NBC Expects ‘Hundreds of Millions’ in Retrans Fees - Multichannel

NBC Expects ‘Hundreds of Millions’ in Retrans Fees

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Add NBCUniversal to the growing list of
broadcasters that believe they are due a retransmissionconsent
windfall.

Last Wednesday, NBCU — which kept particularly silent
on the retrans issue while the Comcast and General Electric
joint venture was undergoing the federal approval process
seven months ago — piped up at the Bank of America Merrill
Lynch Media, Communications & Entertainment conference
in Beverly Hills, Calif., claiming
that it expects “hundreds
and hundreds of millions”
of dollars in retransmissionconsent
fees over the next
few years.

That would place its NBC
Television Network on par
with its major broadcast peers
in the retrans pecking order.
CBS, one of the pioneers of
cash for retrans, is expected
to reap about $250 million in
retransmission-consent fees
by 2012.

NBCUniversal CEO Steve Burke said 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.

FOLLOWING SUIT

“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 owned 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 ABC owned-andoperated
station WABC-TV
in the New York market last
March, and Fox Broadcasting’s
owned-and-operated
stations in New York, Fox
affiliated WNYW and
MyNetworkTV affiliated
WWOR, 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 toprated
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% those 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 are for as long as 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.

SEEKING SYNERGIES

Burke said that NBCU also plans to extract more advertising
revenue out of its networks by taking advantage of all of its
assets. He pointed to potential synergies between the broadcast
network and its sports channels for particular events. For
example, during a golf tournament, the NBC broadcast network
could follow the leaders, while its Golf Channel could
focus on a particular hole. The broadcast station would refer
viewers to Golf during particularly interesting moments.

“We can cume the rating and sell to the same advertisers,”
Burke said, adding that in the past, when it did the
same thing with the Golf Channel and Versus (to be renamed
NBC Sports Channel in January), it resulted in
higher ratings for both channels.

“It appears to be working,” Burke said, adding that other
similar opportunities could arise with its Comcast
SportsNet regional sports networks and its owned-andoperated
broadcast stations.

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