Only in Washington would broadcasters tout a report showing their fees for “free” TV are increasing faster than ever.
“Kagan Puts Retrans in Perspective” is the headline of a Multichannel News article broadcasters are circulating. According to a new SNL Kagan report, retrans fees are only 8.9% of the fees MVPDs pay for basic-cable and regional sports networks. It also says these fees will increase to 12.6% by 2017.
That adds up. Over the next five years, broadcasters will reap $25 billion in retrans fees.
Here’s what the broadcasters and the media aren’t mentioning: the four major broadcast networks own 25 of the top 50 most expensive cable networks.
Broadcasters demand increasingly higher fees for these channels, and use them as leverage in retrans negotiations by tying carriage to higher fees for local affiliates or vice versa. Then, they point to the high costs and say retrans fees aren’t high enough.
Cable channel costs can also be offset when the pay-TV provider inserts its own advertising. But the government prohibits pay-TV providers from inserting its own advertising on the local affiliates. This is further proof that the broadcasters’ “free market” argument is bogus.
The report also shows that “reverse retransmission consent” revenues are projected to grow from $1.02 billion in 2014 to $2.25 in 2019, a 121% increase. The fact that reverse retrans revenues exist is proof that “localism” is a sham. How does sending fees back to the networks help local stations?
Retransmission consent was supposed to foster localism, but there’s less than ever. Consumers are paying the price.
The SNL Kagan report shows that consumers will lose billions of dollars in the next few years, for television that is as “local” as a fast food meal.