Since the beginning of this year, Sinclair Broadcast Group had gotten a series of one-month affiliation extensions for its nine ABC stations. Now it’s signed a new deal extending its ABC affiliations for more than five years – and yes, there is retrans sharing.
CEO David Smith had maintained all along that there was no real dispute with the network, but it just took time to complete the negotiation details. Sinclair announced Friday that it has entered into an agreement with the ABC Network for the renewal of its nine affiliation agreements covering approximately 5% of the country. The new agreements will expire August 31, 2015.
“As one of ABC’s largest affiliate groups, we are pleased to renew our partnership with the Network. We believe the length of this new term continues to demonstrate the robust viability of the network/affiliate model. The agreement will benefit our local market viewers by continuing to provide popular programming such as ‘Grey’s Anatomy,’ ‘Dancing with the Stars,’ ‘Desperate Housewives,’ ‘Modern Family’ and ‘Good Morning America’ and will help us to more quickly realize the value our programming, including ABC programming, brings to multi-channel video program distributors,” said Smith.
Sinclair acknowledged that ABC will be getting a share of its retransmission consent fees as part of the new deal. ABC and other networks have been seeking a share of that new revenue stream from its affiliates as deals come up for renewal.
“Although the agreement includes a license fee, based in part on retransmission consent revenue, we believe that the pass through to the networks of a reasonable portion of the fees that broadcasters receive is a necessary and appropriate way to make sure that the networks continue to be able to provide the most popular programming on television. Over time, we expect that the fees paid by multi-channel video program distributors to acquire content will be reallocated so that the payments they make more closely correlate with the popularity of programming. As a result, the fees paid to broadcasters are likely to increase to more appropriate levels, which will allow affiliates to share these fees with the networks in a measured manner, while the local stations continue to benefit from this dual revenue stream,” explained Barry Faber, Sinclair’s Executive Vice President and General Counsel.
Sinclair does not expect the terms of the new agreement or the license fee to negatively impact the 2010 television station expense guidance provided in Sinclair’s February 17th earnings release, which had already included an estimate for the retrans sharing with ABC.
Sinclair’s ABC stations are: KDNL St. Louis, MO; WSYX Columbus, OH; WXLV Winston Salem-Greensboro-High Point, NC; WEAR Pensacola, FL-Mobile, AL; WCHS Charleston-Huntington, WV; WKEF Dayton, OH; WICS Champaign-Urbana, IL; WICD Decatur-Springfield, IL; and WLOS Greenville-Spartanburg, SC-Asheville, NC.
RBR-TVBR observation: As we’ve noted before, the network-affiliate relationship is a partnership and everything is negotiable. Now it’s up to ABC/Disney to bring some muscle to the table to help Sinclair and other affiliate groups win payments from the MSOs that reflect the value of their programming. You probably couldn’t have a better partner than the company that’s already negotiated the highest programming fees of all from cable companies – for ESPN.