Retransmission Fees Set to Skyrocket | Adweek
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Retransmission Fees Set to Skyrocket

Overall hike projected at 28% this year
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Cable and other pay TV operators won't like SNL Kagan's latest projections for retransmission fees, which SNL Kagan expects will grow 28 percent overall this year, to a total of $1.46 billion. Because they have the most subscribers, cable providers will cough up the most dollars for the rights to carry TV programmers' content, about $842 million, compared to $484.2 million for satellite TV and $147.1 million for the telecom TV operators.

By 2017, Kagan projects, retransmission fees will climb to $3.61 billion, with average per-subscriber fees potentially doubling. Next year, for example, SNL Kagan estimates that ESPN will receive $4.76 per subscriber each month. Even the biggest TV stations in the biggest markets will get much less, about $0.75 a month per subscriber, which is why TV networks are looking for ways to give their affiliates some additional negotiating power by combining their efforts. Comcast, which is now, of course, operating NBC, recently offered to negotiate retransmission agreements on behalf of TV stations in exchange for a piece of the proceeds. Other networks are pursuing similar strategies.

The cost to pay TV is only expected to increase, according to the report, which was released Wednesday, three days before the end of a comment period on the Federal Communications Commission's effort at retransmission negotiation reform.

While the FCC's proposal might modify how the parties negotiate, it won't stop the increased pressure programmers are putting on pay TV services to compensate them for content.

For TV stations, retransmission fees have become an important piece of the financial health of the business, averaging between 52 percent and 76 percent of a TV broadcaster's cash flow.