Tegna CEO sees retransmission revenues climbing thanks to more leverage in vMVPD negotiations

finance earnings

In a quarter in which his company’s subscription revenues grew 26%, Tegna CEO Dave Lougee said net retransmission revenues will continue to rise as virtual MVPDs grow.

“We expect to see more from this ecosystem. The move to OTT, from a broadcast perspective, is good for both of us because we now have far more competitors in the marketplace for our channels,” said Lougee, adding that networks together with local broadcasters will provide must-have channels for consumers.

“So that puts us in a sweet spot relative to future negotiations for distribution. For us it’s not a national negotiation because we’re only in 30% of the country. In the past, we may have been in a negotiation with a cable operator that had 60% distribution of the market and maybe there wasn’t even a telco competing against them, which gave them a lot of leverage against us. Now we’ll have more leverage in the negotiations,” said Lougee. “The net pie is going to rise. I’ve always said let’s focus on the size of the total pie before we talk about the split between us and our network partners. The bottom line for us is, despite whatever trends with the share of split, we will see net retrans continue to grow.”

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Lougee said that Tegna continues to have good partnerships with the traditional MVPDs and that some of the benefits from vMVPDs will come on more down the line as some of those OTT players get scale. “But, I think we’ll let the system play itself out.”

Lougee’s optimism about vMVPDs is shared by other broadcast groups like Nexstar, which is "pleased" with its first subscriber statement during the third quarter, CEO Perry Sook said. “We are now starting to see a modicum of OTT subscribers.”

Nexstar Media is being paid for vMVPD involvement on a per-subscriber basis, and Sook said that Nexstar is anywhere in between “benign to slightly better off” if the subscribers come in through the OTT door as opposed to the MVPD door.