Cable, satellite and telephone video service
providers will have to dig deep into their pockets
over the next five years for reverse compensation fees,
which could increase more than eight fold to nearly $1.3
billion by 2015, according to a new report from SNL Kagan.
In its new Broadcast Investor Report, Kagan estimates
that reverse compensation, or the revenue that affiliated
stations pay their networks from their own retransmission-
consent deals with distributors, will reach $146
million in 2011 and grow to $1.29 billion by 2015. At the
same time, retransmission-
from network ownedand-
will double from $861
million in 2011 to $1.7
billion by 2015, Kagan
CBS, FOX ON TOP
CBS and News Corp.’s
Fox appear to be the
networks that enjoy
the biggest gains
in reverse compens
at ion, according
to Kagan. The research firm expects News’ reversecompensation
revenue to rise from $39 million in
2011 to $341 million by 2015. CBS will increase its reverse-
comp take from an estimated $28 million in
2011 to $368 million by 2015, according to Kagan.
NBCUniversal’s NBC and Telemundo O&Os will enjoy
the biggest percentage gain, according to Kagan, rising
from $5 million in 2011 to $288 million by 2015.
Rounding out the broadcasters, The Walt Disney Co.’s
ABC O&Os will increase their reverse comp from $53 million
this year to $267 million in 2015, and Univision will
hike its reverse-comp take from $21 million this year to
$27 million in 2015, Kagan estimated.
NBC said in May that it was working toward blanket
retransmission-consent agreements, which would give
the network proxy power from affiliates in carriage negotiations.
According to the Kagan report, details of
those proxy agreements could come later this month.
Retransmission-consent charges have been a bone
of contention for distributors for years. With the added
pressure of reverse compensation — which, in some
cases, could more than double the retrans charges for
independent station groups — it has become even more
of a hot-button issue.
NBC has said it would guarantee affiliates 25 cents
per subscriber per month in its proxy negotiations,
splitting any proceeds above that mark evenly with the
stations. Other networks have been trying to hammer
out similar proxy agreements with their stations.
So far this year, there have been a few retrans spats,
such as Mediacom Communications’ battle with LIN
Media, which resulted in the cable operator losing 10
LIN stations in seven states for nearly two months. An
agreement was reached on Oct. 15.
DirecTV dodged a retrans bullet twice last week —
reaching deals with Belo Corp.’s 20 broadcast stations
across the country and with Fox Networks. The Belo deal
was engineered with little fanfare — in a statement Nov. 1,
DirecTV said it had reached an agreement with Belo that
allowed its customers to see their favorite shows. A day
earlier, the Fox deal involved 27 O&O stations and the Fox
News Channel, and was part of a broader carriage pact
for 19 regional sports networks, FX, National Geographic
Channel, Fuel TV, Speed, Fox Soccer, Fox Soccer Plus, Fox
Deportes and Fox Movie Channel.
The agreements for Fox stations and Fox News Channel
weren’t scheduled to expire until December. Fox and
DirecTV had engaged in a battle of words for about 10 days
leading up to the agreement, accusing each other of greed
and various other personality flaws in a series of print and
broadcast ads. But the two seem to have kissed and made
up before the imposed Nov. 1 deadline.
“We both know the past 10 days have been challenging,
but we’re pleased that both sides could eventually come
together to ensure our viewers continue to enjoy Fox programming,”
the companies said in a joint statement.
MORE BATTLES BREW
But as one satellite-TV situation gets settled, another
battle brews. Two broadcast stations owned by Sarkes
Tarzian — CBS affiliate KTVN in Reno, Nev., and NBC
affiliate WRCB in Chatanooga, Tenn. — went dark on
Dish Network at 12 a.m. Mountain Time on Oct. 31 after
the two parties failed to reach a deal. Last week, the stations
and Dish said they were continuing to negotiate,
although by 5 p.m. on Nov. 2, they still hadn’t reached
“We will continue to work diligently for reasonable rates
and remain hopeful we can reach a fair agreement,” a Dish
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