In a research report released by SNL Kagan this week (hat tip to Multichannel News), new numbers show just how high retransmission fees are rising for cable, telco, and satellite TV operators. According to the Kagan report, operators paid $1.14 billion in retrans fees in 2010, with that number projected to rise to $1.46 billion in 2011, and to $3.61 billion by 2017.
No wonder industry folks are so touchy about Netflix getting content on the cheap.
Increasingly, licensing deals look to be a large part of the revenue strategy for TV networks. I haven’t seen anyone draw a line specifically between that strategy and the reduced effectiveness of television advertising, but I can only assume that the two aren’t unrelated. Sure, ad revenue is still predicted to rise through 2014, but nobody is underestimating anymore the disruptive power of the Internet and new business models for television delivery. With audience attentions fragmenting, broadcasters want a more predictable and reliable stream of revenue.
Meanwhile, as retrans fees rise, and the fights among content distributors get nastier, the government is readying itself to weigh in on the matter. The FCC issued a Notice of Proposed Rulemaking (NPRM) on retransmission consent earlier this year, and has begun to collect comments from industry players. Cablevision has filed comments already, proposing that the FCC: forbid must-carry rules around secondary broadcast channels, require transparency from broadcasters on retrans fees, and forbid practices that allow broadcasters to set different prices for service providers based on “size or other factors.”
Transparency in retransmission deals? Yeah, good luck with that.
