Recent disputes between broadcast-television networks and affiliate station owners over virtual multichannel video programming distributors (vMVPDs) have created enough noise to get the attention of Wall Street.
In a research note Friday, MoffettNathanson analysts Robert Fishman and Michael Nathanson weighed in on CBS affiliates no longer being available on FuboTV and Sinclair Broadcast Group’s ABC affiliates getting blacked out on Hulu.
“It is still possible TV station affiliates reach new deals with vMVPDs after any short or even prolonged blackout,“ the analysts said. “But for the moment, it seems that without any change to government regulation over MVPDs, there will be more storms ahead surrounding future negotiations.”
The longstanding relationship between networks and affiliates has been mostly peaceful and mutually beneficial, Fishman and Nathanson noted. “However during periods of negotiation, we are usually not surprised to see more noise around which party has the leverage and how that impacts the terms of new reverse compensation deals.”
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It’s worth pointing out that until the 1990s, networks paid their affiliates to carry their programming (and national commercials). These days, the stations pay the networks programming fees that mostly help cover the cost of sports — particularly NFL games.
Streaming in general, and the rise of vMVPDs, have complicated the relationship.
On recent earnings calls, station owners have said that vMVPD deals account for only a small fraction of the retrans revenue that makes them attractive to investors.
“Even though it is true that these TV affiliate negotiations are unique to vMVPD deals today, we expect vMVPD subscribers to continue to take share of the declining pay-TV landscape, making this a bigger deal going forward,” they said.
“One interesting angle that we hope to learn more about is how beneficial these new deals are for the big broadcast networks and media parent company owners overall,“ Fishman and Nathanson said. “If national network feeds have the ability to fulfill the NFL local game requirements, it would seem as though the broadcast networks should be able to obtain improved economics from new vMVPD deals.” ■
