Wortsman says that cable operators must ‘face the reality’ that they cannot continue to get popular broadcast signals for free.
Univision, the hard-charging and fast-growing Spanish-language network that will be pressing newly created The CW for the title of Fifth Network later this year, is determined to extract retransmission fees from cable operators that carry its broadcast stations.
“The most-viewed channel of any cable system is the local television station,” Univision President Michael Wortsman told a NATPE audience. “MTV is getting paid and ESPN is getting paid. There is absolutely no reason why the local broadcaster should not get paid. It’s an inevitability.”
Univision is currently negotiating for fees from cable operators, Wortsman said. “The satellite guys have paid in the past. The cable guys have been reluctant. And they are being forced to face the reality that their most important programming source is one that they have been getting for free. You just can’t get it for free forever.”
By law, cable operators must get the consent of broadcasters to retransmit their signals. How operators compensate the broadcasters for the consent is a matter of negotiation. As Wortsman noted, cable operators have generally refused to pay cash for the retrans rights, but, as Wortsman also noted, that may be changing.
Last year, Nexstar Broadcasting, a publicly traded consolidator of small- and medium-market TV stations, took a hard line with cable operators, saying that it would settle only for cash. After a tough battle, the operators conceded. Securities analyst Vic Miller estimates that Nexstar will earn about $8.6 million from retrans in 2006.
Nexstar President Perry Sook, who sat on the NATPE panel with Wortsman, said the retrans battle was costly, but was a “necessity investment to create an ancillary revenue stream.”
Broadcasters have been trying to win retrans fees from cable operators since 1992 without much success, Sook said. “The game changer” was the satellite companies, DirecTV and Echostar’s Dish. As a “viable alternative” to cable, they gave Nexstar the leverage it needed, he said. “So, we created a revenue stream in our company that literally didn’t exist 15 months ago.”
“Perry is my hero,” Wortsman said.