Is the Retrans Cash Cow Running Low?

[osu1991]

https://www.multichannel.com/news/is-the-retrans-cash-cow-running-low

Over the past nine months, cable operators and broadcasters have been at each other’s throats more than ever, fueled by fears of greater regulation and a declining pay TV customer base. According to some analysts, as broadcasters have increasingly relied on retransmission-consent cash to prop up a shrinking ad business, many are digging in their heels not only for higher fees, but for guarantees they will be paid regardless of the impact of cord-cutting.

Retransmission consent has been a boon for broadcasters ever since it was included in the 1992 Cable Act, federal legislation that required television stations to elect for either “must-carry” status — meaning pay TV distributors had to carry them, usually at no charge — or retransmission consent, meaning they would be paid for their signals. Once considered to be a supplement to the larger fees broadcasters extracted from advertisers, according to Kagan, a unit of S&P Global Market Intelligence, retrans is approaching 50% or more of many station owners’ annual revenue.

But like everything else in the TV business, retrans is beginning to fall victim to its own success. As fees have risen, distributors and consumers are beginning to resist the high cost of broadcast.

 

[comfortably_numb]

As fees have risen, distributors and consumers are beginning to resist the high cost of broadcast.

Does that mean the market is working?

 

[dare2be]

Does that mean the market is working?

It would if other unrelated channels weren't held hostage during the process.

 

[mdram]

yet customers still complain when prices go up, or stations disappear.

 

[comfortably_numb]

yet customers still complain when prices go up, or stations disappear.

If the article is correct, it's the complaining and "voting with wallet" that is forcing the market to (slowly) correct itself.

 

[lparsons21]

The satellite companies have a little wiggle room when it comes to retrans on the broadcast stations. Unless a station is designated ‘must carry’, they don’t have to carry them at all. Dish is already addressing that issue by making the locals a separate line item you can pick or not. ATT hasn’t done that yet, but I fully expect them to at some point.

Cable companies get the stinky end of the stick in this. They must carry all the local stations and provide them to every subscriber regardless of whether they are ‘must carry’ or not. And they have to pay to retrans them. They cannot, under current rules, make locals an optional thing. That’s just outright BS! The local stations decided to be free over the air and ad supported, the wanted the rules changed when that didn’t work out so well.


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[dare2be]

If the article is correct, it's the complaining and "voting with wallet" that is forcing the market to (slowly) correct itself.

Yes and no. If the "complaining" and wallet voting only consist of "I must have this channel, so I'll switch to wherever I can get it", then that does nothing to correct the market, instead it just validates the position of the channel owner that they can raise prices as much as they want, because the consumer will still do what it takes to get it.

 

[SamCdbs]

The “market” has nothing to do with re-trans. In the market, since the airwaves belong to the public and are only licensed to broadcasters for the benefit of the public as a public trustee, reception of such freely transmitted publicly owned signals and retransmission of same to people who cannot receive them OTA would, as outlined in the wonderful Fortnightly case, be without payment.

 

[sam_gordon]

The “market” has nothing to do with re-trans. In the market, since the airwaves belong to the public and are only licensed to broadcasters for the benefit of the public as a public trustee, reception of such freely transmitted publicly owned signals and retransmission of same to people who cannot receive them OTA would, as outlined in the wonderful Fortnightly case, be without payment.

So you're OK with charging folks who CAN receive OTA? What's the deciding point? A small antenna on the back of the TV has to be able to pick it up? A high gain antenna on a 30' tower?

 

[Ypsiguy]

This will probably push the conversion to ATSC 3.0

ATSC 3.0 contains a conditional access system. Once implemented, all we probably get free OTA is a single stripped down public information channel. Local news and weather in overcompressed 480i.

 

[ncted]

distributors ... are beginning to resist the high cost of broadcast.

Wait. Dish is just beginning to resist? That doesn't bode well.

 

[ncted]

Does that mean the market is working?

The libertarian part of me says yes, and it would have happened faster if the MVPDs had just passed along whatever the channel owners wanted to charge to their customers. However, the realist in me knows the retransmission disputes are just another market exerting influence in the broader market because markets aren't standalone or simple, which reminds me: the move to streaming channels like CBS All Access, HBO Now, and Disney+ are just the market simplifying things by cutting out the middle man. Companies having a direct relationship with the customer should, in theory, reduce cost amplification by distribution, but as most content owners do not own the IP networks over which their content is distributed, that isn't entirely true.

Anyway, I guess my actual answer to the question is, "yeah, kind of, but it is more complicated than that."

 

[The Fat Man]

Regarding OTA, the market is working. Dish has the best model. "This is what it costs for us to retransmit channels that you can get for free. Either you can pay for it, or you can opt out." If enough people opt out, then that is a profound statement to the station owner. If most people pay for it, it's a profound statement for Dish.

 

[dare2be]

Regarding OTA, the market is working. Dish has the best model. "This is what it costs for us to retransmit channels that you can get for free. Either you can pay for it, or you can opt out." If enough people opt out, then that is a profound statement to the station owner. If most people pay for it, it's a profound statement for Dish.

Yep. A step toward ala carte. Whodathunkit?

 

[navychop]

Which is why we’ll never see it.


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