It’s hardly a secret that the broadcast television industry’s reliance on retransmission consent revenue growth is an essential part of pleasing investors by bringing a stronger path to profits. Without this growth, over-the-air television could be strongly impacted by higher costs associated with the NEXTGEN TV rollout and newsroom upgrades and the continued weak core advertising climate.
MoffettNathanson examined closely the last six years, with respect to affiliate fee and retrans growth. The trends are concerning for the cable TV industry.
“[G]one are the days of traditional media companies counting on affiliate fee growth each and every quarter,” the team of Craig Moffett, Rob Fishman and Michael Nathanson share in an investor update on the state of the video marketplace. “Now, media executives are bracing each quarter for how big of a drag will come from affiliate fees!”
That’s because, they point out, locked in price increases are, for the most part, no longer enough of an offset for accelerating subscriber declines.
In Q3 2023, they share, aggregate media industry affiliate fees were negative for the fourth consecutive quarter at -3%.
The good news? Broadcast retransmission fees remained steady at around 6% growth. By comparison, cable network affiliate fees decelerated further into negative territory, to -6% growth.
According to MoffettNathanson estimates, retrans fees at ABC led the group of companies it tracks, at 9%. FOX enjoyed 8% growth, while it estimates NBC and CBS were lower at 4%.
The research does not mention Gray Television, The E.W. Scripps Co., TEGNA, Nexstar Media Group, Sinclair Inc., Cox Media Group, Graham Media Group or Allen Media Group.
Yet, even without those key companies in the mix, there’s a silver lining for broadcast TV station owners. MoffettNathanson forecasts retrans fees maintaining their current moderated 6% growth each year through 2025, helped by FOX’s retrans renewal cycle.
It is cable networks that will experience continued declines, driving total affiliate fees down by 1% each year through 2025, MoffettNathanson concludes.
