By demanding reverse comp — essentially half of affiliates’ retrans revenue — the Big Four broadcast networks and Univision have tapped a new revenue stream that will grow from $146 million this year to $1.3 billion in 2015, according to a new analysis from SNL Kagan. But there is “good news” for affiliates forced to pay.
By demanding what amounts to about half their affiliates’ retransmission consent revenue, the major broadcast networks — the Big Four plus Univision — have tapped a major new revenue stream that will grow from $146 million this year to $1.3 billion in 2015, according to a new report from SNL Kagan.
“For major networks, sharing in affiliates’ retrans revenue stream is now a given, and although slightly different models are emerging, network partners appear to be planning to receive at least half of the income flowing to affiliates.”
The “good news” for affiliates paying the “reverse comp” or programming fees is that they should still be able to increase what they net from retrans by simply demanding more from cable and satellite operators, the report said. How much more will be the subject of an upcoming report.
According to the report, “affiliates have begun to view the reverse retrans development as a positive factor given that it cements the network-affiliate relationship, as well as provides funds for improved programming.
“In addition, the broadcast networks may minimize the amount of high-value programming made available for free online in order to protect the rising retrans fees revenue stream, which is a positive for the broadcast industry.”
The estimated reverse comp take of the five networks in 2015: Fox — $341 million; CBS — $368 million; NBC — $288 million; ABC — $267 million; and Univision — $27 million.
The report also shows how much each of the networks will receive in retrans payments directly from cable and satellite for the right to carry their O&Os. Fox leads the way. The $257 million it gets this year ramps up to $459 million in 2015.
The estimated total retrans-related revenue (direct payments for O&Os plus reverse comp) of the five networks in 2015: Fox — $800 million; CBS — $766 million; NBC — $551 million; ABC — $472 million; and Univision — $404 million.
The roll up for the five networks’ total retrans-related revenue in 2015: $3 billion.