Policy

B’Casters See Big Bucks from Retrans

11/18/2004 9:59 AM Eastern

New York -- Retransmission-consent fees from not only cable operators, but direct-broadcast satellite providers, will provide a lucrative second revenue stream for broadcasters in the coming years, according to a top Hearst-Argyle Television Inc. official.

In fact, Hearst-Argyle has already reaped millions of dollars in revenue by “monetizing” retransmission consent, the president of the 33-station group, David Barrett, said during a panel at the IRTS Foundation’s annual Faculty/Industry Seminar here.

Retransmission consent has translated to $5.7 million in the past three years, according to the broadcaster’s federal filings.

“Cable, which has been a redistributor of our programming, has never had to pay for our programming the way the world has enfolded,” Barrett said during a panel entitled, “The Station Perspec…Trum: Some New Points of View.”

But that is changing, according to Barrett. He pointed out that DBS is now offering local-programming packages, which has helped to drive its subscriptions, giving TV stations an edge in dealing with them.

“The satellite companies, because there are two of them, found that they can really drive increased subscriptions if they have a local-to-local package,” Barrett said. “Stations are in a better position than ever to insist on some kind of a consideration from satellite.”

Barrett also referred to the phone companies’ plan to deliver video services.

“Our view is that the more people that are out there prepared to be a distributor of our content, [it] puts us in a better position to monetize some of the retransmission consents,” Barrett said.

“You’re going to see through people’s income statements in an increasing way over the next couple of years that companies are monetizing retransmission consent,” he added. “Our company, in the past several years, has put several million dollars in our income statement in retransmission-consent fees. And that’s a number that’s growing significantly.”

According to Hearst-Argyle’s most recent annual report, the broadcaster has designated Lifetime Television as its agent in retransmission-consent negotiations. Lifetime is a corporate cousin, since it is 50%-owned by Hearst Corp. and 50% by The Walt Disney Co.

In exchange for retransmission consent for Hearst-Argyle stations, Lifetime got carriage from cable operators for Lifetime Movie Network. Hearst-Argyle then got compensated by Lifetime. The broadcaster collected $1.9 million from Lifetime last year, $2.5 million in 2002 and $1.3 million in 2001, according to its filings.

During the panel, Barrett and Paul Karpowicz, president of LIN Television Corp., also took umbrage to remarks earlier in the day by Fred Dressler, Time Warner Cable’s executive vice president of programming.

Dressler claimed that broadcasters charged that TV stations had “snookered” the government into giving them spectrum for HDTV, which the broadcasters were trying to use for multiplexing.

“I have the utmost respect for Fred, and we do a lot of business with Time Warner, but I really don’t believe that the broadcasters snookered the government in any way, shape or form,” Karpowicz said, pointing out that his company had invested $75 million to create a digital infrastructure for its TV stations.

September