Broadcasters don't have to apologize for demanding big retrans hikes or, like Hearst, be reticent about talking about them. They just have to justify them. It can be done. The numbers are on their side.They account for about 35% of all TV viewership, yet they received only 6.7% of the $30.9 billion that MVPDs will pay to all ad-supported programmers this year.
JESSELL AT LARGE
Numbers Justify Station Retrans Hikes
Hearst Television and Time Warner Cable are agreed on one thing: not talking about the what is really on the table in their retrans dispute that this week resulted in the loss of Hearst stations on TWC systems in 13 markets.
The only number out there right now is” nearly 300%.” According to TWC, that’s the increase in fees that Hearst is demanding. Hearst counters that the figure is “exaggerated,” but won’t say by how much. TWC is equally coy about its last offer before negotiations broke down.
The 300% is meant to shock, to tip the PR and policy battle in TWC’s favor. I understand how it might. It’s a big number. Even sports TV rights holders don’t get those kinds of hikes.
My guess is that TWC is somehow inflating the percentage, but, even if it isn’t, I say, so what?
Hearst, like all broadcasters, deserves big, fat retrans increases. Remember, they are playing catch up. And they have a long way to go before they command the kind of fees their cable network competitors are getting.
Broadcasters have had the right to compensation for cable and satellite carriage since 1993, but for a variety of reasons, mostly their own timidity, they didn’t start demanding and collecting them until the mid-2000s when some gutsy broadcasters like Nexstar and Sinclair showed how.
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Three hundred percent in one year is too much, but over three years it’s just about right.
Let’s say Hearst was getting 25 cents per sub per month in the last year of its just-expired retrans deal with TWC. It does not strike me as anything but fair that it should get 50 cents in year one of a new deal, 75 cents in year two and $1 in year three. That’s 300%.
It would not be out of line with the increases that others have gotten. According to SNL Kagan, which covers retrans closely, CBS was able to go from 18 cents to 45 cents in two years (2009-11), a 155% increase. Tack on another year at that rate and you’re closing in on 300%.
Hearst CEO David Barrett says what Hearst is asking from TWC is similar to what it has been getting from other cable operators recently. TWC’s problem is that it thinks it’s entitled to a “significant discount,” he says.
Rather than asking for a discount, TWC ought to be offering Hearst a bonus.
The Hearst stations are second to none in quality of service. Many are tops in news in their markets, and they sweep up a lot of journalism awards. They seek the best syndicated programming out there. It’s not Hearst’s fault that ABC and NBC, with which many of their stations are affiliated, are struggling in primetime.
In Washington, lawmakers and regulators are keeping a close eye on the retrans marketplace. Too many service disruptions like the ones arising from the Hearst-TWC dispute and they may jump in to “fix” the problem. The fix could be to weaken broadcasters’ bargaining position. It wouldn’t take much to do that.
So broadcasters need to keep talking to their representatives and senators to let them know what they are seeking is only parity with the cable networks.
As I have pointed out here many time before, the Big Four affiliates and Univision are getting far less than they deserve based on the audiences they gather. They account for about 35% of all TV viewership, yet, says SNL Kagan, they received only 6.7% of the $30.9 billion that cable and satellite operators will dish out each year to ad-supported programmers.
That’s quite a gap: 35% of the audience, just 6.7% of the fees.
Even in 2015, after three more years of aggressive retrans demands, broadcasters will increase their share of the then $40.4 billion in ad-supported programming fees to just 9.6%, SNL Kagan forecasts.
Here’s something else of which the policymakers need to be constantly reminded:
In 2015, in what would be the third year of a new Hearst-TWC agreement, SNL Kagan says, ESPN will be getting $6.67; TNT, $1.41; Disney Channel, $1.06; NFL Channel, 95 cents; Fox News, 92 cents; and ESPN2, 85 cents.
If TNT with its limited original programming and seemingly unlimited commercial pods is worth $1.41, then WTAE Pittsburgh or WCVB Boston with their full loads of ABC primetime programming and award-winning local newscasts are certainly worth a dollar.
Broadcasters don’t have to apologize for demanding big retrans hikes or, like Hearst, be reticent about talking about them. They just have to justify them. It can be done. The numbers are on their side.
Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.
