executive session with John Tupper

Save Stations With Programming, Retrans

The head of the Fox affiliates group is convinced that broadcast TV's problems trace back to programming: Offer better fare and stations will thrive. But to stem the erosion of valuable properties to cable networks, the broadcast networks need more money, and retrans revenue -- measured in dollars, not cents -- looks to him like the best immediate source of it.
TVNewsCheck,

Here's a fresh take on the troubles of the TV station business: It's not the economy or the Internet or the collapse of the domestic auto industry. It's the programming.

According to John Tupper, a small-market broadcaster who now chairs the Fox affiliate group, broadcasting's only chance of recovering billions of lost revenue over the past few years and setting new highs in gross receipts will be to put on more and better programming and reverse the slide in ratings.

Story continues after the ad

And the key to improved programming is retransmission consent, he says. If broadcasters are going to get the best, they are going to need retrans fees measured in dollars not in cents.

In this interview with TVNewsCheck Editor Harry A. Jessell, Tupper, owner of the Fox affiliate in Minot-Bismarck, N.D. (KNDX-KXND), makes his case for hefty retrans fees and expresses his hope that Fox will follow NBC's lead in offering to be the affiliates' agent in getting them.

An edited transcript:

Broadcasters have watched their revenue and profit margins plummet over the past couple of years. What's it going to take to restore the fundamentals of the business?

It's all about programming and ratings. The broadcasting business is currently losing some of its marquee programming. We need to stem the tide of the program migration to the cable platform to maintain the ratings and then provide a funding source to the broadcast platform so as to increase the quality and quantity of their original programming and sponsorship of marquee events like sporting events.

We're talking about retransmission consent fees here, right?

Unless some other source of funding emerges. I don't think that the mobile business or the Internet plays that stations are engaged in or retrains as it is now configured are going to come close to replacing the revenue lost. Even if you did, you would still need to generate a source of funding to bring back and maintain the marquee programming and actually increase the level of interest that you can create with your programming.

You said "retrans as it is now configured," by which I suppose you mean 20 or 25 cents per sub per month. You don't think that is sufficient.

No. According to SNL Kagan's latest estimate, broadcastings is getting what amounts to about $800 million out of what's predicted to be a $16 billion business this year. So, we're talking about something that's on the order of 5 percent of the revenue that is trying to offset a drop of 35 percent of the revenue that's occurred over the course of the last five years.

If $800 million isn't enough, how much should the broadcasters getting?

Probably something close to what their competition is taking in at the present time. If you do the calculation, the average cable program service is being paid program fees that are equivalent to about $5.31 per rating point delivered.

How about the broadcasters?

They're getting somewhere between 25 and 29 cents.

Can you put that in terms of monthly per-sub fees?

The average cable program service monthly fee is about 78 cents a month. Of course, the highest priced one is ESPN, which requires you to carry it on your basic service and that you have to also have block booking of other ESPN related channels that so that the subscribers it appears are paying something like $5 a month for the suite of ESPN channels whether they want them or not.

So how much do broadcasters need? Is 78 cents enough? Or, do stations have to get ESPN kind of money.

If you were to do an equation based on rating points delivered, you would clearly see that the broadcast signals are worth significantly more than ESPN. Now, is it realistic to think that the broadcast channels are going to get more than $5 a month from subscribers? The answer is probably no.

OK, so what is a realistic number?

Each network is different and it should be based upon what it earns in audience delivery. Part of the upside-down nature of the current situation is that cable program services are being paid subscription fees without regard to their popularity as measured by their audience delivery.

If you were to come up with an analysis of what the price of TV stations should be based upon their ratings or popularity among the subscribers, you probably would end up with a number that would be in the two to three dollar range.

How do you get to squeeze those dollars out of the operators? They're going to fight like crazy not to pay.

They're currently fighting like crazy not to pay and they've quite frankly been very successful as evidenced by the numbers that we've just recited about what they pay per rating point for a broadcast signal. Because they're so consolidated, they can really have control over that. The results have been what they are and that's going to result in the demise of the local broadcast business.

