According to BIA/Kelsey, fees paid to local broadcasters by MVPDs for retransmission consent are becoming an important part of their income stream – more than that, it is expected to be a growing part.
According to the report, retrans accounted for 6.5% of total income in 2012.
That number is expected to increase to 9.5% by 2017.
“Retransmission fees have become a noticeable revenue stream for local television stations but are also a much needed revenue source to support their investments in news and local programming,” said Mark Fratrik, VP/chief economist, BIA/Kelsey. “They also reflect the changing arrangements between local affiliates and the parent networks.”
Retransmission has been an issue of late on the internet streaming side, as new service Aereo has thus far won the right in court to pass along television signals without permission and without paying a fee. That battle figures to continue.
RBR-TVBR observation: As much as MVPDs complain about this, the fact remains that broadcasters provide their most-watched programming. We remember quite clearly when we first subscribed to cable, one of the major selling points was that cable could provide clear local broadcast signals without a family member striking a ballet pose while hanging on to our set of rabbit ears.
It was a big selling point for cable. It was a reason to subscribe to cable. On top of that, the broadcasters were and are the only source for local programming on cable, by and large, and that has not changed.
As SNL Kagan pointed out in a study, local broadcast is vastly underpaid if the retransmission fee is tied to viewership. Broadcast deserves a raise, and if it achieves 9.5% of total income by 2017 as BIA suggests, it probably will still not have arrived at its full value.