Retrans coin outpaces broadcasters’ projections

Bernstein Research report warns of pressure on MVPDs

The broadcasters may have underestimated how much they’d make from retransmission consent revenues, according to a new research report, which could ratchet up the pressure on pay-TV distributors who have to pay these fees.

While CBS Corp. previously projected that the Eye would reach $1 billion in retrans dollars by 2017, the network will likely reach that sum a year ahead of schedule. Bernstein Research estimates that Fox and ABC are likely moving at the same pace, but not NBC.

“Retrans fee increases are putting huge cost pressures on MVPDs — more than cable affiliate fees,” wrote Bernstein analyst Todd Juenger.

Retrans revenues are derived from payments distributors make to broadcasters for the rights to carry their local station signals. Broadcast networks have also been able to command a share of retrans revenue generated in recent years by their non-O&O affiliates, because it’s the network-provided programming that gives local station owners leverage in talks with MVPDs.

While at its current trajectory retrans revenues would translate to $4 per sub per month by 2025, Juenger spells out a more realistic scenario where it reaches $2 per month by that time, which still represents a healthy increase.

NBC isn’t included in the optimistic estimate because the network “seems mired down in the inter-company complications of Comcast being NBC’s biggest distributor, and the contradictory motivations and unintended consequences that causes.”

Retrans revenues could also impact the next round of negotiations between the broadcasters and pro sports leagues, writes Juenger, who theorized that the most recent deals were influenced by the windfall from distributors. “We firmly believe the new NFL deal, which increases average license fees per year from $600 million to $1 billion, would have looked very different (i.e. lower) if retrans didn’t exist,” he said.

For 2012 alone, CBS is projected to reach $250 million in retrans revenue.