NBCU hits retrans payday with Cablevision

Deal marks first Peacock pact with top MSO since Comcast merger

NBCUniversal is finally ready for a retrans revival.

The conglom’s new carriage deal with Cablevision, announced Monday, marks its first such pact with a major distributor since the Comcast acquisition in early 2011 and could help close the revenue gap between the Peacock and its broadcast rivals for retransmission consent fees.

What’s more, the agreement represents NBCU’s first pact with a top MSO to incorporate TV Everywhere, which will allow the conglom to capitalize on the availability of programming across digital platforms — an innovation it popularized over the summer with the London Olympics.

Pact covers broadcast and cable networks plus expansive rights to on-demand content and access to live channels on multiple platforms in and out of home for the first time. Financial terms of the deal were not disclosed, but the multi-year pact also covers retrans fees for NBC and Telemundo-owned stations.

“Retrans compensation is going to be a significant revenue source for broadcast and stations including NBC,” said Matt Bond, exec VP and prexy of content distribution for NBCU. Bond hinted that more such deals will be announced before year’s end but declined to specify which partners.

NBCU has lagged the field in retrans, which has emerged in recent years as an important new revenue stream for broadcasters that were struggling to match cable’s dual haul of advertising and affiliate fees. The Peacock collected just $50 million in retrans in 2011, according to Nomura Securities, far behind the $91 million at ABC, $122 million at Fox and $131 million at CBS.

CBS, the most aggressive on the retrans front, is projected to fetch $250 million in 2012, double what ISI Group pegged for the Peacock. But some say that disparity is due to the fact the Eye owns triple the number of stations NBCU does (10).

Bernstein Research analyst Todd Juenger also blamed the shortfall on how the NBCU acquisition put Comcast in the paradoxical role of programmer and distributor, saying the company “seems mired down in the inter-company complications of Comcast being NBC’s biggest distributor, and the contradictory motivations and unintended consequences that causes.”

Nevertheless, NBCU CEO Steve Burke had mentioned as recently as Comcast’s third-quarter conference call with analysts last month that the company was on the verge of ramping up its retrans revenues. The Peacock’s early-season ratings resurgence may have helped Comcast at the negotiation table as well.

Retrans helps the Peacock defray mounting programming expenses, between the rising costs of scripted fare and of sports licensing fees. However, that doesn’t help Cablevision, which like all MSOs professes to pass on its increasing expenditures to subscribers.

But the new deal could also benefit both NBCU and Cablevision by amping up a TV Everywhere offering for 2013 at no extra cost to the consumer. That will put programming from the conglom across a range of devices both inside and outside the home.

For NBCU that’s especially enticing because its deployment of the Olympics across digital platforms proved as powerful a promotion for the utility of TV Everywhere as the industry has seen. However, the net wasn’t able to continue those efforts across its regular slate of programming with a top MSO until now. “I think the success of the Olympics helps to drive the value proposition to the customer and help the customer understand what TV Everywhere is,” Bond said.

The NBCU-Cablevision deal came the same day that research firm SNL Kagan issued a revised, more optimistic forecast for retrans revenues. Broadcasters could see their haul exceed $6 billion by 2018.