The kicking and screaming has begun. FOX has been pretty outspoken about figuring out how to get better retransmission deals from the cable companies, and even CBS’ chief Les Moonves has recently been outspoken about getting CBS’ fair share. Now comes word that ABC is asking for a share of retransmission fees from some affiliates:
Belo Corp. CEO Dunia Shive says that ABC is asking for a share of the station group’s growing pot of retransmission consent dollars in ongoing affiliate renewal negotiations.
Call it reverse compensation or retrans sharing, Shive said during the company’s third-quarter conference call with securities analysts. “It’s really a mechanism for having the affiliates share in the cost of programming.”
Belo operates four ABC affiliates, including its flagship station in Dallas-Fort Worth (DMA 5), WFAA.
So this is a bit different than CBS and Fox. They just want retrans fees for their O&Os. I think expecting affiliates to pay the networks money is a much bigger change than getting cable companies to pay retrans fees.
Julia, it would be great to see a breakdown of the Owned and Operator mix/markets across all networks.
I think the networks:
a.) want better retrans deals for their content from the Cable and Satellite companies
b.) want a cut of those fees even from non O&O affiliates
Overall, the networks are probably scratching their heads trying to figure out how to ultimately unwind the existing affiliate model. But I doubt ABC is really different than FOX or CBS, the news just came out faster.
I’m sure all three of them, and NBC too, are prioritizing “a.)” above with their O&O. But I’d be surprised if they didn’t all share ABC’s thinking on “b.)”
True, and if they didn’t think they could ask for it before, they definitely will now. But I still see this as a bigger deal than just getting retrans fees. This could be push up the death of the affiliate model by a lot. Not that it wasn’t already dying, but expecting affiliates to actually pay to be affiliates is a huge change.
It’s not so much asking for payment as asking for a cut of $$ the affiliates are receiving largely (at least from the network’s perspective) on the backs of the networks’ content.
Though my ratings predictions for premieres are never good, my “kicking and screaming” predictions are much better. I think we’re just at the start of a very early cycle of much duress for all parties, but my guess is affiliates will be particularly impacted. Many of the potential revenue opportunities don’t favor the affiliates. For example, I’d pay Comcast at least $10 a month to get the east coast feeds of the broadcast networks.
It will be a while, but I think ultimately something like that will be available where you can get a networks content without the affiliate, and the affiliates are going to hate it.
The article states: “Belo reported today that its retrans take amounted to $10.6 million in the third quarter”
It’s unclear if that figure reflects Belo’s 4 ABC stations or their 20 stations across all affiliations.
If it’s just the ABC stations that breaks down to about 85 cents per home per month.
If it’s for all stations it’s likely less than 20 cents per home per month.
From what I know of the networks’ retrans strategies, that <$0.20 figure isn't going to cut it. The networks will be all over them to negotitate their next deals far more aggressively.
Perry Sook of Nexstar saw the warning signs and fired a preemptive strike back in September:
http://www.broadcastingcable.com/article/340265-TVB_Conference_Sook_Challenges_Networks_Over_Retrans.php
I like his take on the issue. If ABC wants more retrans money, they should negotiate for it just like the non-O&Os are. If they want to play hardball, then affiliates should be able to opt out of carrying certain low-rated programming.