SNL Kagan Releases Updated Industry Retransmission Fee Projections to $9.3 Billion by 2020

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U.S. TV station owners' retrans fees expected to reach $9.3 billion by 2020, versus the projected level of $4.9 billion this year according to SNL Kagan analysis.

SNL Kagan

Announced today, SNL Kagan has updated their industry retransmission fee projections and now expect U.S. TV station owners' retrans fees to reach $9.3 billion by 2020, versus the projected level of $4.9 billion this year. At the same time, SNL Kagan projects rising reverse retrans compensation rates based on recent deals, leading to a higher percentage of retrans fees flowing back to the broadcast networks. The good news is the projections still indicate net retrans growth for affiliated stations, albeit at lower rates than last year.

The projections for growth are based on rising per-month sub fees for TV station owners in recent negotiations, as well as a new set of expectations for what broadcast networks are asking in programming compensation from their affiliates. Despite recent regulatory efforts to chip away at TV stations' bargaining position in negotiations with multichannel operators and potentially slow the growth of retrans, the market at least near term continues to march higher. SNL Kagan’s projections call for retrans revenues to rise to $8.78 billion by 2019, versus their 2019 projection of $7.64 billion from last year.

The average $1.32 retrans fee that SNL Kagan anticipate the industry will receive by 2017 across all markets and all affiliates puts TV stations above all but five basic cable networks in terms of affiliate fees per sub per month, with networks such as ESPN ($7.72) and TNT ($1.92) all still above that average mark. Most RSNs are projected to be significantly above this $1.26 benchmark.

SNL Kagan has also updated their reverse retrans projections, which project the funds flow from the affiliate and O&O stations back to their network partners. Their projections show that the affiliate reverse retrans funds flow back to the networks could increase from $1.53 billion in 2015 to $3.22 billion in 2020. SNL Kagan shows reverse retrans payments back to the networks growing to 59% of affiliates' retrans payments over time, even as affiliates' monthly fees increase in the coming years.

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, new media industries and media technologies. 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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Christina Twomey
SNL Financial
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