally compressed mode as a test.
As Genesis is upgraded over time, and compression technology becomes more sophisticated, NBC will likely be able to beam commercials into more than 40 markets.
NBC's ability to deliver customized ad messages could entice marketers to shift dollars from spot TV to the network level.
"There is no doubt in my mind that if NBC can deliver what you say it can, some clients are so bottom line-oriented that they will move their spot budgets into such a scheme," said one agency media manager with expertise in both spot and national TV buying.
Countered an affiliate executive, "There are issues of frequency and weight that are still going to dictate that advertisers use spot TV."
Still, the reasons are clear why the NBC affiliate board is adamant Genesis not be approved without a plan to compensate stations.
"My view is that we really can't fight technology," said one NBC affiliate station general manager, "so I'd much rather get some money out of it."
Genesis has other implications as well. One is in the area of network-station exchanges on news programming, Mr. Elkins said. Another is when stations accept program downloads from the network.
Yet a third possibility Genesis introduces is ease of switching programming around. Since the now digitized NBC programs will sit on a server, it would be no problem to feed certain stations "Seinfeld" at 9 p.m. and others
"Seinfeld" at 9:30 p.m., depending on which slot would optimize ratings in each particular market.
"Those kinds of things could wreak havoc on the promotion guys," Mr. Elkins said. "But Genesis certainly makes them much easier to do."
Copyright February 1997, Crain Communications Inc.