Broadcast TV's Found Money: How It'll Get to $7.6 Billion in Revenue by 2019

AP Images
Charlie Ergen

A new study from SNL Kagan predicts the relatively new fees charged to cable and satellite carriers will grow 131 percent, but experts predict big battles ahead.

This story first appeared in the Dec. 13 issue of The Hollywood Reporter magazine.

How important is broadcast retransmission revenue for TV networks and stations? SNL Kagan on Nov. 22 projected that the relatively new fees broadcasters charge cable and satellite carriers will surge 131 percent to $7.6 billion by 2019. With emerging competition from Netflix, Amazon and other over-the-top services, TV providers are keenly aware that the loss of hit programs could encourage subscribers to seek alternatives.

For instance, Time Warner Cable lost 306,000 subscribers during the third quarter, when a carriage dispute blacked out the CBS networks for a month. That gives broadcasters an advantage in negotiations like the current standoff between Dish Network and Disney, owner of ABC and ESPN.

STORY: Time Warner Cable Deal Could Alter TV Landscape

Dish chairman Charlie Ergen says that by raising retrans fees so quickly, media companies are acting like monopolies. "Programming rates are going up at four times the rate of inflation," he complained in August.

Nonetheless, NBC, which has gone from zero in retrans fees a few years ago to $200 million in 2013, has promised to catch up with the competition -- CBS, Fox and Disney each boast more than $250 million annually, according to analyst estimates.

STORY: TV's 6 New Cable Networks: Who's Winning in the Ratings

While content providers now hold the upper hand, things could change during the next three years, posits Gary Bourgeault at market news site Seeking Alpha: "It's simply a matter of economics, and broadcasters will only be able to boost prices so high before the real battle begins."