Retrans Rev Seen Hitting $7.6B By 2019

TV broadcasters’ retransmission consent revenue will come in at $4.3 billion this year and continue to grow at a brisk pace, hitting $5.1 billion in 2015 and $7.6 billion in 2019, according to the latest analysis from SNL Kagan.

The research was released today at the start of SNL Kagan’s annual TV and Radio Finance Summit in New York.

According to the research, retrans revenue is also becoming a rapidly growing share of station group’s total revenue. Among the 18 groups covered in the research, the share ranged from 24% (Meredith) to 10% (Scripps) in 2013.

Others getting more than 20% of their revenue from retrans include Sinclair (24%), CBS (23%), Fox (22%), Nexstar (20%), Allbritton (20%) and LIN (20%).

The research also found a broad range of retrans revenue on a per-subscriber, per month basis. In the fourth quarter of 2013, Sinclair was at the top, earning $1.07. Right behind were LIN ($1.06), Fox (96 cents) and Meredith (96 cents).

Despite the growth, what broadcasters receive from multichannel video program providers will continue to be dwarfed by what basic cable networks and regional sports channels receive, the research says.

Retrans will amount to only 10.5% of the cable programming fees this year and 11.4% next year.

For network affiliates, the flip side of retrans is “reverse comp,” programming payment they have to pay to the networks. It is generally seen as a way for the networks to share in the affiliate’s retrans revenue, although it is not necessarily tied directly to retrans.

According to SNL Kagan analyst Robin Flynn, who presented the retrans revenue research, reverse comp now amounts to about 45% of retrans revenue and will top out at around 55% in a few years.

Michael Biard, president of distribution for the Fox Networks Group, was among the conference speakers. During an on-stage Q&A with Flynn, he said he expects to see growth in the retrans it receives for its O&Os as well as in the reverse comp it receives from affiliates. “I see them moving on the same slope.”

The O&Os deserve more, he said. “They compare favorably with anything else on the dial.”

Biard said his confidence in reverse comp upside is based on his experience in negotiating for retrans for the O&Os. “I sit in a position where I am able to gauge what that is based on the retransmission consent discussions that I have representing our stations. I know the values of the stations and the value of the network programming that we license to our affiliate stations.”

Asked if Fox reverse comp demands would stop at 55% of retrans revenue as Flynn suggested, Biard demurred.

But, he said, it is not in Fox’s interest to make the reverse comp demands so extreme as to harm the affiliates. “They are healthy businesses and I expect them to be healthy going forward.”

Biard also said that he doesn’t anticipate any trouble with the affiliates over reverse comp. “We understand there is a tension there, and that tension has played itself out for the most part very quietly. We have been able to get our deals done.”