Does Viewership Equal Specific Retrans Revs For All Networks?

TV viewership -- nothing but viewership -- currently pays the freight, from marketers. But when it comes to multichannel video program distributors paying networks, it doesn’t always work out that way.

Speaking at the annual TVB Forward conference in New York,  Wells Fargo analyst Marci Ryvicker said while broadcast gets 35% of all TV audiences, it only gets 7% of “programming” fees -- just $2.6 billion of an estimated $13 billion. We know these fees by its other name -- “retransmission” fees.

This was the essential compliant CBS voiced in August over its battle with Time Warner Cable. It gets bigger overall viewership than anyone -- and if cable operators spend $5 a subscriber per month on ESPN, shouldn’t they at least give up $2 a subscriber per month to a broadcaster like CBS?

Surely from the cable operators perspective, as well as that from satellite and telco video services, they wouldn’t disagree CBS is a valuable TV network for its customers. But how much more?

Yes, you can get CBS over the free airwaves. But only about 10 million homes out of some 116 million chose to do so.

What CBS, or perhaps other TV network-centric media companies might not talk about is leverage -- that of packaging their strong viewing stations/cable networks with weaker ones. CBS doesn’t have big suite of cable networks -- just Showtime Networks, CBS Sports, Smithsonian -- that perhaps fit in this category in terms of total cable viewership weight.

But for NBCUniversal, Disney-ABC, and Fox, it's a different perspective. Sometimes, they have a dozen to two dozen cable networks looking for carriage, in addition to their key TV stations that run top-advertising revenue-generated network programming. Not all cable networks own by the media giants grab big viewership.

If networks want to be true to their efforts when it comes to viewership equalling value, perhaps one shouldn’t expect leverage of a big viewer generating network to pull in a smaller network -- all to offer up packaging discounts.

But freedom of TV business deals -- or for that matter any other business deals -- rules the day, at least for years to come.

Consumers get the big benefit of lots of diversity and volume from existing and new media entertainment. And when there are glitches in the TV business system --- like a so-called “blackout” of TV stations --  everyone gets upset, especially what consumers spend. Advertisers, too.

Advertisers pay for the viewership they get. Should TV program distributors adhere to similar viewership factors -- more or less?

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2 comments about "Does Viewership Equal Specific Retrans Revs For All Networks? ".
  1. Douglas Ferguson from College of Charleston , September 20, 2013 at 10:19 a.m.
    Excellent analysis. 10 million homes divided by 116 million is 8.6 percent. Hardly worth firing up the transmitter. The FCC needs to reallocate some of that wasted spectrum.
  2. Paula Lynn from Who Else Unlimited , September 20, 2013 at 8:35 p.m.
    It kinda' doesn't work like the way you explained people paying for networks through their cable companies. One cannot just pay for cable stations and premiums stations and then get networks over the airwaves so that $2 fee is not the same as the $5 for the same reasons.