Yesterday Goldman Sachs upgraded News Corp. stock from “neutral” to “buy,” and raised its price target from $15.15 to $17.
At the heart of that report was Fox News, which Goldman says is likely to negotiate a subscription fee in the vicinity of $1.25 per subscriber when it renegotiates deals with some carriers later this year.
The $1.25 fee wold only apply to the affiliates that the channel is renegotiating with this year, not all cable, satellite or telco partners. However, if FNC gets that fee, it is safe to say it would have leverage when its other carriage agreements come up for renegotiation down the line.
As TVNewser has written before, subscription fees are at the heart of the cable business, typically accounting for around half of all revenue.
SNL Kagan estimates that in 2009, Fox News brought in an average of $0.58 per subscriber per month. Some of FNC’s long-term carriage agreements called for that fee to go higher as the deals progressed, believed to top off at around $0.75 per sub.
By comparison, SNL Kagan estimates that CNN/HLN bring in an average of $0.48 per month, CNBC $0.29 per month, MSNBC $0.16 per month, Fox Business $0.11 and Bloomberg $0.06 per month.
In addition to FNC, Goldman also says that retransmission consent fees, which are basically the same as cable subscription fees, but for broadcast networks, will also continue to rise with the Fox Broadcast Channel expecting to reach the $1 a subscriber it has been seeking.
Goldman also upgraded Disney, which owns ABC and ABC News to “buy” while lowering Time Warner, which owns CNN from “buy” to “neutral.”