New SNL Kagan Projections Show Retransmission Consent Fees Spiraling Out of Control

Nov 4, 2014

Less than a year after their last report on retransmission consent fee rates, SNL Kagan is already back with a new report showing that broadcasters’ will continue to extract retransmission consent fees at an alarming rate.

SNL Kagan’s revised projections indicate broadcasters will take in $9.3 billion for broadcast channels by 2020. That’s almost double the $4.9 billion they are already expected to take by the end of 2014. Though broadcasters charge pay-TV providers directly for their programming, the cost ultimately gets passed through to consumers in their monthly cable or satellite bill.

Even as Congress has finally acknowledged that the retransmission consent system needs to be updated, broadcasters do not seem to be slowing down their billion-dollar cash grab.

SNL Kagan reports the trend of “reverse retransmission consent” is also on the rise, with such fees projected to hit $1.53 billion in 2015 and $3.22 billion in 2020. “Reverse retransmission consent” refers to the money paid by local TV to the Big  4 broadcast networks (CBS, FOX, ABC and NBC) for national programming like The Voice, Scandal and Survivor.  The huge increase in “reverse” fees shows just how much broadcasters have twisted the intent of the 1992 Cable Act, which intended that retransmission fees would be spent on local programming for the benefit of the communities served by local TV stations. Now the rise in retrans fees isn’t driven by localism at all—instead it’s driven by broadcasters’ desire for a new revenue stream and is funneled straight back to the big networks to pay for expensive primetime programming.

Overall, the SNL Kagan report shows that consumers will continue to lose when it comes to retransmission consent—paying billions for “free” programming that is as “local” as a fast food meal and for programming that may be blacked out depending on how negotiations are going for broadcasters.

The reforms proposed in Satellite Television Access and Viewer Rights Act (STAVRA) are the first step Congress may take to begin curbing fees, but as the SNL Kagan report indicates, protecting consumers from the harms of retransmission consent is a much bigger challenge, especially considering broadcasters’ repeated attempts to obfuscate the issue and stop any changes. Congress and the FCC need to push for bigger, more comprehensive reforms in order to truly bring our video rules into the 21st Century and protect viewers before broadcasters burden them with billions more in fees.