Commentary
Fox Looks To Join CBS' Retrans Fee Act: Will Cable Look To Upstage?
- by Wayne Friedman , Staff Writer, October 20, 2009
For some time CBS has been the lone performer when it comes to garnering outright retransmission fees from cable systems to carry its local TV station signals.
CBS' long-term goal is to bring in $300 million a year, about 50 cents a month for each cable subscriber. Currently, it has a long way to go. One analyst estimates CBS pulled in $26 million from retrans deals in 2008.
Other media companies -- News Corp.'s Fox network; Walt Disney's ABC and General Electric's NBC -- have been on the sidelines of this issue. Up until now.
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CBS is different from the other big network players; it's the most broadcast-centric, with just one cable network property of note -- CBS College Sports Network. That means it gets little in the way of cable affiliate revenue from cable systems.
That isn't true for the rest. News Corp. has the likes of Fox News and FX; NBC has USA Network, Syfy, Bravo and Oxygen; Disney has ESPN, Disney Channel, and ABC Family in its cable stable.
Cable operating executives might tell you on background they already pay over-the-top big affiliate fees for the likes of ESPN, Fox News, and USA Network.
To some executives, those large cable network premiums include -- in theory -- the "carriage" of media companies' respective broadcast stations. That means if ESPN charges $4 for a cable subscriber per month, perhaps 50 cents goes to some ABC's broadcast stations. It's a bookkeeping issue.
Now, it appears this isn't enough for other big media players. Rupert Murdoch, chairman of News Corp., doesn't think advertiser-only supported traditional TV and non-traditional digital media is a key to the future.
Right before buying the Wall Street Journal, he mused about changing WallStreetJournal.com to one that was free, and ad-supported. Not only didn't this happen for wsj.com, the move to fees looks to be extended to other units of the News Corp empire.
For years cable executives have touted cable networks like TNT, USA, ESPN, and HBO as the reason that cable subscribers buy cable.
Up until this time, cable executives have been relatively quiet about the retransmission issue -- especially in doing deals with CBS.
The reason? There isn't a lot of positioning they can do. Broadcast networks still bring in the largest viewers -- on average -- over any cable networks.
This is not to say something won't happen if other three big TV networks start asking for the same thing as CBS and News Corp. Expect one cable executive to sing out in response to all of this, perhaps hoping for a big public fight.
It's not just broadcasters -- everybody will want to get into the act.
Wayne Friedman is West Coast Editor of MediaPost. You can reach Wayne at wayne@mediapost.com.
What continually suprises me in items about retrans fees and payments is just how much the moneys that AT&T U-Verse and Verizon FIOS (who lack the benefits of retrans/must carry and cable compulsory copyright fees) drive the percieved value. I have been told by a CBS exec that they use the higher fees paid by these upstarts when the negotiate with cable firms. Funny that u-verse and fios executives never seem to bitch about their competitive position, their payments, and that broadcast stations and networks should be available to them for free.