Burke: NBC Expects Big Retrans Haul


 NBC Universal CEO Steve Burke predicted its broadcast unit could reap "hundreds and hundreds of millions of dollars" in retransmission consent fees through a combination of its owned and operated stations and those owned by affiliates at an industry conference Wednesday.

Burke said at the Bank of America Merrill Lynch Media, Communications, & Entertainment Conference in Beverly Hills, Calif., that he didn't expect NBC's retrans haul to set any records, but he added that he anticipates it will receive rates comparable to the other three large national broadcasters.

Comcast COO Steve Burke

"I don't think we are going to be leading the charge there for a whole variety of reasons, but I think we are going to try to get compensated similarly to CBS, ABC and Fox," Burke said.
NBC earlier this year attempted to convince its affiliate stations to allow the network to negotiate their retrans deals with distributors. According to that proposal, Burke said the network and its affiliates would split 50% of whatever retrans fee is negotiated, with the affiliates guaranteed to receive at least 25 cents per subscriber per month.
While some distributors fear that allowing NBC to negotiate retrans deals for its own and affiliated stations would give it unprecedented power - basically every NBC station deal would come due at once - Burke said that it would lessen the chance that a station is blacked out during talks.
"It will actually make discussion go better and reduce the risk of having channels go off the air," Burke said. "Channels that go off the air, more often than not tend to be medium and small station groups that are for whatever reason taking a very tough position."
That appears true for NBC owned and operated stations over the past few years, but not for other networks. Cablevision Systems endured a brief black out of the ABC owned and operated station in the New York market last March and Fox Broadcasting's owned and operated station in New York went dark for Cablevision customers for two weeks in 2010.
While Burke expects retrans revenue to increase, he added that its cable networks also are poised to see a rise in affiliate fees and advertising revenue in the next few years.
NBCU owns more than 20 cable channels, including top-rated USA Network, Bravo, SyFy, A&E Television Networks, MSNBC and CNBC. Burke said that some of those networks, especially USA, have not been attracting affiliate fees and advertising rates that match their ratings prowess.
For example, Burke said that affiliate fees for USA Network are about 60% that of TBS and TNT, despite it being the highest rated cable network. USA's advertising CPMs (cost per thousand) also lag behind lower rated peers, he said.
"If the advertising industry is going to grow at a certain rate, USA should grow at a faster rate. If affiliate fees are going to grow at a certain rate then USA should grow at a faster rate." Burke said. "There is the same kind of opportunity at MSNBC and other places. ...These channels have performed so well, and their relative growth in terms of advertising and affiliate fees has lagged; so there should be a catch up."
Burke added that catch-up period could take time - some of its affiliate deals go out for five years.
"But I think there is a really compelling argument that we haven't been getting what we should and that over time we have the ability to outperform wherever those markets shake out," Burke said.