MONTEREY, CALIF.—Retransmission fees are on the rise, with S&P Global Market Intelligence division SNL Kagan estimating that U.S. TV station owners fees from multichannel operators could be $7.7 billion for 2016, a 20 percent increase from 2015’s $6.4 billion. Kagan projects that number could be as high as $11.6 billion by 2022.
In addition, reverse comp, which is the retrans money stations pay to their networks for programming, is also increasing. Per Kagan, reverse comp for 2016 looks to increase by 36 percent, to $2.1 billion.
Net affiliate retrans revenue is still expected to post annual growth in the high to low single digits over Kagan’s 10-year projection period. TV station owners generally staggered their retrans contracts with multichannel operators for renewal every three years, but affiliation agreements cover an average of four to five years, which gives station owners some visibility on net retrans until the next renewal.
Kagan projects that the average TV station’s retrans fee per subscriber per month will rise from $1.40 in 2016 to $2.21 in 2022. However, by 2019, the projected $10.1 billion in retrans fees would only be about 18.7 percent of the $53.9 billion that U.S. multichannel operators will pay to basic cable networks and regional sports networks.
2019’s average $1.87 retrans fee would put the U.S. TV station industry above all but three basic cable networks in terms of affiliate fees per subscription per month, trailing just ESPN ($9.17), TNT ($2.59) and Disney ($1.88), per Kagan. Most regional sports networks, however, are expected to be above the average retrans fee.