The projections for growth are based on rising per-month sub fees for TV station owners in recent negotiations
SNL Kagan has updated their industry retransmission fee projections and now expects U.S. TV station owners’ retrans fees to reach US$9.3 billion by 2020, versus the projected level of US$4.9 billion this year. At the same time, SNL Kagan projects rising reverse retrans compensation rates based on recent deals, leading to a higher percentage of retrans fees flowing back to the broadcast networks. The good news is the projections still indicate net retrans growth for affiliated stations, albeit at lower rates than last year. The projections for growth are based on rising per-month sub fees for TV station owners in recent negotiations, as well as a new set of expectations for what broadcast networks are asking in programming compensation from their affiliates. Despite recent regulatory efforts to chip away at TV stations’ bargaining position in negotiations with multichannel operators and potentially slow the growth of retrans, the market at least near term continues to march higher. SNL Kagans projections call for retrans revenues to rise to US$8.78 billion by 2019, versus their 2019 projection of US$7.64 billion from last year. The average US$1.32 retrans fee that SNL Kagan anticipate the industry will receive by 2017 across all markets and all affiliates puts TV stations above all but five basic cable networks in terms of affiliate fees per sub per month, with networks such as ESPN (US$7.72) and TNT (US$1.92) all still above that average mark. Most RSNs are projected to be significantly above this US$1.26 benchmark. 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$1.53 billion in 2015 to US$3.22 billion in 2020.
SNL Kagan report: OTT substitution forecast to erode multichannel subs
