Ad Inventory Bigger Part Of TV Distribution Deals

AT&T current transmission/carriage negotiations with CBS and perhaps Nexstar Media Group might be centered aroundwhat it could mean for Xandr, its advanced advertising unit.

Todd Juenger, senior media analyst at Bernstein Research, believes this might be why AT&T hasn’t done a deal yet with CBS or Nexstar. Yet, it has inked one with cable TV network group, Viacom.

Juenger says retrans deals -- carrying broadcast TV station signals  -- lack an important element in modern TV distribution deals: No advertising inventory is involved. “The national ad inventory belongs to the network. The local ad inventory belongs to the station,” he says.

But "carriage" deal agreements with cable networks do have ad components.

Overall subscriber price is also key -- paying $2 to $3 per subscriber for carrying a broadcast TV station versus paying 40 cents, 25 cents or 10 cents for a cable TV network.  Juenger estimates program expense for a pay TV distributor of $4.61 per subscriber for all Viacom networks and $2.50 per subscriber for CBS.



All that might add up to something. But even if it does, deal-makers always want to hedge their bets with some ‘upside’ revenue opportunity -- which is what comes when someone controls advertising inventory. This is why major TV network groups continue to be adamant about controlling all their national linear TV advertising inventory -- not letting third parties sell their commercial time.

But when it comes to local TV advertising inventory sales -- whether for cable or TV stations -- it can be a different story.

For cable, it can be sold from local cable system owners, satellite or telco distribution companies -- or those company-directed co-ops/consortiums/interconnects.  And for TV stations? That comes by the way of large national spot TV companies, network-owned or otherwise, as well as TV stations own internal sales staff.

AT&T has put a lot of effort around Xandr -- and it has already made some moves -- not all that surprising: This year, WarnerMedia's departed advanced advertising TV network consortium, Open AP,  pushed Xandr efforts to work up similar marketplace/buying efforts.

A New York Times story hinted AT&T wanted to find a way to factor CBS All Access into its distribution negotiations. CBS All Access is not a broadcast entity or OTT digital platform -- something consumers can buy directly, not needing a pay TV distributor.

Wonder if any current AT&T retrans TV stations discussions had to do with advertising inventory.

1 comment about "Ad Inventory Bigger Part Of TV Distribution Deals".
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  1. Ed Papazian from Media Dynamics Inc, July 31, 2019 at 7:34 a.m.

    This is a very interesting subject, Wayne. I have been saying for some time that the "addressable TV" sellers need to get more GRP inventory into their hands if they want to expand their revenue base significantly. And deals like you are suggesting are one path for attaining this goal. For example, it's not hard to envision a time when AT&T tries to sell in-show "addressable TV" breaks in its ex-Turner cable properties---at a CPM premium. Whether this will fly is another matter---but it's surely coming---in my opinion.

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