Company Town

The business behind the show

« Previous Post | Company Town Home | Next Post »

Retransmission consent fees to hit $3.6 billion in 2017

May 25, 2011 | 11:07 am

For years, the broadcast television industry has griped about the unfair advantage the cable industry has because its business model is based on two revenue streams -- subscriptions and advertising -- while broadcast only gets money for commercials.

It's time to stop complaining.

A new report from SNL Kagan says that the broadcast networks and local television stations will be pulling in more than $3.6 billion annually in so-called retransmission consent fees from cable and satellite operators by the end of 2017. In 2010, SNL Kagan said retransmission consent generated about $1.14 billion.

Although the gains are impressive, broadcast fees still pale in comparison to what cable networks get in carriage deals. Kagan says a typical television station in a top market gets less than 75 cents per subscriber, per month, while ESPN is getting $4.76. TNT and Disney both average about $1 per subscriber.

Going forward, cable operators will have to find a way to stomach the rising costs of programming. It all can't be passed on to the consumer. Distributors may finally have to get tough on cable networks that are not delivering big ratings but whose subscription fees continue to rise. 

In the past, cable operators have struggled to lower fees or drop networks that are not delivering big numbers. Part of the reason for that is that most cable networks are owned by a handful of companies who bundle their properties together, making it difficult for distributors to pick and choose which ones to carry.

As for what the broadcast networks will do with their retransmission consent loot, it could be used to pump up investments in programming and sports. Or they'll just save it for bonuses.

-- Joe Flint