Policy

Analyst: Retrans Regime as It Stands Could Mean $1B Per Year to CBS

6/11/2012 12:01 AM Eastern

Washington — Cable operators can expect to be ponying
up big bucks in retransmission-consent fees to CBS
if a recent analyst report is any indication.

Analyst Brian Weiser is painting a bright retransmission-
revenue picture for CBS, based on his prediction
that Federal Communications Commission policies
will remain pro-broadcaster for
the foreseeable future.

Weiser’s Pivotal Research Group
initiated coverage on CBS last
week with a “buy” rating and a
prediction the stock will return at
least 15% per year, based in part on
the prediction that CBS’s retransmission
revenue will eventually be
$1 billion a year.

The Tiffany Network was one of
the earliest and most aggressive
pursuers of cash for carriage.

‘KEY GROWTH DRIVER’

“Retransmission consent is one of
the key drivers to growth for CBS,”
Weiser said. That growth is not assured,
but the probability is that if
the FCC did eventually weigh in on
retransmission consent — it has an open docket, but one that
has been around for more than a year — “new rules would
continue to be favorable to local broadcast TV licensees.”

The open retransmission docket is in response to complaints
from cable and satellite providers that the thumb
is on the scale for broadcasters, given the must-carry retransmission
regime. But the FCC has not been responsive
to calls to intervene through forced carriage during
retransmission impasses of mandatory arbitration, including
under current chairman Julius Genachowski.

While the FCC has been pushing to reclaim spectrum
for wireless broadband, Weiser predicted that given the
value of broadcaster-provided local news and publicaffairs
programming, “we believe that policy-makers
would not allow local broadcasters to suffer the same fate
newspapers are facing.”

Eventually, the government might have to rethink the
rules given that they date from a time when cable operators
were “de facto monopolies,” he said. Since then, the
world “has clearly moved on to the point where distributors
are no longer monopolists in their offering of video
services,” according to Weiser.

‘BIASED’ FOR BROADCAST

He added: “Networks and their affiliates must ensure
that they are seen by politicians and community leaders
alike to be continually investing and reinvesting in
their news programming.”

Michael Heimowitz, spokesman for the American TV
Alliance coalition seeking retransmission-consent reform,
said “this report supports what we’ve been saying
all along. The broadcaster business model is propped up
by government regulations completely biased in their favor.
They have all the advantages, especially in retrans.
It’s not a free market, and that’s not good for the viewing
public.”

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