Networks

Burke: NBC Should Reap $500M in 2015 Retrans

NBC Chief Says Market Correction Overdone 9/09/2015 2:15 PM Eastern

NBC Universal should reap about $500 million in retransmission consent revenue in 2015, a figure that while lower than some other broadcasters is expected to grow substantially over time, CEO Steve Burke told an industry audience Wednesday.

 

NBC has lagged other broadcasters on the retrans front and Burke has lamented in the past that the network had some catching up to do – CBS, for example, is expected to report $1 billion in retrans and reverse compensation in 2015, doubling to $2 billion by 2020. Still, Burke said at the Bank of America Merrill Lynch Media, Communications & Entertainment conference in Beverly Hills, Calif., there is still room for the network to grow.

 

As the no. 1 network among adults aged 18-49, Burke said NBC could "argue that we should get as much as ABC, Fox and CBS if we continue to have good ratings performance. I know you'll see that $500 million go up over time."

 

He added that NBC has "a number of deals" expiring in the 2016 timeframe.

 

Burke also commented on the recent downturn in programming stocks, spurred in part by fears that The Walt Disney Co.’s ESPN, once thought to be nearly invincible to cord-cutting or advertising declines, was reducing forecasts due to a slight falloff in subscribers. That helped send the market into a two-day tailspin in early August.

 

 Burke said that pressures from cord-cutting and viewers watching on platforms are nothing new, but gained new immediacy after sports network ESPN began to feel the pain.

 

"Nothing different is happening in the last month that wasn't happening a year ago or two or three years ago," Burke said. "We said that given the trend in ratings, it's unlikely that ratings would grow over the next five years as they did the last five years. The good news is that people are watching more video than ever before, they're just watching in places that many times aren't rated, that aren’t monetized.”

 

He added that while the distribution business is more difficult today that a decade ago, it’s still a business worth being in. And he noted that this isn’t the first time cable has faced a new, seemingly stronger competitor.

 

 “The cable industry has survived satellite, the two biggest telephone companies coming into the business, the Internet and everything else, " Burke said.

 

The market reaction to the ESPN results and other factors was overdone, but Burke conceded that growth is slowing.

 

“When $50 billion in market cap flies out the window in a week, it’s an overreaction,” Burke said. “I think these businesses are very robust and will be around for a very long time, they will just have lower growth rates than they’ve had.”

 

The ad market is growing too, after what he called a “not strong” upfront, driven more by advertisers waiting to see how the market would shake out rather than shifting their dollars to digital platforms.

 

“Advertisers that did jump in [to the upfront] are feeling smart,” he said. “The advertising market now is very good.”

 

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