Local TV Stations' Retransmission Revenues In Danger Of Sinking: Analyst

With cord-cutting continuing to accelerate -- now at around 7% per year -- one stock market analyst believes local TV station retransmission revenues of some $12 billion per year are in danger of being cut.

More significantly, says Richard Greenfield, media analyst at Lightshed Partners, for TV stations and other platforms there is “less and less quality programming, as legacy media companies now launch all their new shows direct to streaming.”

That means the price and value of the video bundle -- of which TV station are a major part -- “is worsening.”

In turn, he says this means “the potential reach of linear TV continues to fall, meaningfully hurting ad sales.” This is driven by TV station groups continuing to post weak “core” advertising results in their quarterly earning reports.

Still, he notes, this does not include what appear to be periods of ever-stronger political advertising revenue.

He believes that now, due to the ease with which TV viewers can stop and start digital TV platforms -- including virtual pay TV providers -- subscriber churn is "at a far higher rate seasonally, with significant numbers coming on just for NFL season or for World Cup. etc.”



Greenfield also notes one instance earlier this year, when the CBS affiliate board rejected CBS’ retransmission consent agreement for vMVPDs. That meant FuboTV, a virtual pay TV provider, lost access to the CBS affiliate around the country.

But CBS replaced the local affiliates' feed with the national CBS feed -- which still included the bulk of a local TV station’s programming -- prime time, morning shows, national news and, perhaps more importantly, NFL games.

Even with the loss of local CBS TV news, Greenfield says viewers and subscribers of FuboTV were probably not very concerned, as their ABC, NBC, and Fox stations still  aired local TV news.

Greenfield says Charlie Ergen, chief executive officer of Dish Network, sees much of this happening soon -- that in fact, local TV station may soon go the way of the current financial troubles of regional sports networks-- that is increasingly finding it difficult to get carriage by pay TV providers.

In Dish’s more recent earnings phone call, Ergen said: “The fact [is] that the local networks now are going the path of regional sports where the cost gets so high that… any rational company will make more money by not having the service.”

Even though the NFL remains key for TV stations, increasingly you can get games on alternative digital platforms, says Ergen. “The next step in retrans is down, not up… I said it about regional sports, I’m saying it now. That's where that’s going.”

From all of this Greenfield concurs: “We could not help but think broadcast TV stations are headed for massive disruption.”
3 comments about "Local TV Stations' Retransmission Revenues In Danger Of Sinking: Analyst".
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  1. Ed Papazian from Media Dynamics Inc, March 6, 2023 at 7:37 a.m.

    Wayne, that figure of $12 billion in retransmission fees---it may be a tad lower---is paid to the stations but they share the money with their networks to the tune of 50% or thereabouts. And much of the perceived value to the cable systems and satellite distributors is derived from network, not local station content. The latter consists almost entirely of local news---which is deemed valuable---plus syndicated fare and local sports.

    I do agree that retransmission fees will probably begin to drop as cord cutting continues, and this poses a major problem  as these incomes are just about all that stands between profitability and breaking even---or worse---for both the broadcast  networks and their affiliates as well as most cable channels.

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  3. Ben B from Retired, March 6, 2023 at 9:31 p.m.

    Dish is the worse they'll not have local TV stations anymore which will hurt Dish in the long run in my opinion than not having the RSNs. Dish doesn't try they like to fight they lose most of the time and they'll lose more if they don't agree with the TV station groups.

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