U.S. TV Station Owners' Retransmission Fees Expected to Reach US$ 10.3 Billion by 2021

Monterey, Calif., July 7, 2015--SNL Kagan has updated their industry retransmission (retrans) fee projections and now expect U.S. TV station owners' retrans fees to reach US$ 10.3 billion by 2021, versus the projected level of US$ 6.3 billion this year. U.S. TV station owners have continued to secure higher retrans fees in recent negotiations, with strong advances made at year-end 2014 from renewals and annual step-ups in existing contracts. While U.S. TV station owners have been successful at securing rising rates, broadcast networks have also been able to extract their share of rising fees, although SNL Kagan does expect continued growth for net retrans over time.

Although the level of reverse retrans paid back to the networks is rising, areas of cooperation are also increasing between networks and affiliates, notably in the OTT realm via offerings such as CBS All Access. OTT initiatives provide avenues to further monetize TV stations’ content and act as a hedge against potential retrans disputes and loss of multichannel subs via cord-cutting. SNL Kagan’s projections call for retrans revenues to rise to US$ 9.8 billion by 2020, versus their 2020 projection of US$ 9.3 billion from last year.

The average $1.53 retrans fee that SNL Kagan anticipates the industry will receive across all broadcast networks by 2018 puts TV stations above all but five basic cable networks in terms of affiliate fees per sub per month, with ESPN ($8.80), TNT ($2.16), FOX News ($1.67), FOX Sports 1 ($1.57), and Disney Channel ($1.56) all still above that average mark. Most RSNs are projected to be significantly above this average retrans fee benchmark for broadcast stations.

SNL Kagan has also updated their reverse retrans projections, which project the funds flow from the affiliate and O&O stations back to their network partners. Their projections show that the affiliate reverse retrans funds flow back to the networks could increase from US$ 1.65 billion in 2015 to US$ 3.69 billion in 2021. SNL Kagan shows reverse retrans payments back to the networks growing from 42% to 60% of affiliates' retrans payments over that time, even as affiliates' monthly fees increase in the coming years.