Prather: Nets Want ‘Every Penny’ Of Retrans

The Gray Television exec-turned-station-owner criticized the broadcast networks for their insatiable reverse comp demands. "At some point, we won't have any incentive to take money from the cable guys [in retrans], if they want it all. And I think they want to get as close to all as they can, frankly."

As COO of Gray Television, Bob Prather liked to carp about the broadcast networks.

Now the owner/operator of a growing group of small-market stations (his Heartland Media just bought five from Nexstar and Media General for $115 million), he still can’t resist giving the networks what for.

At the S&P Global TV & Radio Finance Summit in New York, he was asked about the networks’ demands for reverse comp.  He said they were insatiable.

“The more we get [in retransmission consent fees], the more the networks want, and we have no way to fight them off right now.

“So that’s the big problem we’ve got… — how do we contain these networks that take every penny we get from the cable guys? At some point, we won’t have any incentive to take money from the cable guys if [the networks] want it all. And I think they want to get as close to all as they can, frankly.”

He said the only leverage a station has is to have the market’s dominant news operation and the willingness to walk away. Graham Media’s WJXT Jacksonville, Fla., cut ties with CBS in 2002,  he said, and still prospers to this day as a news-heavy independent.

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Despite the reverse comp demands, Prather said he did not want to follow Graham’s lead and abandon any of his network affiliations. “I don’t want to get rid of them. I think they are good.”

He was also ambivalent about network sports. At one point, he criticized the network for “giving up a lot of the sports to the cable guys.”

Then later he said that costly NFL football — foundational programming on CBS, Fox and NBC — has little value in some small markets where football loyalties are more likely to be to a college team rather than a professional one. In such markets, he said, “we can make more money running old movies” than pro football.

The conference featured four other senior  broadcast TV executives. Randy Bongarten of Bonten Media was on the same panel as Prather and three others were on another.

None of the others took the opportunity to publicly criticize the nets over reverse comp.

Bonten said that every broadcaster who has negotiated with a network has considered going independent, but few actually do. WJXT’s success as an indie is “the exception,” he said.

“The bottom line” on being an affiliate is that networks provide stations with circulation, he said. “They don’t bring the average ratings anymore, but they bring the circulation to the station. If you want to reach 80% to 90% of your market each week, it really helps to have a network affiliation.

“And that circulation provides you with the opportunity to promote and provide audiences on the rest of your programming. That’s really a critical component.”

Plus, he said, a network affiliation is key to negotiating with cable and satellite for retransmission consent payments. “If you are not a Big Four affiliate, you are more than disadvantaged.”

The partnership with the networks is not without “tensions and difficulties,” he said, but it is working.

Prather didn’t save all is blunt talk for the broadcast network.

He also went after niche cable networks that put upward pressure on cable subscriber rates and make it tougher for broadcasters to get what he considers their fair share of cable and satellite programming funds.

“The cable network guys have got to realize… that some of this crap they put on has got to go,” he said.

“A handful of people think it’s greatest thing in the world and nobody else wants to watch it,” he said. “It’s just ridiculous for them to force that kind of junk on the American public…. It’s to keep people in jobs, I guess.”


Comments (8)

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Ellen Samrock says:

June 16, 2016 at 10:09 am

See? No cable lobbyists needed. The the retrans model is slowly being crushed under the weight its own greed.

    John Avellino says:

    June 16, 2016 at 10:19 am

    Well Said Roger….PRATHER + ANSIN getting the team together. Did anybody see this deal about the TV Neutrality Alliance?? I haven’t seen anything yet on TVnewscheck but saw an FCC blurb on Law360 this am.

    Ellen Samrock says:

    June 16, 2016 at 11:26 am

    I’m not familiar with the TV Neutrality Alliance. But at some point affiliates are going to have to question why they exist even as the networks are questioning why they still have them. After all, they could negotiate directly with MVPDs (yes, they’ll still have to pay) and there is internet streaming. In a way, it is fortuitous that 3.0 has come on the scene. No one, at this point, has a clue on how to monetize it but I think 3.0 will spell (to use a cute old expression) a “paradigm shift” in broadcast TV along with the shrinking of affiliation. Television broadcasting as we know it now will be something totally different in the future. The Big 4 networks aren’t interested in 3.0 because they don’t have to be, they have their programming. But affiliates (or should I say post-affiliates) and independents, including LPTV, are interested because they frankly need a new business model and, at this point, have no where else to go but up. As 3.0 becomes the de facto standard, the Big 4 will have to implement it to remain broadcasters but it will probably be limited. It will be the post-affiliates and indes that will utilize the new standard to its maximum potential. The next 5-7 years will be very interesting for broadcast TV.

    John Avellino says:

    June 16, 2016 at 12:48 pm

    Google TV Neutrality Alliance – I just saw their FCC Proposal – Looks like a Savior for LPTV and Affiliates – You gotta see this – it’s awesome and their signatories are some LPTV broadcasters and OTT OVDs looking to pay retrans. Very Compelling and it specifically states that OTT OVDs that aren’t interested in the broadcast signal like Netflix, amazon are NOT subject to MVPD. I still cannot believe that TVnewscheck hasnt picked up this story I am seeing it now on FIERCEonlinevideo.com, Law360, streamingmedia,com these were just posted yesterday…..Looks like “Super Common Sense” and would be a great boost to the affiliates.

    Ellen Samrock says:

    June 16, 2016 at 2:06 pm

    Very interesting. I see Gary Cocola, whom I’ve spoken to at LPTV mixers, is a part of this. I know the idea has been kicking around a while, ever since the FCC first proposed reclassifying OVDs, but I wasn’t aware that an organization had actually been established for it. But I can see 3.0 integrating seamlessly into this environment, providing the transmission backbone for it. Good find, KLatech.

    Veronica Serrano Padilla says:

    June 17, 2016 at 12:58 pm

    Question is what would happen if networks decide they’d rather have 100% of retransmission fees and cut the affiliates out completely (as well as getting 100% of avails). If there ever was a death knell for broadcasting, that would be it.

Julien Devereux says:

June 16, 2016 at 10:50 am

How do we contain these cable companies who take every penny they can get from consumers while being continually rated the worst businesses in the country?

    Angie McClimon says:

    June 16, 2016 at 11:07 am

    Eventually there will be only 2 or 3 cable companies in the country (at the rate M&As are running these days) whose rates will be beyond anything anyone can afford (plus equipment fees) causing a mass cord cutting that will crush the cable industry.


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