Domestic cable operators have been forced to comply with the United States Cable Television Consumer Protection Act since 1992 — a rule that mandates cable operators and multichannel video programming distributors (MVPD) obtain consent from broadcasters when airing their content.
A major part of this rule is that broadcast stations can ask cable operators to pay for carrying their services. And if operators refuse, they may be denied coverage.
Naturally, operators have been long-opposed to this ruling. And the costs have been piling up ever since it was passed.
According to a new report from analyst firm Kagan, the total amount of retransmission fees collected by U.S. broadcasters from virtual and traditional MVPDs will reach $12.8 billion by 2023. This is an increase from the estimated $9.3 billion that will be collected by year’s end. Last year, the figure came in at $7.9 billion.
As FierceCable explains, this increase is largely due to the fact that retransmission fees are on the rise. At the same time, margins have diminished in recent years because of “affiliation renewal contracts with larger network programming expense increases.”
Kagan states that reverse retransmissions will climb to $2.9 billion in 2017, which is an increase of 34 percent from the estimated $2.2 billion from reversal fees in 2016. And throughout the forecasted period, reverse transmission as a percentage of affiliate gross retransmission will rise annually from 50 percent in 2017, 53 percent in 2018, 54 percent in 2019 and 59 percent in 2023.
Kagan believes that multichannel operators will pay an average of $1.50 to $2 per subscriber per month for CBS, ABC, NBC and FOX in major markets. This figure will increase to between $2 and $2.50 over the next three years.