Broadcasters to Boost Retrans Fees to $3.6 Billion by 2017
NEW YORK - Despite an expected decline in pay TV subscribers, higher monthly fees charged by broadcasters to TV distributors will boost industry-wide retransmission consent fee revenue to more than $3.6 billion over the next six years, SNL Kagan projected Wednesday.
The research firm expects total industry retrans fees could increase from $1.14 billion in 2010 to $3.61 billion by 2017, with average per-subscriber fees potentially more than doubling over that time period.
Broadcasters, including sector biggies such as CBS Corp. and News Corp./Fox, have been pushing for retrans fees to develop a second revenue stream beyond advertising - something cable channels have always had.
SNL Kagan said that network-affiliated stations in major markets are thought to get less than 75 cents per subscriber a month now, compared with its estimated $4.76 that ESPN, the highest-paid cable network, gets in carriage fees.
"The disparity between viewership and retrans fees is going to keep up the pressure from broadcast networks and their owned-and-operated stations for higher fees," the research company argued.
This year, SNL Kagan predicts that retrans fees will rise 28 percent to $1.46 billion.
"Retrans fees have continued to grow in importance for TV station owners, with retrans revenues disclosed by public companies rising from $631 million in 2009 to $766 million in 2010," the company said Wednesday. "For the pure-play TV station owners we analyzed, the revenue stream was equal to 52% of their cash flow on average in 2010 and can equate to as much as 76% of cash flow."
Given their bigger reach, cable operators could pay more than $824 million in retrans fees this year, compared with $484.2 million for satellite TV and $147.1 million for telecom firms, according to SNL Kagan.