Until fairly recently, one stable revenue stream for local TV broadcasters was the compensation that networks paid them for carrying network programming. In the recent competitive environment, the networks began reducing compensation levels, or dropped compensation fees totally, as network-affiliate contracts came up for renegotiation. Networks have talked about the next step - requiring local stations to pay networks for the rights to carry programming, just as cable networks get paid by cable and DBS operators. As stations started to collect retransmission fees from cable and MSO, the networks started claiming that the value came from their programming, and thus should be passed through to networks. Local stations, particularly in smaller markets, are in a bad spot - television programming is expensive and networks supply a lot of what stations air. They are likely to acquiesce to network demands, as long as the networks are smart and keep initial fees on the low side. The stage is set for the next round of affiliation contracts to have carriage fees flowing from stations to networks.
While most of the big CBS-affilate group contracts don't come up for renewal for a couple of years, their approach will be to ask for "reverse compensation." CBS has reached an agreement with a group of small market stations that reportedly includes stations paying for network programming, and is said to be near a deal with a larger station group that will also include "reverse compensation." CBS CEO Les Moonves has indicated that station fees for carrying network programming could generate as much as $450 million in added revenues a year, as it gets phased in.
Source - CBS's Moonves Sees Gold In Reverse Comp, TV Newscheck
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