Eyeballing parity in TV's pay-to-play war - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?)
Subscriber Content Preview | Request a free trialSearch  
  Go

Telecom, Media & Technology

Print  |  Share  |  Reprint

Eyeballing parity in TV's pay-to-play war

by Richard Morgan  |  Published September 12, 2013 at 9:08 AM

FamilyTV-LG.jpgThat bruiser of a battle between CBS Corp. and Time Warner Cable Inc. over retransmission fees ended earlier this month, but don't think the broadcast community lacks for others to lead in lieu of CBS chief executive Les Moonves.

Moonves, television's resident retrans champ, gets credit for taking Time Warner Cable down after 32 blacked-out days. Yet the gap between TV stations' share of viewers and share of programming fees remains vast enough to ensure additional standoffs. And the vibes emanating from Wells Fargo Securities LLC analyst Marci Ryvicker suggest Sinclair Broadcast Group Inc. stands ready to lead at least one retrans redux.

Sinclair has been so busy gobbling up TV stations it's now the country's largest station group. All the more reason, obviously, for the Baltimore-based broadcaster to insist on pay-for-play parity between TV stations and cable networks. But, as Ryvicker reported in a Wednesday update on Sinclair, this parity has yet to be.

The analyst's source was no less than David Smith -- Sinclair's chairman, president and CEO -- who over a Wells Fargo-hosted dinner lamented that TV stations receive only 7% of total programming fees (the combination of retrans fees for TV stations and carriage fees for cable networks). Yet those same stations, he said, deliver 40% of all viewers.

"Why shouldn't our retrans fees be valued the same as the cable net's carriage fees?" Smith asked.

It's not an easy question to answer, even though the media world is rife with inequities. Advertising giant WPP plc recently noted that U.S. consumers spend only 6% of their time with print products, yet the medium continues to command 23% of ad budgets.

And though this discrepancy primarily reflects Madison Avenue's aversion to change, print's defenders can at least argue a magazine ad versus an online ad is an apples-to-oranges comparison.

The argument falls flat, however, on dealing with viewers of content from TV stations versus content from cable networks -- especially when the content of each is distributed by the same multisystem operator. Eyeballs are eyeballs, after all, which means the sort of standoff that pitted CBS against Time Warner Cable stands to be re-enacted time and again until those eyeballs command comparable values.

Share:
Tags: CBS Corp. | David Smith | Les Moonves | Sinclair Broadcast Group Inc. | Time Warner Cable Inc. | WPP plc

Meet the journalists



Movers & Shakers

Launch Movers and shakers slideshow

Philip Falcone is resigning as chairman and CEO of publicly-traded conglomerate Harbinger Group Inc. For other updates launch today's Movers & shakers slideshow.

Video

Wet Seal, dELiA*s, Cache and Body Central: Zombies of retail

These struggling apparel banners are hoping for a surge in consumer spending during the holidays to give them some life. More video

Sectors