Networks preparing to battle cable and maybe their own affiliates over retransmission consent
In the search for new revenue streams, the broadcast networks are going to their affiliates with their hands held out or their guns drawn, depending on one's viewpoint.
Specifically, if their affiliates are getting money from cable and satellite operators in return for carrying their signal, the networks want a cut. Today, the CEO of Belo Corp., which owns a handful of ABC affiliates, said that Walt Disney-owned network had approached them about receiving a portion of any revenue it is getting from cable and satellite operators. Belo CEO Dunia Shive declined to say how much ABC was asking for but said it wasn't "100%." Well that's nice of them. The news was first reported by TVNewsCheck, a well-regarded industry website. Belo currently gets more than $40 million annually from cable operators for their signals.
The industry lingo for payments from a cable or satellite operator for a broadcaster's TV signal is "retransmission consent." Yes, that phrase will make your eyes glaze over, but it's actually a very important issue for broadcasters and cable operators. In a nutshell, broadcasters want cable operators to pay them to carry their feeds just like they already pay cable channels such as ESPN and TNT. Cable operators have always argued that since broadcast signals are available free over the air, why should they pay.
But momentum seems to be swinging toward the broadcasters on this one. Whenever one of these battles reaches a stalemate and a cable operator stops carrying a broadcaster, the public outcry is usually vented toward the distributor, not the program supplier.
If broadcasters can actually start to get paid in real dollars (or nickels and dimes), then it can have that long-sought-after second revenue stream that cable networks already enjoy. News Corp., parent of Fox and owner of almost 30 TV stations, and CBS have been the most vocal about getting payments from cable operators.
We're not talking chump change here. Michael Nathanson, media analyst with Sanford C. Bernstein, says if News Corp. could get 50 cents per subscriber for its Fox stations and another 25 cents for its non-Fox stations, that would translate to more than $300 million in revenue and operating income. In the past, big media companies such as News Corp. and Disney have not gone after cash aggressively. Instead, they have usually opted to allow distributors to carry their stations for "free" in return for also carrying their cable networks for pay. This is how many channels including FX and ESPN2 were launched.
But not only do the networks want money for their own stations, they also want money from their affiliates as well. Their logic is that since it's network programming that attracts the most viewers, they should get a piece of the -- here comes those words again -- retransmission consent fees.
Of course, the affiliates already give the networks the bulk of their commercial inventory and in many cases are already paying them to carry programming, so one might understand if going after their retransmission consent causes some brows to furrow a little.
-- Joe Flint
Photos: Top left: Disney CEO Bob Iger. Credit: Peter Foley / EPA. Bottom right: CBS CEO Leslie Moonves. Credit: Nicholas Roberts / AFP/Getty Images