Broadcast is not busting the MPVD bank

By on Jun, 8 2012 with Comments 0

Pile of MoneyMVPDs are screaming to the high heavens about allegedly exorbitant demands from broadcaster when it comes to retransmission fees. But the statistics paint a very different picture about where MVPD fees are going.

A study released recently by SNL Kagan’s Robin Flynn spells out where cable companies are spending their retransmission money – and very little of it is going to broadcasters, despite all the gnashing and grinding of MVPD teeth, and despite all the pleas for congressional and FCC intervention.

The MVPDs need to be saved from themselves, according to the statistics. According to Kagan, in 2006 98.7% of retransmission fees paid by cable went to basic cable companies. This year, basic cable is expected to rake in almost 93% of the total payout. 2015 is projected to be the first time that the broadcast share will get into double digits, and just barely – it isn’t expected to get all the way to 11%.

Here’s the chart from SNL Kagan, spelling out the retransmission breakdown from 2006 through 2015. Amounts are in billions.

Year Basic Cable Broadcast TV Bcst%
2006 16.23 0.21 1.3
2007 18.35 0.31 1.7
2008 20.51 0.50 2.4
2009 22.74 0.76 3.3
2010 24.82 1.14 4.6
2011 26.66 1.46 5.5
2012 28.82 2.03 7.1
2013 31.50 2.70 8.6
2014 33.95 3.28 9.7
2015 36.51 3.89 10.7
Source: SNL Kagan      

RBR-TVBR observation: Can you say bargain? For less than a dime of the MVPD programming dollar, broadcasters provide over 90% of the top 100 programs week in and week out. On top of that, they provide virtually all of the local news on the average cable system, and are the go-to source for critical information in times of emergency.

MVPDs love to grouse about the percentage of increase broadcasters are asking for as they update outdated retransmission agreements. It’s a great way to hide the fact that the dollar amounts are totally reasonable – it’s just that they were priced crazy low to begin with. Rest assured, cable operators, that the percentages will be reasonable again after broadcasters get through their first corrective negotiation that brings the fees to the current going market rate.

For all that broadcasters bring to cable – not the least of which is the impetus they provide to sell subscriptions – a 25% slice of the retransmission pie should not be out of the question.

About The Author: RBR-TVBR has been reporting on the business of broadcasting for nearly three decades. Beholden to no one, it is independently owned.

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