Tuesday, November 8, 2011

Retrans Fees will Boom, but not for stations

The Retransmission Fee regulatory language was created to allow local stations to decide how they could best benefit from carriage on cable or other multichannel distribution systems - by requiring carriage and expanding their service area, or by seeking remuneration for the right to carry their signals.  Now that the dollars for retrans fees are growing, the networks want in, under the argument that it's their content that is creating the value.
  Media research firm SNL Kagan is out with a report on what's happening with retransmission revenues - one that shows how far retrans fees has gone from trying to help local stations.  They suggest that revenues from retransmission fees for broadcast networks will reach $1 billion this year and grow to $3 billion by 2015, with the revenues coming from a mix of direct fees from multichannel services for non-broadcast networks, and taking retrans fees earned by their local affiliates.
  Univision is capturing the most fees ($303 million), in part because of their lack of affiliates in many markets, which allows them to engage directly with multichannel services for carriage rights.  Fox, CBS, and Disney trail, all getting a mixture of fees from owned cable networks as well as broadcast affiliates.  SNL reports that the current affiliation model is for networks to get about half of station retransmission revenues.  The report also suggests that station attitudes are shifting - "Affiliates have begun to view the reverse retrans development as a positive factor, given that it cements the network-affiliate relationship and provides funds for improved programming,"  Still, the movement reflects a shift from the original intent of the regulation to strengthen local station's ability to deal with cable and other multichannel systems, and a further erosion of their potential revenue sources.
  As revenues from carriage fees rise, there is some concern that broadcast networks may minimize the amount of high-value programming made available to "free" broadcasting, in order to maximize carriage fees for their cable networks.  It's not an unrealistic concern, as many European countries have designated major-value events as being available only on "free" public service networks.

Source-   Close-Up: TV Retrans Revenues to Grow to $3B By 2015MediaDailyNews

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