CBS Wants Its Retrans Cake - Multichannel

CBS Wants Its Retrans Cake

Author:
Publish date:
Social count:
0

The CBS broadcast network, poised to reap about $100 million in retransmission consent revenue in 2010, is expected to more than double that take in the coming years as its fees from distributors rise and as it captures 50% or more of those funds from its affiliate stations, chief financial officer Joseph Ianiello said at an industry conference here Wednesday.
CBS has about 28 owned and operated stations in the top markets in the country, including New York, Los Angeles and Chicago. The broadcaster has been one of the more aggressive station owners in demanding cash for retransmission consent.
Speaking at the SNL Kagan TV and Radio Finance Summit, Ianiello said that while CBS is on track to extract about $100 million in retrans revenue from distributors this year based on an average fee of about 50 cents per subscriber per month. But as new retrans deals approach the $1 per subscriber mark and the company begins to take a piece of its affiliates' retrans fees, that number ramps up to $250 million.
Ianiello said that CBS already has about 60 retrans deals in place with distributors - including long term agreements with Time Warner Cable, Verizon Communications and Cablevision Systems - and it still has some deals to complete. While Ianiello would not say which deals are expiring, he said that CBS will strive to extract fair value for its stations.
"We want as much as we can get," Ianiello said.
And part of that stance means that affiliates will have to pony up 50% or more of their retrans takes to the network.
At a later SNL Kagan panel, a trio of TV station owners said that having networks involved in their separate retrans negotiations could lead to much higher fees for distributors.
John Tupper, president of investment banker Kepper, Tupper & Co., said that networks are basically telling station owners that they want a certain amount of cash per subscriber, which they estimate is about 50% of their retrans revenue.
"But they don't care what you're getting," Tupper said. "It is going to force the station to get a number that is going to turn out to be probably twice as large as what the network is asking for."
CBS wouldn't be the only network to try to extract a portion of their affiliates' retrans fees - Fox and ABC have expressed a similar desire.
While taking a cut of affiliate retrans fees has been controversial - some of the larger station groups have said in the past they will fight any revenue sharing - Ianiello said it is only fair given that much of a station's value lies in the network programming it receives. And though the networks could bypass the affiliates and provide programming directly to the distributors, Ianiello said that could mean giving up some advertising revenue in return for a higher fee.
"We want both," Ianiello said of advertising and retrans revenue. "People say ‘You want your cake and you want to eat it too.' Who wants cake and not eat it?"
Ianiello also addressed a movement by some cable operators to get the federal government involved in retrans negotiations as the battles grow more contentious.
"If others would like to get the federal government involved, I say, let's go one step further," Ianiello said. "If you're worried about consumer choice, let's go ala carte."
Ianiello added that in that scenario, most subscribers would likely take the four broadcast networks and a handful of cable networks.
"In that model, we make a whol lot more than $1," Ianiello said.

Related