Broadcast Network Executives Talk up Retrans to Investors
Executives from all four major broadcast networks talked up the coming wave of retransmission consent payments from subscription-video distributors and affiliated TV stations, at two investor conferences in Florida this week. Retrans makes broadcasting a more attractive business, said Disney Chief Financial Officer Jay Rasulo, in response to a question about how the broadcast network and TV stations fit into the company’s overall strategy. Retrans payments are among the more attractive aspects related to turning around the NBC network, Comcast CFO Michael Angelakis said Tuesday at a Credit Suisse investor conference. “We look at the network as having a heck of a lot more upside than downside."
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The strongest comments came from CBS CEO Leslie Moonves and News Corp. Chief Operating Officer Chase Carey, who spoke separately at a Deutsche Bank conference Monday. Moonves estimated that the pay-TV distributors pay a collective $26 billion a year to all programming networks, cable or broadcast, out of which the major broadcast networks have a 40 percent audience market share. “Just by viewers alone, it would be a $10 billion opportunity for the networks, and that’s assuming all networks are created equal,” he said. Moonves expects CBS to take a disproportionate share of carriage fees, he said. CBS is projected to get $250 million in retrans fees at its owned TV stations next year. More money will come from CBS affiliated TV stations, he said. “We take a very small part of their revenue right now, and that number will be getting bigger as we go into the future."
Carey wouldn’t quantify how much retrans revenue Fox expects from pay-TV distributors and affiliates, but said “it is a transforming event for the business.” Adding a second revenue stream to broadcasting “takes it from a business that is troubled to one that should be one of our shining lights,” he said. Later during his presentation, he said a case could be made that Fox is worth $5 monthly per subscriber to pay-TV operators, although the company isn’t asking for that much in negotiations.
At CBS each new distribution deal it reaches is better than the last, Moonves said. “Five years ago we were getting zero” from pay-TV providers and paying local broadcast affiliates, he said. “You've had to reverse two long-time trends in the business. It’s a big shift in five years with hundreds of millions of dollars leading into billions of dollars.” CBS is one of the few TV programmers that wouldn’t mind la carte pricing for cable networks, Moonves said. If pay-TV operators introduce smaller tiers of service, CBS will be included, he said. “CBS is going to be there if your package is four networks,” Moonves said. “We are going to be there. You have to have CBS."
For Disney, the ABC network is less about distribution than it is about content creation, Rasulo said: “We look at ABC primarily as a content creator.” Owning the network makes it easier to introduce new franchises and hit TV series because it’s the first distribution window for those products, he said. “But make no mistake, we view ABC as a content engine,” he said, “and not so much as a distribution outlet.”