Gray Television President and COO Bob Prather had more on his mind than his second-quarter results when he got on the phone with securities analysts last week.

"We're going to fight that hard," Prather said of NBC's plan to charge affiliates for its programming. "They have a word to describe this: it's called arrogance."

NBC revealed its reverse compensation intentions to affiliates last May, and, in an interview with TV Week last month, network president John Eck provided the rationale to the entire industry.

"We take enormous, enormous risks on all of our programming," Eck said. "We think given the reality of the marketplace today, that affiliation fees are something that's very appropriate for what we do in the Olympics and sports and primetime and in late night."

In this interview with TVNewsday Editor Harry A. Jessell, Prather counters that affiliates already deliver plenty of value to the network and expresses the hope that other affiliates will join him in opposition.

An edited transcript:

You mentioned on your conference call that NBC was asking for payments from your station in Charleston, W.Va., WSAZ. What about your other nine NBC affiliates?

They've all got four or five more years before they're up.

So why all the fuss?

I think the way they've handled it. They just basically said, here it is, a take-it-or-else-type thing. From the position that they are in, with their ratings going down, for them to come in with this kind of attitude is frankly just unbelievable.

I would say our NBC stations are performing poorer than most of the other stations just because of NBC's primetime schedule is so poor. Normally, it doesn't hurt us that bad, but theirs is so poor, it's actually hurt our news and overall NBC station performance.

I guess it's nice that you have some mix of network affiliations across the group.

Yes, it is, but you know, we've got NBC in some of our bigger markets so from a total dollar standpoint they're a very important part of our business. They are probably 45 percent of our cash flow right now.

Do you have any idea what kind of payments NBC will be seeking?

Yes. I know exactly what they're seeking. I can't go into that, but I know exactly what they want.

Can you give me a ballpark on that?

They just want a nice percentage of any retrans revenue we get in our local markets.

So they actually want to tie it to retrans.

Yes, they do.

You know the broadcast networks have been losing ground to the cable networks for years. Don't you think they deserve a second revenue stream to stay competitive with cable?

I think we bring them a bigger audience than they could get without us. We way outperform all the networks in all our markets as far as bringing an audience to them. I think we bring our audience to them, not vice versa.

Would you feel better if the payments were attached to a particular type of programming — say, the NFL or the Olympics?

Well, they do that anyway or try to do that.

Not NBC.

CBS has on the NFL and on NCAA. From the standpoint of a local affiliate, frankly, I think it just encourages them to overpay for these things. That's part of what's happened in the past.

On your conference call, you said that you do $3.5 million in revenue around the Olympics. Why not share that with the network that is bringing it to you?

We're getting just a few minutes an hour of the time. They're getting 98 or 96 percent of the income coming in from the Olympics.

You know, a group your size doesn't really have a lot of leverage with NBC. Is this something you're just going to have to swallow?

We told them we'd get back to them. We haven't had any further discussions. I would tell you that there are several other groups that have NBC [contracts] up at the end of this year or next year and they all have pretty much the same attitude we do.

Luckily for us, Charleston is one of the strongest NBC stations in the country. It's got a great performance record over a long, long period of time. We're a dominant station in that market. So we feel like we've got a valuable asset for NBC.

But even if you put all your NBC affiliates together, it wouldn't amount to a big percentage of NBC's total households.

Look, I won't pretend that we're on an equal negotiating basis with them.

OK, then, bottom line: Could you live without them?

I don't want to think about that. I don't want to live without them. I think we'll be able to work out a deal at the end of the day.

What are you hearing from the other networks?

I haven't heard anything from the other networks regarding this kind of thing. Luckily, all our deals are out four or five years with CBS and ABC.

Do you think the other groups are going to rally and really present a common front on this?

I hope so. I think we all should, certainly. A couple of the group heads I have talked to certainly have indicated a strong opposition to this.

I guess it would be a bad precedent for you. If NBC does it, the other networks are going to do it too.

You would think that the lemmings would follow along, yeah.

What about this business of the networks distributing their programming online? Doesn't that devalue the programming for you?

That doesn't bother me as much as some people. My theory is that the computer and the TV are kind of converging together anyway. We've just got to figure out a way to accommodate that. I think the vast majority of people that are watching a streamed program on the Internet probably wouldn't have seen it on TV anyway. They were watching it in an office or they watch it on the road somewhere. I would think most people if they're sitting at home where they have a nice TV, they're going to watch whatever they watch on the TV.

I know you also have a number of digital CW affiliates. Do you hold out much hope for the CW?

I hope so. It's a tough, tough market right now in general as you well know. I think the CWs and My Network both have come up with some pretty good programming. I just think they've got to be consistent over a period of time

Our digital channels, as I have mentioned before, have been hurt by not being on the analog tier in a decent channel position. That's something we're going to work hard on in our retrans negotiations — to try to get better channel placement for our digital channels.

But you're not going to give up the cash for that, right?

No. We want the cash.

Do you have a Plan B in case CW does fold?

We think we can operate just fine with our digital channels with more local coverage, more local programming and some more syndicated programming. Remember, they're only providing a couple hours a night of programming.