SNL Kagan has been studying retransmission fees, which at the same time are an important part of the broadcast income model and far less per subscriber than cable-only channels generally make. The bottom line is that the pile of cash and its potential add strong motivation to the broadcast challenge of Aereo.
It may not be the amount of money that is lost specifically from having Aereo go around the retransmission consent model – it remains to be seen if the service will every be big enough to be more than a thorn in the side of broadcasters.
The danger is that an ultimate Aereo victory in the dispute could topple the entire retransmission consent regime one way or another.
There is also another angle that Kagan noticed when looking at the threat by Fox Television Network to convert its broadcast network to a cable network, and that is the inequity between the retransmission compensation that broadcasters get compared to cable only networks.
Let’s look at Kagan retransmission estimate for 2013: broadcasters are expected to rake in $3.02B; cable networks $44.5B.
Fox O&O television stations are making somewhere betweeni $1-$2 per sub.
That compares to ESPN, which is expected to rake in better than $5.50 per sub.
Fox’s prime time raging average for 2011 was 5.11; ESPN’s was 1.84.
Fox understandably wants to see its ratings superiority reflected in its retrans compensation.
So there are two motivations for the threat by Fox, followed by Univision and CBS, to move to a cable-only regimen: One, makes sure that the game with Aereo is strictly hardball; and two, the grass just might be greener on the cable side anyway if the matter gets that far.
