Retransmission Fees: A Dominant Topic At S&P Summit


By Renee Cassis
Special to RBR+TVBR

NEW YORK — TV retransmission revenue. That was, by far, the hottest topic of discussion across several broadcast industry panels at the S&P Global TV & Radio Finance Summit, held today in New York.

S&P Global Market Intelligence Senior Director Robyn Flynn opened the day-long summit by declaring that retrans fees are “bringing stability to TV stations because their revenue is no longer tethered solely to the ups and downs of the advertising market.”

To little surprise, both radio and TV are losing share to digital, Flynn disclosed.

In 2010, TV stations’ share of ad dollars was 10% and radio was about 7.1%. Looking at 2019, without political, Flynn anticipates those numbers will decline to 8.7% and 5.6%, respectively.

“You pay your bills with dollars, not margins, and that’s why we focus on retrans growing every year,” observed Chris Ripley, CEO of Sinclair Broadcast Group, during a panel of TV executives on the future of the business.  “As long as we can add dollars to the bottom line, we don’t care where the margin is.”

No broadcast industry event is complete without vocalized discontentment of ownership caps, and Nexstar Media Group CEO Perry Sook provided the quote of the day.

“No cap is the right answer,” he said, adding that FCC Chairman Ajit Pai is in favor of deregulation, but hampered by politics. “Deregulation happens in steps,” Sook said.

Sook and Ripley both appeared on a morning panel dubbed “The Future of TV Station Operations: Opportunities and Challenges” moderated by Wells Fargo Securities Managing Director Marci Ryvicker. 

Ryvicker skillfully shifted the discussion to advertising dollars, allowing Ripley to take a step back for a broad view on the ad landscape — and the challenges and opportunities for TV.

“When you look at the ad marketplace, two trends or challenges are affecting the advertising industry,” Ripley said. “For big advertisers who want the reach, the agencies don’t make money buying local and it’s more efficient for them to spend in network. On the local side, advertisers desire more targeted inventory and more attribution.  So, there are two structural issues … both fixable, and there’s lots of initiatives to automate the process for national buyers. Our networks-selling operation will significantly expand once we buy Tribune. Addressable and data overlays are coming. In the future, all of our inventory will have the capability of being addressable.”

Meanwhile, relaxed laws on sports gambling also represent a positive windfall for TV, at least in Ripley’s view. “If you’re gambling on sports, you watch more sports,” he says. “Watching and betting at the same time is where we’re heading.”

Before concluding, Ryvicker posed the question about what happens if direct-to-consumer options become a larger part of the equation.

Bob Prather, CEO of Heartland Media, explained it isn’t an all or nothing scenario for broadcast TV.

“It’s an additive stream of revenue,” Prather says. “The bundle will exist for any number of reasons. They can peacefully coexist.  You don’t have to assume that it all goes one way or the other. But we have to be careful about how we negotiate those agreements.”

RBR+TVBR Correspondent Renee Cassis of RC Communications Marketing is based in New York. She can be reached at [email protected]