Fee income adding up for CBS Corporation


Retransmission consent fees are providing an important new revenue stream for television networks. CBS has told Wall Street analysts it is looking for big numbers, both from retrans payments by cable/satellite systems and reverse comp from its affiliates.

When CBS Corporation reported its Q4 results in mid-February CEO Les Moonves repeated a figure he’d given before that the company hoped to see retrans payments from cable and satellite companies for its O&O stations to reach $250 million by 2012. Moonves also talked about growing payments from affiliates, but didn’t provide a figure at that time.

But this past week (2/24) CBS Corporation conducted a lengthy analysts meeting in New York. According to Anthony DiClemente (pictured) of Barclay’s Capital, CBS officials put a number on their reverse comp expectations. “Incrementally, management believes there is the opportunity for reverse compensation to reach $225 million in two to three years time, assuming roughly $0.25 per sub from the non-owned affiliates,” the analyst said.

“Together, retrans and reverse comp could add up to $475 million in pure margin to 2012 OIBDA [operating income before depreciation and amortization],” DiClemente noted. That’s not a figure to sneeze at.

RBR-TVBR observation: All of the networks are going after reverse comp, or in some cases more reverse comp, in their re-negotiations of affiliate contracts. That’s clearly the new norm, but the big debate is over how much the affiliates have to fork over to the network, which is not necessarily tied to how much they can get in retrans payments from the cable and satellite operators in their markets. So, some of the negotiations are going to be rather testy.