As the guy who really started the battle by TV stations to extract retransmission consent fees from cable MSOs, analysts are always interested to hear what Nexstar Broadcasting Group CEO Perry Sook has to say about retrans developments. In his quarterly conference call Tuesday, Sook was asked about whether stations are going to have to split the take with the networks.
According to Sook, this financial dance between the networks and affiliates is nothing new. “We affiliates already pay the networks for certain things. We pay CBS a contribution to defray the cost of NFL Football, NCAA Basketball. We pay Fox for NFL Football and there’s also an inventory buyback program. So, the concept of the networks wanting more money from the affiliates to us, I guess, is not surprising. But it’s also not new and we don’t consider it newsworthy,” Sook replied. “I think that this will be the same business as usual – a tug of war over money that’s been going on with the networks and their affiliates since the late ’90s.”
“As agreements come up for renewal we’ll enter into those discussions. I think there is a balance between value exchange and distribution. A network without affiliates is not a network at all. Maybe it’s a cable network and I think we know what original program ratings are on cable,” Sook said, adding that he’s never had a network threaten to move to cable if it couldn’t strike an affiliation deal. The affiliate group CEO also repeated a comment he’d made before that if the networks are able to bring more negotiating power to the table to increase the amount of retrans fees that stations are able to collect, then he would be willing to compensate them accordingly.
Despite all of the attention to the issue in the trade press, Sook said the issue occupies very little of his time, since Nexstar is currently in negotiations on affiliation renewal for a single CBS station.
Just a day earlier, at a Credit Suisse investor conference, News Corporation COO Chase Carey noted that his company is currently in negotiations with several of its Fox Network affiliates and suggested that retrans “should be shared fairly” between local affiliates and the networks. What would that fair split be? “From my perspective, the most valuable programming is the network programming.
RBR-TVBR observation: Everything is negotiable. The strong affiliates with leading local news operations are in a good position when it comes to negotiating network affiliation agreements. Those who don’t do local content and are viewed as weak players in their markets don’t bring much to the table and risk having their network make tough financial demands – or perhaps move to a DTV multicast channel of one of their stronger competitors.