"With all due respect to my friends at the networks, I contend that the network programming is not the main reason that we're receiving compensation--it's the local programming."
-Nexstar Broadcasting Group Chairman/President/CEO Perry Sook via Broadcasting & Cable
Perhaps, but not for me. I'm completely fine without any of the local content and have been for going on 20 years. In fact, as a west coaster, I'd pay at least $5 a month extra just to get the east coast feeds of just the nationally broadcasted content.
The affiliates relationship with the retransmission fees is a lot like Gollum's relationship with the ring.
For those not already playing along at home, local broadcast networks negotiate a fee from cable and satellite providers to carry their signal. As a revenue growth opportunity, the networks (rather than the local affiliates) have been attempting to get a share of retransmission fees. Not something the affiliates are happy about. For me, Sook's and other similar comments strike me as "No! Mine! Keep your grubby hands off!
I do understand the affiliates plight. They've negotiated these deals and its an important revenue stream. But I also understand the networks plight which amounts to "hey, why shouldn't some of that be coming back to US?" If I'm CBS I'm laughing at Sook's comments and thinking, "Yeah right. How many people watch your local news broadcasts and how many people watch NCIS and NFL Football?"
Over the long haul I just don't see the affiliate model surviving. Sook is fine with the networks getting some of the money -- if they want to renegotiate the retransmission deals and then split any increases 50-50 with the affiliates, that's fine with him.
But the networks are going to want more than half of any additional amount they could negotiate, they're going to want some of the original amount too.
Because of how these deals are negotiated (with most deals not currently being up for renegotiation), this is a war that will play out over years, rather than weeks or months.
I agree: It is ridiculous to think that cable companies and satellite services would be willing to shell out the kind of money that affiliates are asking for in retransmission fees if it weren’t for the network programming. Ask yourself why the local independent stations don’t command such high fees.
Perry Sook is the runaway favorite for the title of Most Deluded Media Exec of 2009….and that’s saying something.
Any station that refuses to share its retrans cash with the network is going to lose its affiliation. Any station that loses its affiliation is on an express train to bankruptcy.
Did you know that in one case a station and network went to binding arbitration to determine how much retrans cash the network was entitled to? The arbitrator ruled that the network was entitled to 95%. NINETY-FIVE!!
The stations are near to worthless without their network affiliations and they know it.
To Mikey’s point.
Exhibit A: KRON – San Francisco, lost NBC affiliation after a contentious negotiation, became shell of former self and arguably a leading cause of Young Broadcasting bankruptcy.
But Sook may just be doing a bit of initial public negotiation, instead of being mentally ill, but I admit it is hard to tell.