It’s clear that Les Moonves and Perry Sook do not see eye to eye when it comes to retransmission consent fees. Sook, CEO of Nexstar Broadcasting, is not about to let Moonves at CBS or any other network muckety muck get his hands on the retrans cash that Sook fought so hard for.
Just last week CBS Corporation CEO Les Moonves said CBS would be getting a cut of the retrans pie from its affiliates because network program is the reason that the retrans payments are being made by the MSOs. “You know, the realization that if they are getting retrans, which they will, they’re getting paid retrans because of the services that the network is providing. You know, the NFL, CSI and David Letterman, 60 Minutes, etc.,” he said.
Sook begs to differ. “I don’t understand why the networks would feel that they’re entitled to a piece of a revenue stream that we developed, that they had no hand in negotiating, documenting or collecting. I’ll say this, the local cable system in Stroudsburg, Pennsylvania carries three NBC affiliates – the O&Os out of New York and Philadelphia and our NBC station in Wilkes-Barre, Pennsylvania. I’m being paid to be carried there. In St. Joseph, Missouri the ABC affiliate from Kansas City is carried on the next channel to our ABC affiliate in that market on the local cable system – and I’m being paid to be carried there. And there are plenty of more instances like that. So, with all due respect to my friends at the networks, I contend that the network programming is not the main reason that we’re receiving compensation, it’s our local programming,” Sook said Wednesday in his quarterly Wall Street conference call.
“Having said that, I would say that we would entertain, as I’ve mentioned on previous calls, if the networks are able to negotiate better deals on behalf of all of the affiliates and their O&Os than I’m able to negotiate as a small company, then I would be willing to share that upside with them on a 50-50 basis. And I think then they can say that they’re generating that value from the distribution system beyond the vast majority of the ad avails that they keep for themselves in the programming that we pass through, but they would then also generate money for their own owned and operated station,” Sook added.
“But I can guarantee you that if we have the earlier conversation of the networks asking for a share of our retrans revenues, we’ll fight just as hard to keep that retrans revenue as we did to create it in the first place,” Sook declared.
Nexstar blazed the trail for broadcasters to collect retrans cash from cable systems, deliberately scheduling a few contracts to come up for renewal in 2005 and standing firm – even being removed from some cable systems – until the MSOs agreed to pay. That set the stage for many broadcasters to insist on cash payments as retrans contracts came up for negotiation in 2006 and since.
RBR-TVBR observation: Everything is a negotiation when it comes to network affiliation agreements – and that’s the way it has always been. But if the networks are going to lay claim to any of the retrans cash that affiliates are getting from the MSOs, they’re going to have to bring something to the table to deliver value to the affiliates in return.