SNL KAGAN SUMMIT (UPDATED 7:58 A.M. THURSDAY)

Station Retrans Fees Up, But ESPN Still King

Currently, broadcasters get about $1 per month for each subscriber from the television service providers that carry their stations. Broadcasters may, however, be moving toward parity with other cable channels, which individually earn more in retransmission fees than broadcasters do but not as much as ESPN.

While broadcasters’ retransmission fees are expected to rise, over-the-air TV will likely never get the size of fees paid to ESPN, which, at the top of the heap, gets more than five times what broadcasters do.

“The audience for ESPN is probably the most passionate out there, and if all of a sudden a carrier drops ESPN, that audience will leave,” Robert Folliard, a Dow Lohnes associate who works with affiliates, said Thursday morning. “With broadcast, people will leave but you don’t have that passion.”

Folliard was part of a panel that addressed issues surrounding retransmission fees — and ways TV stations can grow that revenue — at the SNL Kagan TV and Radio Finance Summit in New York.

Currently, broadcasters get about $1 per month for each subscriber from the television service providers that carry their stations. ESPN gets $5.54, according to SNL Kagan Associate Director Robin Flynn.

Broadcasters may, however, be moving toward parity with other cable channels, which individually earn more in retransmission fees than broadcasters do but not as much as ESPN, they say.

“I do think we can get there,” Robert Dunlop, the EVP of operations at Fisher Communications, said.

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According to SNL Kagan’s latest research, TV stations’ retransmission consent revenue will grow from $3 billion to $4.9 billion in 2016.

And despite cable operators’ complaints that retrans fees are too high, said SNL Kagan’s Robin Flynn who presented the research at the summit, they are “dwarfed” by the fees that the operators pay to basic cable networks.

Those fees will grow from $31.7 billion in 2013 to $40.8 billion in 2016, said Flynn. Retrans amounts to just 9.5% of the basic networks’ 2013 take and just 12% of their 2016 take.

The research also shows that retrans has become a significant contributor of station groups’ total revenue (and has grown substantially over the past three years).

The top five in retrains as a percentage of total revenue:

Sinclair, 20% (up from 16% in 2009)

News Corp., 19% (up from 8%)

Univision, 19% (up from 11%)

CBS, 18% (up from 7%)

Nexstar, 16% (up from 10%).

For the most part, only network affiliates have been able to negotiate from retrans. But they have had to share a portion of the fees they collect to their networks.

According to the research, the “reverse comp” that affiliates pay networks will amount to 46% of their retrans take of $1.6 billion in 2013 and increase to 54% of their take of $2.9 billion in 2016.


Comments (7)

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Jamey Deen says:

June 6, 2013 at 4:26 pm

Shhhh – Don’t let Matt Polka from ACA know how much ESPN is getting per sub, per month! He’ll go crazy and run to Congress again for relief. Oh no, I’m mistaken, Polka only cries when broadcasters get paid…

Don Richards says:

June 6, 2013 at 4:31 pm

How does the spot inventory that ESPN gives to cable/satellite provides impact the comparison of retrans fees? ESPN gets a lot more money on a per-sub basis…but they also give up a lot of inventory that the cable/satellite operator can sell in order to “buy down” the retrans fee. Is there a way to calculate the value of the inventory that ESPN gives up and see what the “net-net” cost of ESPN is?

darren shapiro says:

June 6, 2013 at 5:45 pm

Dear Diana…..you are just about 40% off in what networks get…..Other insiders are saying any where from $0.40 to $0.60 per sub. Can you confirm it…please

    Brad Dann says:

    June 7, 2013 at 11:27 am

    those other insiders are not very good negotiators. I’m in a mid-small market and all MSO’s large and small are around $1 per sub this year.

Peter Grewar says:

June 6, 2013 at 10:28 pm

That two minutes per hour of spot inventory on ESPN that goes to cable/satellite carriers isn’t going to come close to the $5.50/month fee that they pay to carry ESPN.

darren shapiro says:

June 7, 2013 at 11:34 am

Mrs. Marszalek

How can cable networks “DWARFED” broadcasters on fees per sub when on March 2012 ESPN was $5.06 now around $5.50, TNT was around $1.21, and if you average ALL of the other cable nets, they were at $0,42….
…..I am not disputing…..I just want to understand. Thx.

    Brad Dann says:

    June 7, 2013 at 12:14 pm

    How many stations do systems pay retransmission to? vs how many cable nets do systems pay for? Something like 4-8 vs 150-200. you can do the math from there


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