Service providers face surging broadcast retransmission fees

Pay TV subscriber numbers may be growing at a far less robust rate than they have traditionally, but the carriers serving those subscribers are likely to continue to pay higher fees to broadcast content owners for retransmission consent rights, according to a report from SNL Kagan.

Retransmission fees have consistently escalated as TV service providers have signed or renewed contracts with broadcast content owners and local TV stations, and in many cases, disputes between the parties have threatened consumer access to the content involved. Earlier this spring, the Federal Communications Commission was drawn into the fight, and set a notice of proposed rulemaking on the matter.

SNL Kagan said that the broadcast companies will continue to see retransmission consent revenues rise in the coming years. Those fees stood at $1.14 billion last year nationwide, and are expected to grow to $1.46 billion in 2011 and $3.61 billion by 2017. With the number of subscriber sign-ups unable to keep pace, SNL Kagan said the increase will be even more apparent on a monthly per-subscriber basis.

ESPNESPN HD, for example, stands to receive $4.76 per subscriber monthly for retransmission fees this year, while major-market TV station owners are likely to see far less, perhaps under $1 per subscriber. TV station owners in many cases share retransmission fees with broadcast content owners.

Cable TV companies are paying the most collectively in retransmission fees, and are likely to pay more than $824 million this year, while satellite TV companies will be responsible for $484 million and telco TV players collectively will pay about $147 million.