For groups such as the American Television Alliance (ATVA) and small-market and independent MVPD association ACA Connects, retransmission fee increases are nothing but trouble for cable TV service providers, which must pass on these additional costs to their customers. For broadcast station and cable network owners, it is fair compensation for television programming MVPDs profit from, as the bulk of their subscribers tune to over-the-air channels.
Such is the tug of war over retrans. And, it’s not likely to get any smoother soon, given the latest analysis released on Monday from S&P Global Market Intelligence.
The key takeaway from the report: Retransmission revenue for U.S. broadcast TV stations increased in 2022 as renewal rate hikes outpaced traditional subscriber churn.
Commenting on the findings, Justin Nielson, Principal Analyst at S&P Global Market Intelligence, said, “Although traditional multichannel churn outpaced virtual subscriber gains in 2022, increases in average per-subscriber rates in renewals and annual step-ups kept gross retransmission revenues growing, albeit at a much slower pace than years prior.”
In 2022, domestic television station owners’ retransmission and carriage fees from cable, direct broadcast satellite, telco video operators and virtual multichannel providers reached an estimated $14.46 billion. This compares to $14.08 billion in 2021.
In 2023, rate hikes in renewals are expected to slightly outpace the cord-cutting trend. This will result in another 3% gain in gross retransmission and virtual subscriber fee revenues, pushing the total to $14.83 billion.
This trend will continue, S&P Global Market Intelligence predicts. “Longer term, these revenues will likely grow by percentages in the low single digits, to $15.93 billion by 2027,” it says.
On a net retransmission basis, the share that goes back to the TV stations is expected to decline slightly — from about 50% in 2018–2020 to 49% in 2021–2024 and to 48% in 2026–2027.
And, even with some major disruptions at the end of 2022 and beginning of 2023 resulting in high-profile “blackouts” due to retransmission consent impasses, TV station owners have continued to be successful in securing higher retransmission fees in each renewal period, S&P Global Market Intelligence finds.
