Comments attributed this morning to CBS Corp. boss Les Moonves underscore a conundrum of retransmission consent, the legal framework for channel-carriage deals between broadcasters and multichannel video distributors.
Retrans, if you hadn’t noticed, is big business. cable/telco/satellite providers will pay $5.5 billion by 2017 for the rights to retransmit TV station signals to pay-TV subscribers. Speaking today at an industry conference, Moonves said CBS expects to collect more than $1 billion from retransmission payments and reverse compensation fees (money paid to CBS by its broadcast affiliates) by 2017. Moonves, President and CEO of CBS, appeared today in NYC at the On Screen Media Summit presented by Broadcasting & Cable and Multichannel News.
According to Tweets this morning from Multichannel News writer Todd Spangler, Moonves said the hefty rights fees may actually represent a bargain to pay-TV providers, because CBS draws more viewers than even cable’s most expensive network, ESPN. By Moonves’ logic, on a pure ratings basis, CBS is among the most valuable channels a video provider can offer. If ESPN gets $5 per month/per subscriber from pay-TV companies, Moonves was quoted as saying, “shouldn’t we be getting $7 or $8 a sub?”
But ratings are only one part of the equation, and Moonves’ analysis ignores a fundamental difference between cable networks and broadcast station groups when it comes to licensing payments. That difference has to do with advertising.
ESPN, USA Network, Discovery, HGTV and hundreds of other cable networks give back 2-3 minutes per hour of time in which affiliates can sell local – or in the case of DirecTV and Dish Network – national/regional advertising messages. For the cable industry, ad inventory doled out by networks results in an annual revenue stream that approaches $5 billion. (Not…
