SNL Kagan raises retrans fee forecast to $9.8B by 2020; Mediacom's CEO complains to FCC

Research firm SNL Kagan increased its retransmission fee forecasts, saying that it now expects U.S. cable operators to pay a total of $9.8 billion in 2020 to carry content from TV stations. That figure is up from the $9.3 billion in 2020 that SNL Kagan predicted in October.

The firm now predicts retransmission fees to reach $10.3 billion by 2021, up from $6.3 billion this year.

SNL Kagan also predicts that the average station retrans fee across all networks will reach $1.53 per subscriber by 2018, which would rank higher than all but five major cable networks including ESPN (projected price: $8.80), TNT ($2.16), Fox News ($1.67), Fox Sports 1 ($1.57) and Disney Channel ($1.56).

Bolstered by better cooperation between networks and affiliate stations, station owners have continued to secure strong advances in retrans fee pricing from cable operators, as well as step-ups to existing contracts. 

CBS Corp. recently re-upped deals with Dish Network (NASDAQ: DISH) and AT&T U-verse (NYSE: T)--terms of those deals were not disclosed, but CBS has been among the most aggressive networks in seeking significant retrans-fee increases.

The SNL Kagan report tipped off a fresh round of griping from cable operators: Mediacom Chairman and CEO Rocco B. Commisso, for example, fired off a letter to FCC Chairman Tom Wheeler, accusing the agency of "doing nothing" as retrans fees grew 8,600 percent from 2005 to 2012. 

"Pay TV costs are significantly higher in the U.S. than anywhere else in the world largely because the average monthly wholesale programming costs paid by most MVPDs have grown to over $45 per subscriber," Commisso wrote. "To put these wholesale programming costs in their proper perspective, $45 is roughly the monthly retail price ISPs change for their flagship broadband product."

Retrans fees, Commisso added, are the biggest component of that cost growth, doubling every two to three years. 

"At a recent industry conference, broadcasters set a target for monthly retrains fees of $6 per subscriber for each channel--meaning that the monthly wholesale cost for the Big Four network affiliates alone will be $24 per subscriber and a stunning $29 billion a year for MVPD customers collectively versus about $6 billion today," he noted. 

Commisso urged the FCC to re-approach its notice of proposed rule-making on retrans that has remained "moribund" since it was first introduced five years ago. 

Statements from the cable-backed American Cable Association and American Television Alliance supported Commisso's comments, with the latter urging Wheeler to "get off the sidelines."

For more:
- read this SNL Kagan press release

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