Time Warner Cable will make cash payments to LIN TV under the new retransmission-consent deal covering more than a dozen TV stations, as the broadcaster got what it wanted, its CEO said Thursday.
“The bottom line is we received the compensation that we set out to receive from Time Warner,” LIN TV president and CEO Vincent Sadusky told analysts during a third-quarter earnings call. “There’s not much more to say than that.”
Sadusky didn’t offer any other details about the deal that his company reached Wednesday with Time Warner, citing the confidentiality provisions of retransmission-consent deals. But during a month-long dispute that left LIN TV stations black in 11 markets, LIN TV publicly said it was seeking a 30 cent, monthly license fee for its stations.
When asked point blank by one Wall Street analyst on the third-quarter call, “Can you confirm that there will be cash payments in the Time Warner contract,” Sadusky answered, “Yes.”
Time Warner couldn’t be reached for comment Thursday, and declined to comment on terms of the deal Wednesday.
During the conference call, LIN TV reported that its digital revenue, which includes Internet advertising as well as retransmission-consent fees, increased 88% to $8.1 million in the third quarter, compared to $4.3 million in the same period last year.
Retransmission-consent fees increased 91% in the third quarter compared to the same period last year, LIN TV said. In the third quarter, LIN TV also reached a new retransmission-consent agreement for both its analog and high-definition signals with Charter Communications, the company reported.
“As a result of the announced agreement with Time Warner Cable yesterday, I’m pleased to announce that we have reached deals with every major cable, satellite and telecommunications company for retransmission- consent of our highly rated local stations,” Sadusky said.
For the fourth quarter, LIN TV is forecasting that digital revenue, retransmission-consent fees and Internet ads, will be anywhere from $8.7 million to $9.2 million. That projection factors in the new Time Warner deal, according to Sadusky.
The new LIN TV-Time Warner retransmission-consent deal covers analog and digital signals for 17 TV stations: 15 carried by Time Warner and Bright House Networks, whose old deals expired Oct. 2 and were pulled; and two stations in Norfolk, Va., whose deals with Time Warner are due to expire at the end of the year.
LIN TV stations were dropped in Austin, Texas; Buffalo, N.Y.; Columbus, Ohio; Dayton, Ohio; Fort Wayne, Ind.; Green Bay, Wis.; Indianapolis; Mobile, Ala.; Springfield, Mass.; Terre Haute, Ind.; and Toledo, Ohio.
The dispute had involved three LIN TV stations that Bright House carries in Indianapolis and two it carries in Mobile.
“We ended it because we received what we got, and I’ll spare you all of the drama that went into getting to our final result,” Sadusky told analysts. “But we got to the place that we wanted to be.”
The CEO said it is hard to gauge the financial impact of the month-long blackout of his TV stations, a number of which were CBS affiliates, on Time Warner and Bright House systems.
“We lost Time Warner revenue,” Sadusky said. “They are a significant advertiser. But they are back now. So we lost at least a month’s worth of Time Warner revenue. And then with regard to how much advertising actually did we lose over that month-long period, it’s very challenging to quantify.”
As for the ratings impact of the stations being pulled from cable, it varied depending on the market, and how big a presence Time Warner has in a market, according to Sadusky.
In Indianapolis, for example, he said, “We actually saw ratings go up during the time period that we were off Time Warner. Now you’d say intuitively we would have gone up more, but the point is the impact wasn’t all that significant.”
In Dayton and Austin, where Time Warner has a large footprint, Sadusky said, “The ratings impact was more significant. We saw advertisers really stay with us for the early part of the campaign. In the last couple of weeks, it definitely started to have more of an impact. But again, it’s very challenging to quantify it.”
Sadusky also reflected on past retransmission-consent negotiations.
“I don’t know what other broadcasters are getting,” he said. “I know the larger the operator, it’s been our experience it’s been a more challenging negotiation. Our assets, we believe, lined us up very well for getting the maximum value out of this deal, meaning we’ve got very highly rated television stations across a very good percentage of Time Warner’s footprint.”
LIN TV keeps “a very significant database” of retransmission-consent fees, based on the deals it has cut with distributors, according to Sadusky.
“It’s not been our philosophy to come off cable systems,” he said. “It’s a bad result for the cable operators, as they lose a significant amount of viewers when, in our case, the most highly rated television station in many of these markets comes off the air. It’s not good for us. We lose, temporarily, advertising revenue….When we do come off it’s because we have not been able to receive the compensation that we set out to receive. And as we said all along, we are not unreasonable in out compensation requests.”
LIN TV’s net revenue for the third quarter increased 5% to $98.8 million, compared to $93.7 million for the same period in 2007. The increase was primarily due to higher political advertising sales in this election year of $11.4 million, compared to $1.3 million for the prior year period, and to higher digital revenues.
LIN TV’s core advertising sales declined 8% for the third quarter, due primarily to television advertising marketplace declines in the broadcaster’s markets.