McAdams On: Retransmission

There seems to be no clearer message that networks don’t feel they need TV stations any longer than the emerging demands for a piece of retransmission fees. The network shakedown couldn’t come at a worse period in the industry, and arguably seems time to kill off the affiliate model. TV stations across the country are just now beginning to dig out of the auto-industry collapse and a loss of households in the digital transition. They’re also under attack from the federal government for their spectrum.

Retransmission consent fees, which cable and satellite operators were reluctant yet willing to pay, has been making up at least a portion of the lost revenues.

So now networks, which have ratcheted up affiliate fees in recent years, are getting ready to strong-arm stations for a piece of the retrans action. Belo’s chief, Dunia Shive, told TVNewsCheck this week that ABC had come after the Dallas-based broadcast group, which pulled in $10.6 million in retrans for the third quarter--nearly 8 percent of revenues. Nexstar of Irving, Texas took in $7.9 million in retrans--13 percent of revenues. Nexstar chief Perry Sook said he was not yet “having any specific conversations” with networks about splitting retrans because the group had no affiliate agreements up for renewal this year.

“Having said that I am not of a mind and don’t understand why the networks would feel that they’re entitled to a piece of a revenue stream that we developed that they had no hand in negotiating, documenting or collecting,” he said during Nexstar’s third-quarter earnings call.

Sook said a local cable operation in Stroudsburg, Penn., carried three NBC affiliates, including Nexstar’s, for which it paid retrans. Sook said it was proof that the value placed on affiliate signals was for local rather than national programming.

Robert Seidman, posting at TVByTheNumbers, said who’s kidding who:

“If I’m CBS I’m laughing at Sook’s comments and thinking, ‘Yeah right. How many people watch your local news broadcasts and how many people watch ‘NCIS’ and ‘NFL Football?’”

Seidman also has a point, one that goes to an increasing skepticism about the continued viability of the affiliate model. Yet if networks could go directly to national pay carriers, why haven’t they done so before now? Perhaps that’s the very question that will be on the table for the next round of affiliation renewals.

It remains to be seen how this particular battle unfolds, but right now it’s hard not to see it as just another nail in the coffin of free TV.