Wall Street analysts are asking pretty much every TV group CEO about attempts by the networks to claim a share of retransmission consent revenues won by affiliates from the cable MSOs. According to LIN TV CEO Vincent Sadusky, having the networks getting into the retrans game is not a bad thing.
“The conversations we’ve had have been centered around creating the dual revenue stream for the broadcast industry,” Sadusky told analysts, noting that few of his group’s affiliation agreements are up for renewal soon. “Critically important in that is the owned and operated television station groups getting into the game. Prior to these recent times it’s really been some pioneering television station groups that have gone out and fought a difficult fight with very large MSOs in order to start to create that second revenue stream. So, we were really excited to see Fox get a deal done with Time Warner, ABC get a deal done with Cablevision in New York and CBS being very active.”
“The way we look at it is we want a very healthy broadcast network. We want the networks to be profitable, we want them to be able to continue to afford the very high rights fees for the best sports programming and be able to afford continuing to produce the best high-definition and entertainment programming as well. And when you look at the roughly $8 billion or so on a monthly basis that transfers from MSOs on over to the providers, it’s just astounding, and we think that, at the moment we’ve made good strides as an industry, but a very small amount of that actually comes to the [broadcast] industry, despite the incredibly high ratings that our outlets provide through a combination of local programming, syndicated programming and network programming. So, we’ve said all along we’re comfortable with sharing the incremental benefits that our network partners, through their owned and operated television stations, help bring to the industry,” Sadusky said.
He later laughed at the claim but forth by the MSOs that they need government help to protect them from abuse by broadcasters. “Really these are large companies negotiating against small broadcasters and the large MSOs have the upper hand in most cases. They have throughout time,” the CEO said. “We find it interesting that the MSOs would want to set a precedent under which the FCC would regulate MSO negotiations. It seems strange that these large companies are going to the government asking for government protection. I just can’t imagine with this current FCC’s focus on things like net neutrality, big vs. small broadcast, minority ownership and having a primary focus on broadband, on spectrum, that they would want to get down into the weeds of private negotiations between broadcasters and MSOs. I think the reality is that the retrans structure has served MSOs well since 1992. And now I think the paradigm shift has been the result of successful competition in these markets, where no longer is there primarily on outlet for pay TV. There are at least three, and in many cases four,” Sadusky told the Wall Street analysts.
RBR-TVBR observation: Be careful what you ask for, is our advice to the MSOs – you might get it. If the government were to move into regulating retransmission consent fees, it would be illogical for it not to then regulate programming fees for non-broadcast networks, many of which are owned by the MSOs. And then, what about the consumer side? Former FCC Chairman Kevin Martin’s beloved a la carte plan could easily rise from the grave as a zombie to haunt the MSOs.