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.
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.
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.