SNL Kagan has revised its projection upward for the amount of retransmission-consent fees TV station owners will collect over the course of this decade.
The Monterey, Calif.-headquartered researcher forecasts that retrans fees will reach $7.6 billion fees in 2019, up from $3.3 billion this year. SNL Kagan attributes the growth projection to the rising monthly sub fees TV station owners have garnered in recent negotiations, as well as the consolidation of the business over the last couple years, which has often led to higher retrans rates after acquired stations are brought under larger groups' umbrellas.
SNL Kagan’s current projections call for retrans revenues to jump to $7.15 billion by 2018, compared with the group’s 2012 forecast of $6.05 billion for that year. SNL Kagan said the environment has improved for TV station owners, which have increasingly obtained rates they believe are closer to the value they bring to multichannel video services.
The projected uptick comes despite a shrinking multichannel universe. Whereas last year multichannel subscribers were projected to grow from 100.4 million at year-end 2011 to 103.7 million in 2018, SNL Kagan now foresees the multichannel industry only serving 100.6 million video subscribers five years from now.
SNL Kagan has also updated its reverse retrans projections, noting a doubling of these funds flowing from the stations back to the network to $2.25 billion in 2019 from $1.02 billion in 2014. SNL Kagan shows reverse retrans payments back to the networks growing to 50% of affiliates' retrans payments over time, even as affiliates' monthly fees increase in the coming years.
At the same time, SNL Kagan said retrans negotiations have become more complex owing to digital rights, which are often more complicated to finalize than the subs fees themselves. Affiliate groups must secure the rights to grant digital and second-screen distribution from their network partners when renegotiating their affiliation agreements, and there is not yet a cohesive industry approach, according to the research firm.
