The notion that multichannel video distributors might create an Aereo-like service isn’t likely to disrupt the growth of retransmission-consent payments, according to a panel of broadcasters.
“I’m not concerned about Aereo having an impact on retransmission during anyone’s investing or planning horizon,” said John Hane, a communications lawyer at Pilsbury Winthrop Shaw Pittman speaking Tuesday at a TV on Wall Street panel sponsored by the NAB in conjunction with NYC Television Week.
Hane said even if Aereo’s service for transmitting broadcast signals over the Internet is ruled to be legal, cable and satellite distributors are not set up to distribute programming that way. “I don’t see this as something viable,” he said.
Perry Sook, president and CEO of Nexstar Broadcasting Group, said that while he would defend against Aereo if its entered one of the markets in which he owns a stations, he’s not overly concerned about it. “What is the total number of subscribers? There may be more people in this room than Aereo subscribers. We spend a lot of time talking about them with analysts and reporters, but internally we spend no time worrying about it.”
The growing stream of retransmission revenue has revitalized the broadcast business says Sook. But he said there is still a disparity between “what we’re being paid as part of the cable package versus what we’re worth,” based on viewership. In the average market, stations account for about 35% of viewing, but only 5% what cable networks get.
He projects getting monthly fees of $4-$5 per subscriber.
Hane said that negotiations are not based on viewership. Instead they’re based on a calculation of how many viewers the cable operator would lose if they blacked out the stations.
Some of that retrans revenue gets to be shared with networks, which are now getting reverse compensation from stations. While negotiations between stations and networks may get testy, the relationship is stable right now, according to Sook. “I don’t think the networks are interested in having a bankrupt affiliate group,” he said.
“We’re both bringing value to the equation,” added Steve Foerster, vice president of corporate development at Griffin Communications. “Where that settles out is just a matter of time.”
Sook said that when negotiating retrans, it's not the fee that takes the most attention. “The grant of rights paragraph is what we spend the most time on,” he said. “What rights over what devices. What rights do we have to grant.”
Sook noted that Nexstar recently got a check from Fox covering its share of national content that was delivered online into its DMAs. (Other networks either haven’t granted local digital rights or haven’t come up with a plan yet, he said.)
The check from Fox was small, amounting to $45,000. But that’s up from $1,500 a couple of years ago. “It beats a sharp stick in the eye,” he said.