multichannel connect
careers
all access

Marketing

Ops Rebut Retrans 'Gains’

5/15/2005 8:00 PM Eastern

Cable One Inc. and Cox Communications Inc., in the midst of a five-month-long retransmission-consent dispute, are challenging Nexstar Broadcasting Group Inc.’s claim that its TV stations haven’t seen a ratings decline after losing their cable carriage.

Phoenix-based Cable One cited Nielsen Media Research data from the February sweeps, which showed that Nexstar owned-or-operated TV stations in Joplin, Mo., saw ratings dip across broad dayparts in February compared with last November’s sweep.

Retrans War Ratings Fallout
Nexstar station Feb. ’05 [1] Nov. ’04
KODE (ABC) 3.49 4.16
KSNF (NBC) 3.17 3.90
KTAL (NBC) 2.82 2.90
KRBC (NBC) Feb. ’05 [2] Feb. ’04
Total-day household 2.0 4.0
Primetime 4.0 7.0
KLST (CBS) Feb. ’05 [2] Feb. ’04
Total-day household 5.0 7.0
Primetime 7.0 12.0
Sources: [1] Nielsen Media Research data provided by Cable One, average daypart household rating. [2] Nielsen data supplied by Cox Communications.

“It’s odd that Nexstar asserts that down is up, and that behind is ahead and that bad is good,” said Tom Basinger, vice president of Cable One’s central division. “Their ratings are down for the most part somewhere between 15% and 20% in virtually all dayparts. I’m sure you can find some daypart or a demographic where that’s not true, but by and large, they’re down.”

Like Basinger, Cox officials questioned comments made by Nexstar CEO Perry Sook during a May 4 first-quarter conference call with Wall Street analysts, remarks he echoed last week at the UBS Leveraged Finance Conference in Las Vegas.

During the call, Sook painted a rather rosy picture in the aftermath of Cox and Cable One dropping Nexstar’s owned-or- managed stations in four DMAs as part of a retransmission-consent standoff, saying there had been a “less than anticipated and virtually minimal negative revenue impact to us.”

In addition, Sook said, “We suffered no net loss of audience in the key demographics in any of the markets,” adding that ratings were actually up for Nexstar’s KTAL, its NBC affiliate in Shreveport, La.

In a conference call earlier this month, Sook claimed that ratings were up not only in Shreveport but for Nexstar’s ABC station in Joplin, KODE, and that viewers were getting the stations via rabbit ears or by switching from cable to direct-broadcast satellite.

After the February sweep, some advertisers were returning to the stations, Sook said. The MSOs have their doubts.

“We know for a fact that their [ratings] are significantly down in at least two markets, San Angelo and Abilene [Texas],” said Tom Forst, regional vice president for Cox Media.

For example, total-day ratings for Nexstar’s KRBC, the NBC affiliate in Abilene-Sweetwater, Texas, dropped to a 2.0 this February from a 4.0 last February.

“Their ratings were down basically half in total day,” said Dave Gustafson, Cox’s corporate research manager.

In primetime, KRBC slid from to a 4.0 this February from a 7.0 last February. And there were declines along those lines at 5 p.m., 6 p.m. and 10 p.m., Gustafson said.

And in San Angelo, CBS affiliate KLST in total day has gone to a 5.0 in February from a 7.0 in February last year. In primetime, KLST dropped to a 7.0 rating from a 12.0 February sweep to February sweep.

JANUARY DROPS

Cable One and Cox have been in a battle with Nexstar, which is seeking cash compensation for its TV stations, since January. After failing to reach renewals on pacts with Nexstar, Cox had to drop KRBC and KLST on Jan. 1; and then KTAL in Texarkana, Texas. Cable One had to stop carrying KTAL, as well as KODE and NBC affiliate KSNF in Joplin.

Then this spring, Cable One also had to drop Nexstar’s NBC affiliate KMAR in Amarillo, Texas.

Cable One provided comparisons of the February and November sweeps. For example, KODE in Joplin, saw its average daypart household rating drop to a 3.49 in February from a 4.16 in November, according Nielsen. It was a similar story with KSNF in Joplin, which dropped to a 3.17 in February compared with a 3.90 in November.

And KTAL in Texarkana, Texas-Shreveport, LA., saw its average daypart rating slip in February to a 2.82 from a 2.90 in November.

Duane Lammers, Nexstar’s chief operating officer, defended the accuracy of Sook’s remarks, saying that the executive’s ratings analysis was based on individual programs, not broad dayparts, at the broadcaster’s TV stations. And in the case of KTAL, ratings are up across the board, according to Lammers.

Nielsen data comparing February and November for KODE and KSNF show that both Joplin stations were down across a broad array of dayparts.

Lammers maintained that looking at ratings in terms of broad rotator dayparts is irrelevant for TV stations, because that is not how ad time is sold.

“What we evaluated was programs,” Lammers said. “We sell programs. We don’t sell 6 p.m. to 8 p.m. That’s not how any television station sells itself. So Mr. Sook was factually correct in what he said.”

As for Nexstar’s Texas stations, Lammers said, “We will not dispute that we lost some audience in KRBC and KLST. However, the overwhelming majority of the lost viewers sent to Nexstar station KTAB in Abilene and KSAN [a Mission Broadcasting station run by Nexstar] in San Angelo.”

Some of Nexstar’s stations are NBC affiliates, and the network’s primetime programming overall has taken a nosedive, which is contributing to the stations’ woes.

Sook has also told analysts that some Nexstar advertisers had come back after standing aside in the first quarter.

“The people that are buying the ad time, they know what the numbers are,” Lammers said. “And they’ll confirm for you exactly what Mr. Sook said.”

Forst claimed that Nexstar has to be losing ad revenue because of its ratings declines.

“Any client who is looking at the numbers would definitely not spend the same for an 11.0 [rating] and they would spend for a 7,” he said. “That’s just rational, so I have to believe that I those departs when you’re down 43%, it’s possible you’re going to be down in revenue 43%.”

Lammers countered by saying while Nexstar has lost some advertisers, “our revenue is growing with each passing day, week and month.”

At the UBS conference, Sook claimed that Cox and Cable One had lost 15% to 20% of their subscribers in the four markets where Nexstar stations were dropped.

Cable One maintained that Nexstar’s numbers were wrong. The MSO has lost close to 5% of its subscribers in Texarkana, and somewhat more than that in Joplin, but not anywhere near 20%, according to Basinger.

Cox also disputed Nexstar’s estimates of subscriber losses.

“That is not true,” Cox spokeswoman Amy Cohn said.

COX DENIES LOSSES

“That is definitely a high figure: 15% to 20% is definitely overinflated.”

Nexstar indicates no intention of backing down in it standoff with Cox and Cable One.

September