[opendtv] News: Is Retrans Cash Viable?
- From: Craig Birkmaier <craig@xxxxxxxxx>
- To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 29 Apr 2005 06:15:54 -0400
Is Retrans Cash Viable?
April 28, 2005 12:00am
Source: Reed Business Information. All Rights Reserved.
Multichannel News:
Viacom Inc.'s CBS Television Network is likely to seek cash for
carriage from cable operators for retransmission consent in the years
following the media company's planned division into two separate
operating units, company officials told analysts last week.
Viacom announced in March its plan to cleave itself into two
separate, publicly traded units, one company consisting of its MTV
Networks cable channels and studio Paramount Pictures, the other
including its CBS and UPN broadcast networks, its TV stations, radio
properties and outdoor advertising. The MTV Networks unit will be led
by Viacom co-president and co-chief operating officer Tom Freston.
Viacom co-president and co-COO Les Moonves will head up the other
division.
PLAN ON TRACK
In a conference call April 19 with analysts to discuss first quarter
results, Viacom chairman Sumner Redstone said that plan is moving
forward.
Redstone said the company should make a decision on the separation by
the end of the current quarter. The split could be completed by the
first quarter of 2006, he said.
Asked what would happen with retransmission consent once the spinoff
is completed, Moonves said it presents a perfect opportunity to start
getting cash for carriage from cable operators.
"We think there's a real possibility that CBS will be able to
generate cash for our retrans," Moonves said on the call.
Cable operators have largely resisted paying cash for carriage of
broadcast networks. And the four major broadcasters have largely used
retrans to force operators to carry their less-popular niche networks.
However, on the conference call, Freston said that Viacom's cable
networks don't expect to get that much benefit from retrans in the
future.
"Retrans has been a great value to MTV Networks over the last five
years since we merged with CBS as we've been able to mop up all kinds
of analog and digital space coincident with the cable operators
rolling out their digital-network platform," Freston said. "We think
that game is largely over. Most of our deals are done until the end
of the decade. Cable operators will be focusing more and more on VOD
and broadband."
Moonves said that CBS will not likely see cash for carriage for
several years, mainly because most of its deals won't expire for a
few years.
"Nothing is going happen until these deals expire, some of them are
coming up in the near future," Moonves said. "As we go forward
post-split, we think in the next three to five years it [cash for
carriage] could be worth tens of millions of dollars to the CBS
network."
OPS GIRD FOR FIGHT
But CBS shouldn't begin spending that retrans money yet. Cable
operators, loath to pay cash for retransmission in the past, appear
to be gearing up for a fight.
Last week, more than 55 cable companies, independent programmers and
national organizations filed comments with the Federal Communications
Commission in support of the American Cable Association's call for
reform of retransmission-consent rules.
The ACA, a lobbying group for independent cable operators, in March
filed a petition with the FCC asking the body to examine and change
regulations used by the Big Four TV broadcast networks - including
CBS - and TV-station groups to allegedly prop up the price of
retransmission consent. The ACA charged that cash-for-carry
retransmission-consent demands could cost the ACA and its customers
an estimated $1 billion if current rules aren't changed.
The ACA petition has drawn comments in support from the National
Cable and Telecommunications Association, the National Cable
Television Cooperative, Court TV, Hallmark Channel, Mediacom
Communications, Cebridge Connections, Atlantic Broadband, Millennium
Digital Media, Armstrong and Susquehanna Communications.
"Retransmission consent is simply outdated regulatory policy - it
precludes the television distribution arena from operating
equitably," Robert Rose, Court TV's executive vice president of
affiliate relations, said in his network's comments.
The FCC last month released the petition for public comment to the
ACA filing, with comments due last week.
"The regulations identified by the ACA, particularly
retransmission-consent provisions, may cause adverse marketplace
consequences, including further difficulty in launching and
distributing new services, because cable operators forced to divert
substantial payments to broadcasters have less to spend on new,
independent programming," Paul FitzPatrick, Crown Media's executive
vice president, said in Hallmark's comments.
Regarding the filings in support of the ACA, president and CEO Matt
Polka said, "This enormous record and response from across the
country shows that retransmission consent is not working well for
consumers, cable operators or the public interest."
ACQUISITION TARGETS
While cash for retrans is still up in the air, Freston gave some
insight on possible acquisition targets for the MTV Networks division
after the planned split.
"If a cable network comes up for sale, particularly something that
has an older skew where we have less inventory than kids, teens and
young adults, we would be very interested," Freston said. "It's going
to depend on the quality of the network and of course on the price.
We're also looking at acquisitions [in] smaller, largely Web-based
companies that would enhance our existing web businesses in the
demographics we appeal to. Those would be things around video games,
community sites and things of that like."
For the quarter, Viacom reported revenue growth of about 5% to $5.6
billion and cash flow rose 6% to $1.3 billion, mainly because of
strong performance at its cable networks. Cable network revenue was
up 19% in the period to $1.7 billion while cash flow increased 17% to
$695 million.
<<Multichannel News -- 04/28/05>>
<< Copyright ©2005 Reed Business Information. All Rights Reserved. >>
----------------------------------------------------------------------
You can UNSUBSCRIBE from the OpenDTV list in two ways:
- Using the UNSUBSCRIBE command in your user configuration settings at
FreeLists.org
- By sending a message to: opendtv-request@xxxxxxxxxxxxx with the word
unsubscribe in the subject line.
Other related posts:
- » [opendtv] News: Is Retrans Cash Viable?