Continued on page 2…
Edit Article

Comments (8) -

PhillyPhlash Nickname posted over 3 years ago
|
Digi-movie channels offered by broadcast stations in partnership with syndicators (and in the near-future, with Hollywood studios) are silently revolutionizing the TV programming industry -- offering FREE hi-def movies and other programming (such as classic TV series). This is "cable-style" programming available free, less compressed than most cable channels. Here in the Philly area, WPHL-TV 17's "This TV" movie channel has become "destination TV". WPVI just put the "Living Well" network on an HD-digi -- but I predict it will soon realize that movies and old TV series will draw many more viewers than health programming. Digital TV has created Frankenstein's Monster and station managers who realize they've got a "cable-killer" on their hands will start to heavily promote these channels. New ad revenues will follow. And cable subs will continue to "churn" off as they realize they can get their movies and re-runs without forking over $50+ a month for a service that in many markets isn't even providing the new digi-channels. Now, which digi-channel will bring back "The Honeymooners" to broadcast TV? I'm waiting...
Richard Vara posted over 3 years ago
|
Interesting Perspective! How would one go about partnering with a syndicator of FREE hi-def movies and other programing such as classic TV series for your porposed business model? I'm searching out free programing for a independent LP station and could use your advice. Regards!
Richard Vara posted over 3 years ago
|
Interesting perspective! How would one go about partnering with a syndicator of FREE hi-def movies and other programing such as classic TV series for your porposed business model? I'm searching out free programing for a independent LP station and could use your advice. Regards!
Brian Byrnes posted over 3 years ago
|
Mr. Tupper is right on the mark. We sit and watch as over the air television puts on cheaper and cheaper programming and wonder why our audiences get smaller and smaller. Viewers migrate to cable to watch reruns of quality programs which once airied on the over the air networks. There's a message here.
HopeUMakeit Nickname posted over 3 years ago
|
while he is my competition I applaud his logic. We are the most powerful media. period. With regard to retrans calculations, it should be whatever the cable systems are generating in ad sales divided by the number of stations in their DMA. The stations should by law only be able to used those dollars on programming and news. Its just good to hear a TV man speak verses the endless streams of web intergrations dreamers and bea counters.
JamesV Nickname posted over 3 years ago
|
While Mr. Tupper is right, there also is a difference with the cable networks that currently are receiving higher compensation rates than broadcast stations are receiving retrans fees. That is, cable operators have advertising availabilities for many or most of the cable networks, for which they can sell local advertising. That reduces the net cost to the system operator if viewed on a per subscriber basis. Unless broadcast stations were to give up advertising time to a system operator, which isn't likely to happen [big grin], the model is not quite the same thing. That would need to be taken into account by both sides during the negotiation period (as it no doubt already is by the cable operator). The reality is that without required ala carte cable pricing, with system operators prohibited from packaging the wanted and unwanted channels, it is unlikely that retrans fees will approach anything close to a value based on actual viewership. It is also unlikely that there will be any action that requires ala carte cable pricing, which would radically alter the cable programming industry, perhaps for the better or worse. It also is unclear that an ala carte pricing structure would reduce subscriber's bills, depending of course on how many program channels a subscriber obtained. That assumes of course that most cable systems could technically implement an ala carte pricing model if required to do so (at a nominal cost).
Ted Langdell posted over 3 years ago
|
What ever happened to off-air station promotion? One of the things hammered home to me during my time in the business is "Top of Mind Awareness" and there's not much evidence that broadcast television is trying to keep its TOMA up through other advertising media. I rarely see (or hear on radio) stations telling readers or listeners what's on tonight... or why they should watch their offerings. Outdoor ads (Billboards, bus signs and other transit ads) along with radio spots and newspaper ads used to be seen everywhere promoting television news and programs. With the digital signage appearing in more and more places, it seems like there's an opportunity begging to be used. Running promos only within your own programming is not getting new "customers" into the tent, nor does the programming offered sometimes seem to inspire "brand loyalty" as people find other, more interesting offerings on other cable or satellite channels. I don't suggest promoting weak programming, but to fail to constantly "get the word out" about potentially viable programs helps the audience slide to other media faster.
SupportTV Nickname posted over 3 years ago
|
The cable industry pays $22 billion in sub fees to cable program services. Cable systems generate $4 billion (NCTA website) in ad sales. Out of that, perhaps $2 billion is cash flow available to reduce the programming cost, a 10% reduction. I assume broadcasters would readily agree to be paid only 90% of the average per rating point paid to cable program services to account for the lack of local avails. Without a mass audience for a local free press, our democracy is at risk. Newspapers have the proverbial fork in them, local TV is all that's left. The internet does not have a business model to support local professional journalism. Even the cable guys are not going to like living in a corrupted society. Hopefully, they will take a longer view and hand the local broadcasters a bone.

