U.S. TV Station Owners’ Retrans Fees to Reach $7.6 Billion by 2019

MONTEREY: SNL Kagan is forecasting that U.S. TV station owners' retransmission fees will reach $7.6 billion by 2019, compared to the projected level of $3.3 billion this year.

SNL Kagan has revised its projections upwards, calling for retrans revenues to rise to $7.15 billion in 2018, compared to its $6.05-billion projection from last year. This is because in the last year, the situation for TV station owners has improved, as they are increasingly getting rates they believe are closer to the value they bring to multichannel video services.

Digital rights negotiations have added complexity to retrans negotiations. "Affiliate groups must secure the rights to grant digital and second-screen distribution from their network partners when renegotiating their affiliation agreements, and there is not yet a cohesive industry approach," SNL Kagan asserts.

The projections call for higher industry retrans fees compared to this time last year, despite the reduction in forecasts for multichannel subs. Last year, multichannel subscribers were expected to grow from 100.4 million at the end of 2011 to 103.7 million in 2018; this year projections are that in 2018 the multichannel industry will serve 100.6 million video subs.

SNL Kagan has also revised its reverse retrans projections, examining the funds flow from the affiliate and owned-and-operated stations back to their network partners. The projections show that the affiliate reverse retrans funds flow back to the networks could increase from $1.02 billion in 2014 to $2.25 billion in 2019. SNL Kagan shows reverse retrans payments back to the networks growing to 50 percent of affiliates' retrans payments over time, even as affiliates' monthly fees increase in the coming years.