Magnitude of Potential Broadcast Retransmission Fees Through 2017
SNL Kagan’s study projects that total industry retrans fees could increase from $1.14 billion in 2010 to $3.61 billion by 2017, with average per-sub fees for cable MSOs potentially more than doubling over time from their 2010 levels through 2017.
Monterey, CA (PRWEB) May 25, 2011
Although TV station owners' share of retransmission dollars is under siege, SNL Kagan expects that total national retrans revenues will continue to rise thanks to the steady upward pressure on the monthly fees paid by multichannel operators to TV stations. That is despite an outlook for slower potential future growth of multichannel subs due to such things as over-the-top substitution.
SNL Kagan’s study projects that total industry retrans fees could increase from $1.14 billion in 2010 to $3.61 billion by 2017, with average per-sub fees for cable MSOs potentially more than doubling over time from their 2010 levels through 2017.
Retrans fees have continued to grow in importance for TV station owners, with retrans revenues disclosed by public companies rising from $631 million in 2009 to $766 million in 2010. For the pure-play TV station owners we analyzed, the revenue stream was equal to 52% of their cash flow on average in 2010 and can equate to as much as 76% of cash flow. Overall for the industry, there is no turning back from the push for higher retrans fees, given the continued strong differential between the fees paid for certain cable networks versus what broadcast network O&O stations with significantly more viewers receive.
For example, in 2011, SNL Kagan estimates that ESPN/ESPN HD will receive $4.76 per average sub per month, rates much higher than the fees received by network O&O stations in major markets which are thought to be less than $0.75/sub/month.
The disparity between viewership and retrans fees is going to keep up the pressure from broadcast networks and their owned-and-operated stations for higher fees. O&O station execs very much see the growth of retrans fees as a work in progress and expect to get what they feel to be appropriate value for their stations over time.
SNL Kagan’s analysis shows that retrans fees could rise 28% this year from $1.14 billion to $1.46 billion, thanks to more agreements being struck at progressively higher levels between distributors and carriers. Because of the number of subscribers, most of the fees are being paid by cable MSOs, which could pay more than $824 million in retrans fees this year, versus $484.2 million for DBS and $147.1 million for telco TV operators. TV station operators continue to strike and renew deals with all multichannel operators, now with the added wrinkle that the retrans revenue earned is increasingly being shared at various levels with their broadcast network partners.
Contact Christina Twomey, Press Relations, at 434-951-6914 or ctwomey(at)snl(dot)com for more details and specific media requests for data, analysis and interviews.
These and other elements of the broadcast business will also be discussed at SNL Kagan's June 1 conference "The TV and Radio Finance Summit," for which more information is available here: http://www.snlcenter.com/kaganradiotv/2011/agenda.asp
About SNL Kagan
SNL Kagan, a division of SNL Financial LC, is a comprehensive resource for financial intelligence in the media and communications sector, including the broadcasting, cable, entertainment, motion picture, telecom, wireless, satellite, publishing and new media industries. The SNL Kagan suite of products integrates breaking news, comprehensive data and expert analysis into an electronic database available online and updated around the clock. For more information, visit http://www.snlkagan.com.
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