Comments (16)
Allyson Mongrain says:
July 13, 2012 at 4:23 pm
I agree the but the real issue is fringe networks( Current TV,SOAP, LOGO,etc) on cable who get money for no viewership all because cable companies are forced through bundling deals to carry all network to get popular ones, al carte can come none to soon then all network will stand or fall based on who wants to see them!
Kelly Lewandowski says:
July 13, 2012 at 4:43 pm
Oh! Amen! Thank you for putting this in terms that even a layman can understand.
Joanne McDonald says:
July 13, 2012 at 5:10 pm
For the Hearst Time Warner Cable dispute:
Every Time Warner Cable customer should be ashamed of both David J. Barrett and Hearst for this blackout that result in the viewers from being able to watch their favorite shows with Time Warner Cable. I feel that David J. Barrett and Hearst are trying to be like the Neil Bogarts of Casablanca Records fame of the 1970’s disco era, the Trinity Broadcasting Network’s, the David Smith (one of the Smith brothers from Sinclair Broadcast Group), the Harry Pappas as part of the Pappas Telecasting Companies, the Bernard Madoff’s, the Enron’s, the Worldcom’s, the Adelphia’s, the Tyco’s, and the Martha Stewart’s, of the 2000’s by letting broadcast greed get out of control so all of the head employees and bosses at Hearst to be able to enjoy carefree lavishly spending to support carefree lavishly lifestyles with luxurious homes, luxurious jets, luxurious cars, join luxurious clubs, and have other luxurious items just to make them very happy then trying and willingness to improve the quality of all the stations they owned and control and making the viewers happy as well. I hope and I wish that David J. Barrett and Hearst get scolded by both by the ACA and the FCC for making the viewers being forced to deal with this blackout because they could not make a deal to get the stations back to it’s customers sooner and with a fair deal with Time Warner Cable. I hope and I wish that David J. Barrett and Hearst is barred from buying and owning anymore TV stations in the future after their final decision to remove the stations from Time Warner Cable. I feel that David J. Barrett and Hearst are trying to bribe like the General Tire/RKO General of the 1960’s and 1970’s by not being very honest of not only the viewers by making them miss the shows on Time Warner Cable and also on themselves. I hope and I wish that the FCC would force David J. Barrett and Hearst to allow Time Warner Cable to carry it’s stations without any interference before the olympics and football season starts, in the event David J. Barrett and Hearst fails to allow Time Warner Cable to carry it’s stations again, then the FCC would force David J. Barrett and Hearst to allow Time Warner Cable to import out of market stations that are very real close to the station being blacked out being affiliated with the same network, in the event David J. Barrett and Hearst fails to allow Time Warner Cable to import out of market stations that are very real close to the station being blacked out being affiliated with the same network, then the FCC would allow Time Warner Cable to carry the out of market station with the same affiliation without any restrictions and also be allowed to continue to carry the out of market station that it’s digital television signal is reachable by a outdoor antenna including both it’s SD and HD feeds on the cable system even after the dispute is over without any interference for 12 whole years to meet FCC rules and regulators. I feel that both David J. Barrett and Hearst are way too busy being the Rebecca Black Friday and Double Take Hot Problems as well as trying be act like the Lyle and Erik Menendez’s as the greedy murderers, the Jeffrey Ireland’s and the Patrick Jones’s as the drunks, the Rodney Dangerfield’s, the John Belushi’s, and the Chris Farley’s as the comedians, the John Robert Ewing’s and the Cliff Barnes’s, the Charles Montgomery Burn’s, the Homer and Bart Simpson’s, the Peter Griffin’s, the Garfield cats, the Cookie Monster’s, the Miss Piggy’s, the Victor Newman’s of the broadcasting industry of not coming to reach a deal with Time Warner Cable to carry it’s stations to the viewers everyday. I feel that both David J. Barrett and Hearst are trying to turn into the 1919 Chicago White Sox’s baseball team and the Southern Methodist University football of the 1980’s to force Time Warner Cable to accept a take it or leave it deal to carry it’s stations. I urge all of the viewers with Time Warner Cable to boycott both David J. Barrett and Hearst right now for making the Time Warner Cable viewers suffer from being able to watch their favorite shows.
