No surprises here.  Earlier in the week news came out that ABC was looking for a share of the retransmission fees from affiliates.  That train has left the station and whether it’s public yet or not, all the broadcasters are aboard. We’ve been saying for a while now that the biggest revenue growth opportunity for broadcast nets is retransmission fees.

CBS has already signed retransmission deals with many cable and satellite providers and sooner or later will have deals with all of them, which will bring in hundreds of millions for the network.

from Broadcasting & Cable:

Moonves is pressing for non-owned and operated CBS stations to share their retransmission dollars with the network. Both networks and their station partners have been chasing distribution dollars from partners such as cable companies, but around the business there’s been a debate about who should get what share of that money. Moonves said, “As each new affiliate agreement comes up, there will be a sharing of the retransmission fees; it’s in the very early stages. There’s a realization that if they’re [affiliates] getting paid retransmission fees, they’re getting it because of network providing NFL, 60 Minutes and Letterman. We are working with the affiliates right now and most understand the situation and they’re talking to us about how we do this in the best possible way together.”

[A]t least one broadcast network will flunk. Right now, I think the CW is on the edge of the cliff. I know they are going after the young audience, but their shows are not working for the most part. “Melrose Place” is a disaster. “90210″ is the same thing. Both shows are done.

I think CW has a year or two to make it. This could be the final year of the CW if the ratings don’t get better I think that network will drop.

via MediaPost.

I’m not so sure about that prediction. As long as CBS and Warner Brothers develop all the programming on the CW, their overall financial situation, considering the value of those developed show franchises, may be enough to have them continue to fund the CW. As for the CW’s strategic direction, and its current boss, Dawn Ostroff, that’s entirely another matter.

Other predictions from the same interview:

- ABC, CBS, NBC, Fox may decide to go all cable, and then local affiliates will have to scramble to survive.

- The number of television stations will decline

Click to read the rest of the excerpt from the video interview.

Scripps and Cox are forming a new Joint Venture to own and run Travel Channel Media … Cox keeps 35% and Scripps gets 65%.•

via MediaBiz.

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.

read the full story on TVNewsCheck

Even if the ratings and carriage fees aren’t huge, the value of being in nearly 100 million homes apparently  is.  Brian Stelter at the New York Times writes:

Cox Communications is expected to command close to a billion dollars for the Travel Channel, people close to the bidding war for the channel said on Thursday.

The company is entertaining bids from a number of media companies, including the News Corporation and Scripps Networks, three people with knowledge of the auction said. The people requested anonymity because they were not authorized by their employers to discuss the confidential process. At least one of the offers exceeds $900 million, they said.

[...]

By the ratings and revenue metrics of cable channels, the Travel Channel is undistinguished. The channel, which counts “Anthony Bourdain: No Reservations” and “Man v. Food” as its most popular shows, is distributed in nearly 100 million homes, but it earns on average just 6 cents per subscriber. It draws a modest average of 485,000 viewers in prime time.

More on NYTimes.com

Though $.06 a month per subscriber isn’t much, but Nielsen estimates the Travel Channel is available in 93,990,000 homes.  For purposes of back of the napkin math, I’m fine with calling that 100 million homes and figuring the $.06 per subscriber winds up being around $6 million in subscription revenue per month.

The cable model strives for a split between subscriber revenue and advertising revenue.  If they are able to obtain a 50-50 split, that would be another $6 million a month.  So back of the napkin gets it near $150 million in annual revenue. Fetching $1 billion would be somewhere around a 7X multiple of annual revenue.

It’s clear to me now that the accountants* have taken the reigns at the broadcast TV networks. While broadcast networks used to try and drive profits by pretty much exclusively focusing on increasing ratings, the boys with the green eye-shades are now in control and are trying to drive profits by driving down costs or emphasizing other non-ratings related revenue streams.

Read the full story

There seem to be a few memes that persist in the TV media world even though there is no data to back them up. One is the “Oprah ratings down because of Obama endorsement”, another is “Look at all the people cutting the cord” (i.e. cancelling their subscription TV service).

Recently it’s been spun as an after effect of the economic problems, in today’s LA Times cord cutting is touted as a combination of technology and consumer choice, which of course it is, and the anecdotal examples are charming, but the problem is the data just doesn’t support the fact that it’s a general phenomenon.

In fact, total subscriptions to cable/satellite/telco TV services continue to grow slowly, as they have for many years.

Who knows what will happen in the future, but it’s not happening now!

Last March I wrote that I was watching four trends (that didn’t involve whether Chuck or Dollhouse got canceled) and one of them was reallocation of existing revenue streams, including retransmission fees for broadcast nets:

[...] especially as advertising rates between broadcast and cable begin to equalize, look for the broadcast networks to get a bigger slice of subscriber revenues.

Reallocating the subscriber dollars seems like something that has to happen, especially if the broadcast networks are the most watched networks  on cable and satellite offerings.  I suspect this will be a very painful process that will occur over quite a few years.

Lately, media coverage of this is heating up, largely due to Rupert Murdoch saying FOX would demand payment for carriage.   In an article Titled “Networks Put The Squeeze on Cable“  Forbes’ Dorothy Pomerantz writes:

Cable stations get paid through advertising and subscriber fees. Why should broadcasters only rely on ads?

LOS ANGELES — At the News Corp. shareholder meeting last week in New York, Rupert Murdoch sent a tremor through the TV world when he announced that the Fox network will no longer be doing business as usual. From now on, Fox will demand payment from the cable, telco and satellite companies that carry the broadcast network.

[...]

Things started to change a few years ago when CBS split from Viacom. Right off the bat, Chief Executive Leslie Moonves announced that he intended to charge retransmission fees for CBS.

“We’re going to get paid for our content by cable operators,” Moonves said at a 2006 investor meeting. “Try running a cable network without the Super Bowl, the Grammys, CSI, The Final Four, Survivor and David Letterman.”

read the full story

Hat tip to commenter “Mikey” for pointing out the Forbes story.