Today's Top Stories

Classifieds

The Market

Symbol Last Change (%)
Nasdaq 2905.66 +45.98 (+1.61%)
NYSE 8060.43 +115.00 (+1.45%)
S&P 500 1344.90 +19.36 (+1.46%)
Updated 02/04 4:46a ET Quotes delayed at least 20 mins.
Source: Financial Content

Ratings

Overnights, adults 18-49 for February 3, 2012
  • 1.
    3.9/11
  • 2.
    3.5/9
  • 3.
    2.5/7
  • 4.
    1.5/4
  • 5.
    1.5/4
  • 6.
    0.9/2
Source: Nielsen
Reviews
Opinions
Features
  • Robert Lloyd

    Keegan-Michael Key and Jordan Peele, veterans of Fox's sketch comedy MADtv, have a new series of their own, Comedy Central's Key & Peele. It is a genial, at times almost genteel, half-hour in which the pair's obvious niceness shines through even their more pugnacious characters. (Key's version of road rage is to shout, "Selfish!") In a roundabout way, that's the point. The sketches are consistently smart and smartly acted and flow easily from ordinary premises to weird conclusions.

  • Hank Stuever

    Discovery's Bering Sea Gold doesn’t seem at first like it has crossed any new reality TV frontier, relying on elements and structure familiar to the form. Enticingly (to the network), it combines the ocean and the gold and the cold and the reactive testosterone among bad-tempered desperados. To which I am surprised to cry: Eureka, they’ve found it! Bering Sea Gold is a testament to how thoroughly absorbing the genre can still be, when it’s done right.

  • Neil Genzlinger

    All Star Dealers, Discovery Channel's sports-memorabilia addition to the bloated auction/pawnshop/storage locker subgenre of reality television, should have been a winner, with endless stories to draw on and a built-in fan base. But rather than find its own formula, it was content to borrow from existing shows, and it borrowed all the wrong things.

  • Joanne Ostrow

    Kiefer Sutherland displays his softer side in Fox's Touch, a touchy-feely drama merging paranormal, spiritual and sweetly familial elements. shows off his acting chops, long forgotten, in scene after scene. It's heavier lifting than usual for the actor who was often reduced to caricature in 24. Sutherland is all about vulnerability in a show whose goal is nothing short of proving the interconnectedness of human life. We'll see if audiences can tolerate the notion of profound interrelatedness as weekly entertainment.

  • Tim Goodman

    Let's jump right to the most obvious of all sentiments when it comes to HBO's new horse racing/gambling series Luck: Do not bet against David Milch in this one. Like a lot of HBO series, Luck will require patience. It's telling a dense story with nuanced characters and it doesn't feel the need to rush in, like a network series, and hammer home the main themes. But each episode is more enriching, more engrossing than the last and there's Hoffman's superb turn at the forefront, even though his story unfolds with the least rush. Luck is a smart and ambitious series that looks to truly pay off in the home stretch.

  • Mike Hale

    The timing of FX's animated series Unsupervised is unfortunate. A kind of reversed Beavis and Butt-Head — in which the teenage heroes, while losers in just about every way, are also social strivers yearning for suburban domesticity and dispensing Oprah Winfrey-style affirmations — it has the bad luck of coming along three months after the original was revived by MTV. The new show looks awfully pale by comparison.

This advertisement will close automatically in  second(s). You will see this ad no more than once a day. Skip ad