Fox Broadcasting signed on two new
affiliates last week, making good on its promise to seek
other distribution avenues in areas where stations won’t
accept its new retransmission-consent policy.
And though this may present an opportunity for smaller
station groups looking to capture beefier network affiliations,
cable operators hoping that the changing of the
guard will lead to lower retransmission consent fees may
be out of luck.
Fox announced June 20 that it had reached new affiliate
agreements with Granite Broadcasting in Fort Wayne,
Ind., and Koplar Communications in Springfield, Mo. Both
Granite and Koplar own former MyNetworkTV affiliates
in those markets and will continue offering MyNetwork
TV programming (mainly syndicated shows) on the station
as well. (Fox and MyNetwork TV are both owned by
The Springfield deal takes effect on Sept. 1, with the
Granite deal taking hold on Aug.1. Nexstar Broadcast
Group had been the previous Fox affiliate in those areas,
but lost that distinction after its contract with
Fox spokesman Scott Grogin said the
Nexstar affiliate agreement expired about a
year ago and, after lengthy negotiations, the
two sides could not reach a deal. That has not
been the case with most of Fox’s more than 200
affiliate stations, he added.
MOST AFFILS REUPPED
“The significant majority of our affiliate stations
have been very receptive to the terms of
the new affiliate agreement,” Grogin said.
For more than a year, Fox has told its affiliates
that it will require a portion of their
retransmission-consent fees in exchange for its programming.
In February, after nine months of negotiations with
its affiliate board, Fox president of affiliate sales and marketing
Michael Hopkins said in a letter to stations that it
would seek other distribution agreements if stations don’t
agree to the fees, which some analysts estimated
at about half of each station’s total
retrans take. Fox isn’t the only broadcaster
asking for a cut of affiliate retransmissionconsent
fees — all of the major broadcasters
are doing the same to varying degrees.
So far, Fox has not renewed affiliate
agreements with four stations — three
owned by Nexstar (WTVW in Evansville,
Ind.; WFFT in Ft. Wayne, Ind.; and KSFX in
Springfield, Mo.) and one owned by Block
Communications (KTRV in Boise, Idaho).
According to Miller Tabak media analyst
David Joyce, there will likely be more.
And he added it could be a potential windfall
for station groups like Granite that
have few big network connections.
“It’s an opportunity for broadcasters
that have stations that are independent.
It would be a huge ramp-up in their value
by getting that network affiliation and
they probably would not mind sharing half
of their retrans fees in the future to get that
value creation,” Joyce said.
In a research note last week Joyce said
that Nexstar stock may see some pressure
in the future, mainly because it has
about 11 Fox affiliates left. Nexstar, which has 63 stations
in 34 markets, has been one of the more vocal opponents
of Fox’s new retrans policies. Nexstar CEO Perry Sook did
not return a call for comment.
In a bit of an ironic twist, Granite’s chief operating
officer is Duane Lammers, who previously
served as Nexstar’s chief operating
officer and negotiated many of the station
group’s early retrans deals. He has also served
as a consultant to Communications Corp. of
America (owned by the same hedge fund that
owns Granite), which picked up a Fox affiliation
in Evansville earlier this year. Lammers,
who has earned the nickname “the Hammer”
from operators for his hard negotiating style,
declined to comment.
While it is still up in the air on what fees
Granite or Koplar will charge operators for
retransmission consent in those markets, Joyce said it
is unlikely they will get a break.
EVEN LESS FOR STATIONS
“I think it means there will continue to be contentious retrans
negotiations between the stations and the cable operators
because now the stations are getting only half of
what they thought they were going to be getting,” Joyce
said. “That means they are going to be working harder to
grab some of that back.”
Grogin declined to comment on individual deals.
According to published reports, Fox is asking affiliates
in the top 125 markets to initially pay it 25 cents per subscriber
per month, escalating to 50 cents in four years. For
smaller markets, Fox is seeking 15 cents per subscriber per
month, rising to 25 cents in four years.
Nexstar isn’t the only big station group with a Fox dependency.
Sinclair Broadcast Group, another cash-forretrans
pioneer, has about 20 Fox and 18 MyNetworkTV
affiliated stations across the country. All together, Sinclair
owns, operates, programs or provides sales service to 58
stations in 35 markets across the country.
The smarter way to stay on top of the multichannel video marketplace. Sign up below.
Thank you for signing up to Multichannel News. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.