Tuesday, March 2, 2010

Les Moonves Says CBS is Getting a Cut of Affiliates Retrans Fees


It’s no longer a question of whether network affiliate stations will share their retransmission consent fees with the networks. CBS Corporation Les Moonves told the Morgan Stanley Technology, Media & Telecom conference in San Francisco Monday that CBS is now receiving retrans cuts from some of its affiliates.

Moonves first declared publicly in November 2009 that CBS would insist on getting a share of the retransmission consent fees that its affiliate stations negotiates with cable MSOs and satellite TV companies.In a Q&A session with Morgan Stanley analyst Benjamin Swinburne, Moonves noted that the network TV companies are no longer dependent just on advertising revenues. “The game has now changed. Fox is getting paid by Time Warner [Cable], we’re getting paid by Time Warner. We recently concluded a deal with Cablevision. We have a deal with Dish. We have a deal with Verizon. We have a deal with AT&T – to get paid a second revenue stream,” the CEO said of recently concluded retrains deals for the CBS O&O stations.

“So no longer can it be ‘network is doomed’ because they only have a single revenue stream, while cable is a much better business because they have two revenue streams. Now we are achieving that dual revenue stream as well and that’s going to be significant as we move toward the future. I think it’s now a given that retrains is part of the game,” Moonves said.

Then came the revelation that CBS is, indeed, collecting a cut of retrains from some affiliates: “And retrains is paid on our owned and operated stations, but we are also sharing in the retrains that our affiliates have, in a certain manner.” Moonves did not elaborate on how that is being paid and how much it currently amounts to.

“So the fact is, if you want to get our top programming – which we believe network programming is at the top – and if we’re spending hundreds of millions of dollars to bring you NFL Football, or ‘CSI,’ then we should get paid as much as a cable network showing repeats,” Moonves concluded.

“In 2010 we’re going to take in over $100 million in retrans fees. That number will grow in 2012 to at least $250 million,” Moonves had said earlier in the discussion at the investor conference.

RBR-TVBR observation: Whether or how the retrains pie is cut up is not a matter of what is right or wrong, or whether the local station or network is more deserving. It is simply a matter of what the parties negotiate when affiliation agreements come up for renewal. Some of those negotiations are going on right now – and they sometimes feature negotiators with very different views of the relative value of the network and the local stations.

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