Policy

Year-End Blitz on Retrans

12/19/2011 12:01 AM Eastern

Cable operators are bracing for what
could be another contentious round of retransmissionconsent
negotiations as more than 900 separate deals
could come up for renewal at year-end.

While several deals have already been done this year —
most recently, satellite-TV provider Dish Network’s multiyear
agreement to carry 55 Nexstar Broadcasting Group stations —
Dec. 31 is the expiration date for many retransmission-consent
pacts.

The American Cable Association,
a Washington lobbying
group representing about 900
independent cable operators,
has already said earlier this year
that its membership is bracing for
more than 900 renewal deals.

Back in October, ACA CEO
Matt Polka warned that smaller
operators could face TV-station
blackouts “on a massive scale,”
especially as station groups have
gobbled up multiple affiliates in
the same market. Polka pointed to
Topeka, Kan., where one broadcaster
gained control of the retrans
rights for ABC, NBC and
Fox affiliates carried by 10 ACA
members in that market.

Other distributors, like Direc-
TV, Comcast and Time Warner
Cable, reached deals in March
— Comcast with Sinclair Broadcast
Group’s 36 stations; and DirecTV with Fox (27 stations) and
Belo (20 stations).

Retrans reform has been a hot-button issue for years — the
Federal Communications Commission toyed with the idea of
a proposed rule making earlier this year, but has made little
progress on that front. And last week, U.S. Rep. Steve Scalise
(R-La.) and U.S. Senator Jim DeMint (R-S.C.) proposed scrapping
retrans laws altogether, which gained support from the
ACA but realistically has little chance of passing.

But many operators are expected to ring in the New Year
locked in negotiations with at least a few broadcasters. And
though the markets may be smaller, negotiations could be
even more heated as broadcasters begin to test the capacity of
distributors to absorb even bigger increases. SNL Kagan has
estimated that the retrans haul for broadcasters will rise 50%,
to $1 billion, in 2011 and another 58%, to $1.6 billion, in 2012.

Most broadcast networks are demanding a portion of their
affiliate’s retrans fees, so-called reverse compensation, which
could drive up prices as much as 50% to 100%.

“TV stations are trying to set the bar higher,” Miller Tabak
media analyst David Joyce said. “It’s going to be another tough
set of negotiations.”

And the year was not without its spats. Mediacom Communications
endured a lengthy battle with LIN Media that resulted
in about 10 stations going dark in September. While that
deal was settled in October, others have cropped up, including
Time Warner Cable’s decision to let two stations in Corpus
Christi, Texas — NBC affiliate KRIS and Telemundo outlet
KAJA — go dark after agreements expire on Dec 13.

On Dec. 15, Dish Network said two stations in Traverse City,
Mich., went dark to its subscribers — CBS affiliate WWTV
and Fox affiliate WFXQ — after they could not reach a retrans
agreement. Dish claims the stations, owned by Heritage
Broadcasting, have asked for a 50% increase in retrans
fees and have “completely walked away from the table.” Heritage
has claimed that Dish is offering rates near the bottom of
the pay scale, a claim the satellite giant disputes.

At DirecTV, Dish’s larger satellite counterpart, no recent
spats have come to light, although the company has deals
that expire throughout the year. DirecTV did not want to
comment on any upcoming renewals, although people familiar
with the company said no major deals are expected
on the horizon.

At Mediacom Communications, which has been an outspoken
proponent of retransmission-consent reform, more than
two dozen retrans deals are to be completed before the end
of the year, according to group vice president of legal and
public affairs Tom Larsen. Those deals run the gamut in
size and scope, he added, saying he was not ready to predict
whether they will end up in disputes.

“We hear a lot about reverse [compensation], so I am
sure it is a complicating factor for a number of the negotiations,”
Larsen said.

Comcast’s retrans deals come due throughout the year,
and the company did not want to comment on any specifics.
However, people familiar with the MSO said they don’t
think any major-market deals expire at the end of the year.

Other operators are in the same boat — retrans negotiations
aren’t usually revealed until they’re completed,
reach an impasse or one side feels the need to negotiate
in public. So it looks like distributors and programmers
alike will be spending another year-end waiting for the
next shoe, instead of a lighted ball, to drop.

September
October