Nexstar May Be Facing Retrans Disagreement

Nexstar Communications is heading for another retransmission skirmish with small cable operators in the Scranton/Wilkes-Barre, Pa area, where retransmission agreements expire Dec.31. 

A crawl across its stations in that market list some 17 recalcitrant cable operators, but Nexstar President/CEO Perry Sook surmises some of those deals have been made but just not signed yet. 

He said as of Wed., Dec 24, Nexstar has no agreement with the seven small cable operators and that all the disputed systems serve just a few thousand customers. But he emphasized, "we haven't dropped anybody yet" in that market.

Still, Nexstar is a trailblazer in the retransmission battles with cable. Sook told analysts earlier this month that it negotiated $20-$21 million in retransmission consent revenue this year and that 80% of his deals end before the end of next year. He predicted "substantial double digit" growth in the next several years. He attributes $30 million in 2008 revenue to aggressive marketing of the Internet and retransmission consents. "Where would we be without them? We have been able to avoid Defcon 3," he says.

Nexstar operates WBRE, an NBC affiliate, and WYOU, a CBS affiliate, in Scranton/Wilkes Barre, and seemingly has some leverage because NBC airs the Super Bowl on Feb. 1 and cable subscribers would likely howl if they couldn't see it. 

"Whenever there's a network with the Super Bowl and retransmisssion consents come up, they tend to leverage that event," says Robert Shema, vice president and COO of the American Cable Association, a trade association  that serves smaller cable operators. But he said any sizeable increase--some stations are asking in the range of 40 cents to a $1 a subscriber-- would force a small operator to raise rates, at a time subscribers are trying to save pennies. 

"In 2005, the retransmission consent fees began an uptick," Shema says. "In 2008, it's become an onslaught."