For the Directv Viacom dispute:
Every Directv customer should be ashamed of both Philippe P. Dauman and Viacom for this blackout that result in the viewers from being able to watch their favorite shows with Directv. I feel that Philippe P. Dauman and Viacom are trying to be like the Neil Bogarts of Casablanca Records fame of the 1970’s disco era, the Trinity Broadcasting Network’s, the David Smith (one of the Smith brothers from Sinclair Broadcast Group), the Harry Pappas as part of the Pappas Telecasting Companies, the Bernard Madoff’s, the Enron’s, the Worldcom’s, the Adelphia’s, the Tyco’s, and the Martha Stewart’s, of the 2000’s by letting broadcast greed get out of control so all of the head employees and bosses at Viacom to be able to enjoy carefree lavishly spending to support carefree lavishly lifestyles with luxurious homes, luxurious jets, luxurious cars, join luxurious clubs, and have other luxurious items just to make them very happy then trying and willingness to improve the quality of all the stations they owned and control and making the viewers happy as well. I hope and I wish that Philippe P. Dauman and Viacom get scolded by both by the ACA and the FCC for making the viewers being forced to deal with this blackout because they could not make a deal to get the stations back to it’s customers sooner and with a fair deal with Directv. I hope and I wish that Philippe P. Dauman and Viacom is barred from buying and owning anymore TV stations in the future after their final decision to remove the stations from Directv. I feel that Philippe P. Dauman and Viacom are trying to bribe like the General Tire/RKO General of the 1960’s and 1970’s by not being very honest of not only the viewers by making them miss the shows on Directv and also on themselves. I hope and I wish that the FCC would force Philippe P. Dauman and Viacom to allow Directv to carry it’s stations without any interference for 12 whole years to meet FCC rules and regulators. I feel that both Philippe P. Dauman and Viacom are way too busy being the Rebecca Black Friday and Double Take Hot Problems as well as trying be act like the Lyle and Erik Menendez’s as the greedy murderers, the Jeffrey Ireland’s and the Patrick Jones’s as the drunks, the Rodney Dangerfield’s, the John Belushi’s, and the Chris Farley’s as the comedians, the John Robert Ewing’s and the Cliff Barnes’s, the Charles Montgomery Burn’s, the Homer and Bart Simpson’s, the Peter Griffin’s, the Garfield cats, the Cookie Monster’s, the Miss Piggy’s, the Victor Newman’s of the broadcasting industry of not coming to reach a deal with Directv to carry it’s stations to the viewers everyday. I feel that both Philippe P. Dauman and Viacom are trying to turn into the 1919 Chicago White Sox’s baseball team and the Southern Methodist University football of the 1980’s to force Directv to accept a take it or leave it deal to carry it’s stations. I urge all of the viewers with Directv to boycott both Philippe P. Dauman and Viacom right now for making the Directv viewers suffer from being able to watch their favorite shows.
John Murray says:
July 13, 2012 at 5:57 pm
Okay…….. : )
jeff lee says:
July 13, 2012 at 10:29 pm
“making the Directv viewers suffer”
Really? Define suffer………….it is only TV.
alicia farmer says:
July 14, 2012 at 8:26 am
Paragraphs anyone?
Teri Keene says:
July 15, 2012 at 12:03 am
Would make a comment on what James said, but fell asleep halfway through reading his post.
keith Goldberg says:
July 19, 2012 at 10:41 am
Agreed! This has gone waaay too far. Glad I have an hd box that I can still watch “free” tv on! KMBC, don’t need ya on TWC after all!
Bob Dowden says:
July 13, 2012 at 10:33 pm
Harry – its time to retire for real this time – if you think there is any rhyme or reason to what is paid for cable channels and the content they create, then you haven’t been paying attention since the 70’s…ESPN gets what they get because Leo agreed to a long term deal with 20% a year increases…no one else in the industry was entertaining such a crazy idea at the time, but they got the big dog to say “yes” and the rest of us have to follow…if broadcasters think they should be on par with cable nets, then stop broadcasting and convert to cable nets…or start charging antenna customers the same as cable customers, with an appropriate markup for billing, customer service and technical support of those customers…. Cable operators were lousy editors back in the day, but they were not soley to blame….local rate regulation tied increases to channel additions and fee inflation….you build a 54 chl system in ’81 and then add everything you could…you would have had 10 chls blank….so programmers grew like weeds and the land rush began…. When broadcasters stop distributing on “free” airwaves, try the argument again….
