Commentary

More Retrans Money Flows To TV Stations -- Is OTT Next Big Revenue Bonanza?

TV station groups can take heart in the knowledge that -- in the near term, anyway -- retransmission revenues will continue to rise sharply. But is this offering up a false sense of security?

SNL Kagan says fees for U.S. TV stations -- from cable, satellite, and telco companies -- are estimated to rise 20%, to $7.7 billion in 2016. Kagan forecasts retrans fees will hit $11.6 billion by 2022.

For many, this will be the basis of strong financial results -- even if there are continued question marks about TV advertising dollars, and whether pure-play digital media companies might siphon away traditional TV dollars in the coming years.

You can imagine many senior TV executives grinning, and then proclaiming that retransmission fees go “right to the bottom line.” That means, of course, bigger net profits.

Growth from those fees will, naturally, abate somewhat, averaging high- to low-single percentage gains over the next 10 years, according to Kagan.

For many, this shouldn’t mean complacency. Digital media revenue line items continue to grow for TV stations groups -- but perhaps not as fast as many would like.

Political advertising revenues seem to be steadily rising as well. But they will continue to come in two-year cycles, for Presidential or other strong political periods.

The main question, as retrans money continues to flow to TV stations, is if this will be enough until OTT (over-the-top digital TV platforms) really gets going -- more fully distributed to viewers in TV stations’ key markets.

TV station groups -- especially those with strong broadcast network affiliate connections -- would seem to benefit with new OTT services. Broadcast TV stations appear to be key media channels for the new “skinny” OTT services -- perhaps more than some mid-size cable networks.

All this means TV stations need to continue to find ways to maintain value and importance to local TV viewers.

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