Magazine article Variety

Retrans Fees: On the Rise, but for How Long?

Magazine article Variety

Retrans Fees: On the Rise, but for How Long?

Article excerpt

WITH THE UNCERTAINTY surrounding how strong advertising dollars will be coming out of the upfront marketplace, it's important not to forget the other big revenue contributor for most TV companies. Retransmission-consent and affiliate fees have been a consistent source of growth over the last few years, expected to exceed a combined $50 billion this year, according to MoffettNathanson Research. But there are signs that future growth is not guaranteed.

Retrans fees have been a boon to station owners like Meredith, EW Scripps, TEGNA, and Nexstar. The fees have risen from less than 10% of revenue three or four years ago to more than 30% in Ql 2016.

Jumps in retrans revenue tend to come at the start of the calendar year, as renegotiated rates kick in, so are generally first seen in Ql results. But this year's first quarter saw a more modest jump than last year's, and there are signs that the growth is slowing as companies have worked through many of their contracts and set new rates.

In theory, retrans fees are free money and should have driven a significant increase in margins over that period. But in practice, much of that revenue is passed on to network owners who have renegotiated their cut. As a result, margins haven't really budged for these companies; in fact, most of the station owners have seen margins decline over the past few years. …

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