Policy

Sinclair's Retrans Cash Rises 90%

2/16/2007 7:00 PM Eastern

In the aftermath of its bitter battle with Mediacom Communications, Sinclair Broadcast Group this year expects to generate nearly $48 million from retransmission-consent agreements, almost double last year's figure, officials said last week.

That would represent almost a 90% increase from the $25.4 million in retransmission-consent revenue the broadcaster secured in 2006, Sinclair officials said during a fourth-quarter earnings call.

Sinclair CEO David Smith used the call as a pulpit to urge fellow broadcasters to join in the quest to collect cash from cable companies.

“Now is certainly a significant time in history, and point in time in history, when we as a company have been able to get what we think is the beginning of the fair value of our content,” Smith said. “Having said that, it is now incumbent upon the rest of the industry to kind of recognize what we've been able to accomplish and kind of step up and start asking for what their due is.”

In a pre-Super Bowl XLI strike, Sinclair pulled 23 TV stations off of Mediacom systems in 16 markets on Jan. 6, affecting 700,000 subscribers. A new agreement was struck on Feb. 2, in which Mediacom reportedly paid cash fees for carriage of Sinclair's stations, which were restored to the cable company's lineup.

In January, Sinclair also completed a new retransmission-consent pact with Time Warner Cable for carriage of analog and digital signals of 35 stations in 22 markets, representing nearly 6 million cable subscribers.

“I think the next big driver in this category is going to be CBS, who has publicly said they would like to get 50 cents a subscriber,” Smith said on the call. “We think that's a very do-able number, and would certainly encourage them to hold the line, and for the CBS affiliate body, to the extent that it can, to hold the line to start to get paid.”

He added: “There is no confusion on the part of the consumer about what they watch and what they think has value. I think it's time for the consumer to kind of let the cable company know that it's OK to pay for content that we choose to watch.”

Still, Sinclair officials were circumspect about details of their confidential cable deals. “There are rate increases in all of our retrans deals,” Smith said. “They vary deal to deal.”

Asked what kind of losses or negative impact the month-long Mediacom dispute had on Sinclair, Smith said, “Anything that we lost there was immaterial relative to what we get. So it's not worth chatting about.”

After being complimented on their conduct during the Mediacom battle by an analyst, Sinclair officials commented on some of the charges levied, not only about Smith but general counsel Barry Faber. Mediacom, for example, had sought a Congressional probe of the dispute.

“It's one of the most difficult things Barry and I've ever been through, and Barry was bearing the brunt of the entire transaction,” Smith said.

“It was necessary to stay above the foolishness, as you suggested, because I think if we hadn't, then it would have just degenerated into just a name-calling kind of thing,” he added. “It's not easier, but it's sometimes difficult to stay on the outside of that and say, 'We're just going to be really good guys here and do the right thing and let the chips fall where they're going to.' It was hard, but it was necessary, given the personalities of the two companies.”

Sinclair said it still needs to secure such agreements for roughly 25% of its viewers who are customers of multi-channel video program distributors.

“By 2010, there is no reason why our numbers … probably couldn't double,” Smith said.

September