Broadcast Coalitions Lock Horns Over vMVPD Issue With Hundreds Of Millions Of Dollars At Stake
Dueling coalitions — the affiliate-led Coalition for Local News and O&O-led Preserve Viewer Choice Coalition — have raised the temperature on a long-simmering argument over who should be able to negotiate retransmission rights with vMVPDs. The growing size of the vMVPD revenue pot in an awful year for spot TV may have a lot to do with the timing.
With Netflix and Disney+ just months away from launching ad-supported versions of their respective streaming services, Kagan, the media research arm of S&P Global Market Intelligence, says that lower prices and more ads may just encourage current ad-free customers to switch to the more economical tiers.
While broadcast station advertising revenue has rebounded from its lows in 2020 during the pandemic lockdowns, a new analysis from Kagan shows that deal making for broadcast stations remains at near historical lows. However, year-end numbers for 2021 are higher than in 2020 giving reason for some cautious optimism for 2022, noted Volker Moerbitz, the lead analyst for the Kagan report.
Global pay TV subs will hit 1.1 billion in 2021, a slight 0.5% gain but revenue from video services will slump by 3.5% this year, Kagan predicts, accelerating an ongoing shift to streaming.
Traditional U.S. pay-TV subscriptions dropped by nearly 7.2 million in 2020 according to the latest figures from S&P Global Market Intelligence’s Kagan unit. The Kagan figures further document that it was a tough year for pay-TV companies as viewers shifted to streaming amid the COVID-19 pandemic.
Exclusives
According to Kagan, about 22 retrans deals are expected to come up for renewal in 2021, affecting about 30.2 million subscribers. All together, Kagan estimates that about 334 stations in 244 markets will come up for renewal this year. While comparisons are tough, Kagan says that is lower than 2020, when they estimate retrans deals affected about 56 million subscribers.
U.S. television station deals reached $4.86 billion in the first quarter, dominated by station consolidations and spinoffs, according to Kagan, a media research group within S&P Global Market Intelligence.
According to Kagan’s fourth-quarter 2018 U.S. multichannel subscription report, traditional multichannel video losses swelled in the fourth quarter to push the full-year decline to nearly 4 million subscribers.
In the largest deal of the quarter and year, Nexstar Media Group announced on Dec. 3 that it would acquire all of Tribune Media’s assets for $46.50 per share. Kagan estimates the broadcast assets to be worth $3.51 billion.
Media research group Kagan found 32 deals involving TV stations in the quarter, with 23 full-power and 23 low-power stations changing hands. In the same quarter a year ago, there were 21 deals made, with 11 full-power and 55 LPTVs exchanged for a total of $100.1 million.
Kagan: Gray-Raycom Boost 2Q Station Trading
Radio and TV station merger and acquisition activity totaled $5.11 billion in the second quarter of 2018, the biggest quarter since second quarter 2007. Kagan says, however, that 98% of the volume was attributable to TV stations sales, led by Gray Television’s acquisition of Raycom Media for $3.65 billion.
Optimistic Outlook On Multicast’s Prospects
While diginets still have some hurdles to face — such as rising program license fees — they have captured the attention of general-market advertisers and they are looking forward to the rollout of the upcoming ATSC 3.0 broadcast standard with its expanded capacity. What’s more, the multicast networks are relieved that the FCC’s incentive auction and ongoing repack of the TV band isn’t affecting their station carriage deals to any significant extent.
Multichannel services cede ground to over-the-top content and virtual service providers in the latest U.S. video household segmentation outlook from Kagan.
