Commentary

No More Gripes: TV Stations May Act, And Even Prosper, Like Cable.

by Wayne Friedman , Staff Writer, December 1, 2008

Now that TV stations are shoe-horning their business model more like cable networks, one wonders when the complaining will stop.

Right now, TV stations are moaning about the loss of big marquee sports like the Bowl Championship Series. But they say there's hope -- all because of retransmission fees, similar to the subscription fees paid to cable networks.

TV stations are starting to digest the financial power of getting a dollar or more per subscriber -- which, for many cable networks, is good money.

Even when program ratings never made advertising sense for cable networks, they always preened about their duel-revenue stream business model. For many networks, that was a nearly 50-50 stream of revenues -- subscriber fees and advertising money.

But that's not the equation for TV stations -- yet. The revenue from retransmission fees is still a fraction of the dollars they get from advertising sales.

For example, Perry Sook, president/CEO of Nexstar Broadcasting, says revenue from retransmission deals (and some Internet revenue) is bringing in $30 million per year. In 2007, Nexstar had $266 million in net revenue. That comes to a little better than 11% of all its revenue.

The real dollars for national programming, however, are what network affiliates give back to their networks -- now called reverse compensation. Local cable systems just call them the monthly subscribers' fees they pay to get cable networks.

Sook figures that between football ad inventory give-backs to Fox, and other services, he is giving Fox around 7 cents a subscriber. All that sounds nice. But cable operators give much more for their cable networks -- with the likes of ESPN getting better than $2 a subscriber.

That's hard to compete with. And it's that disparity -- what cable operators pay for cable network programming, and what TV stations are now, somewhat grudgingly, giving to pay for specific programming such as sports-- that really shows some weakness in the broadcast business model.

2 comments about "No More Gripes: TV Stations May Act, And Even Prosper, Like Cable. ".

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Arthur Greenwald from Greenwald Media, December 1, 2008 at 11:25 a.m.
Surely you meant to refer your readers to the source of the Perry Sook reference: his interview in TVNEWSDAY:
http://www.tvnewsday.com/articles/2008/11/25/daily.3/?promo
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Clinton Gallagher, December 1, 2008 at 12:23 p.m.

TV stations have nothing to cry about. They have ripped off and local businesses with outrageous advertising fees and have misled the communities with fraudulent "news" for far too long.

What's more, this group of licensed fascists are on the precipice of usurping control of advertising and related information conveyed using the World Wide Web which should be clear to anybody with the least bit of common sense who has scrutinizing the fundamentals of the February 17th digital briadcasting sham.

As if nobody has observed the TV manufacturers making thier products "Internet Ready" but for yet another lie of ommission from these fascist licensed oligopolists that have the manufacturers making proprietary products usurping the otherwise agnostic Internet protocols which are now only being supported for proprietary uses as the manufacturers and the facist licensees conduct the most significant corrupt collusion ever witnessed.