Reverse compensation

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Reverse compensation, in United States broadcasting, is the practice of a television station paying a television network in exchange for being permitted to affiliate with that network. The word "reverse" stems from the historical practice of networks paying stations to carry their programs, to compensate for the revenue that these stations would lose by carrying networked advertisements.

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.