REVENUE TRANSITIONS
THE BRUISING
RETRANS BATTLE
BROADCASTERS AND THEIR DISTRIBUTORS ARE WAGING WAR MORE FIERCELY THAN EVER, AND BLACKOUTS ARE LIKELY TO RISE FOLLOWING A COVID SLOWDOWN. BY KRISHNA JAYAKAR
C
LOS E TO 1 6 M I LLI O N H OU S E H O LDS WE R E
impacted nationwide when AT&T’s DirecTV and U-Verse services dropped the signals of 64 TEGNA television stations on Dec. 2, 2020. For 18 days the blackout continued, igniting a social media firestorm and flooding complaint hotlines. More recently, in October 2021, a TEGNA dispute with the satellite provider Dish resulted in close to 3 million Dish subscribers losing access to local broadcasters in 53 markets. The reason for the blackouts? Breakdowns in retransmission consent negotiations between the companies. The TEGNA disputes are among the latest in a series of retransmission-related blackouts in recent years. In early 2020, a dispute between ViacomCBS and Comcast affected almost 12 million subscribers in 15 markets. Another one, in 2019, between Nexstar Media and Comcast affected 11 million. Despite the negative publicity and the severe consumer backlash, both TV stations and multichannel video program distributors (MVPDs) are willing to risk blackouts as part of their negotiation strategy. While they’ve been going on for a long time, blackouts seem to occur more frequently and last longer with each passing year. To examine the trends, I compiled data from Kagan from 2011 to 2020, on 413 publicly reported retransmission agreements involving network-affiliated full-power commercial TV stations.
14 The Financial Manager • November/December 2021
Of these, 161 carriage negotiations (39%) ended in deadlock, blacking out more than 1,400 TV stations. The percentage of negotiations that triggered a blackout increased over that time, from 21% to 50%. (See chart, page 16.) Blackouts also lasted longer. If the typical blackout was 37.4 days in 2011, it rose to 99.4 in 2018 and an unprecedented 170.8 days in 2019. The blackouts settled down to 37.2 days in 2020, but that was an anomaly. Under the shadow of the pandemic, only 10 retransmission deals were finalized. Though five involved a blackout (50%), these were settled relatively quickly. The long-term trend indicates that 2020 was only a temporary plague-year truce. In 2021, as this article goes to print, the trade press is abuzz about an impending blackout that threatens to be the largest ever, involving the Dish network and 108 of Sinclair Broadcast Group’s TV stations. A blackout reportedly was averted in recent months as the two parties agreed to short-term extensions while they continued to negotiate. There’s an obvious reason why retransmission consent is such a contentious issue: money. BROADCASTER VANTAGE POINT In 2020, U.S. television stations made a record-setting $13 billion from retransmission revenues, up 9% from the previous