Denise Moore says:
July 15, 2012 at 7:50 am
Here is the bottom line on this. Heasrt, as a group, is seeking an increase on retransmission fees. While it “may not be Heart’s fault… ABC and NBC are struggling in primetime,” but that isn’t the only reason why viewership is going away. There are a lot of factors, starting with the internet. No one has to watch local news anymore because any information anyone needs can be easily found online. Viewership of the broadcast networks is dwindling because of cable and the internet. The networks are also to blame for cheapening their content allowing people to watch previous episodes online for free. You can still watch the station for free over the air and that family doesn’t have to pay the broadcaster a dime. Who is also to say that all of the Hearst operations are worth the increase? WXII isn’t for certain.
Based on my experience of the Heart product on the local level (WXII 12 out of Winston-Salem, NC), the product needs help… desperately! The newscasts are not even watchable because the focus is not on the local market, but rather ripped headlines from the national wires and videos from their sister stations. What little focus there is on the local market is nothing above dribble. I will admit that their syndicated programming is decent if your into that kind of stuff. Me personally, I only watch NBC programming.
Hearst is the big loser here with this blackout. Their NBC affilates are getting ready for their olympics coverage. There goes advertising dollars these stations would have had because the viewership isn’t there. Time Warner is dominate in each of these markets, so the big loser is Hearst. I would rather watch WBRE.
alicia farmer says:
July 15, 2012 at 9:01 am
More $, more $, more $. Viewers have had enough!
Raymond Wilson says:
July 16, 2012 at 5:11 pm
These high-profile disputes, caused by greed on both sides, will ultimately result in unwanted new government regulations. Remember it is the consumer who ends up taking it in the shorts in these disputes–first, through loss of access to programming, then through higher fees passed along by cable operators. Consumers vote. Consumers complain to their elected officials.
Although there may be some rationale justifying “big fat increases” on the order of 300% over 3 years, broadcasters would be wise to take a more moderate stance. In this economy, a 300% increase in anything sounds outrageous to consumers…and frankly, it is. Imagine the howls of anguish if the FCC increased station licensing fees and other taxes by 300%–which stations would either have to pay or go dark. Think about it.
Tanya Pavluchuk says:
July 17, 2012 at 10:20 am
What we don’t know is 300% of what?
1 penny, 2 cents, 10 cents?
Ed Miley says:
July 16, 2012 at 5:13 pm
Have we forgotten that broadcasters are sending this content for ‘free’ to anyone with an antenna? This is just a legal way to get dollars from viewers. For those viewers who cannot receive the broadcast signal, due to terrain or other obstacles and have to rely on a delivery service, why make them pay more than the person who lives on the top of the hill?
This whole system needs a serious overhaul.
Traci Folkins says:
July 19, 2012 at 9:39 pm
IMO it’s too late – the seeds of the transmission system were sown many, many years ago. Rather than a centralized and regulated transmitter network, each TV station was allowed to build out their own facilities. As a result, your TV signal generally doesn’t come from a single site. In analog days, antenna rotators were common. Across the pond, viewers only needed to put up one single directional antenna to get all stations for their area. With the digital switch-over, the number of TV “channels” changed from 4 to 5 analog to 30 digital. This is enough to market a “cable-lite” TV service… on an antenna. In the UK, it’s called Freeview. It’s available to 99.8% of the population. It’d take an awful lot of co-operation on the part of broadcasters and a whole lot of re-engineering to get a TV broadcast network that delivers this.
Traci Folkins says:
July 19, 2012 at 8:56 pm
While it is true that broadcasters can justify “large” increases, the thing is that re-broadcasters (cable, satellite) have appeared to have found out that they can make arrangements with other broadcasters of an affiliated network to fill in the blank if negotiations between the broadcaster + re-broadcaster fail to reach a mutually agreeable solution. I could see a future where a broadcaster in a 100+ market reaches a retransmission deal with a cable company in a larger market, the cable company produces local news and the small broadcaster and cable company reach an advertising deal. Voila! A network superstation is born! The local network affiliate now has permanently lost 1/2 of its audience, because the cable company has decided not to carry them and over half of Americans typically get their TV via cable. I can also see a time when the Big Four create their own “For Cable” service – cutting out the traditional broadcaster out entirely. If the satellite companies play along with the cable companies and networks, the local broadcaster can be cut off from its non-antenna based audience.