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JESSELL AT LARGE

Oprah Underscores Importance Of Retrans

By Harry A. Jessell
TVNewsCheck, Nov 20 2009, 1:14 PM ET

Well, at least Oprah had the courtesy to give the story to WABC New York, the top station in the string of more than 200 that have helped make her a multi-billionaire over the past 24 years.

Today, on her talk show, she announced that she will be leaving the show and broadcast syndication to head up an eponymous cable network in partnership with Discovery Communications after her current station deal ends in 2011.

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Some broadcasters who carried the show will be relieved that they no longer have to pay her steep license fees. Others who competed futilely against her over the years will be relieved that they no longer have to.

Relief isn't what any broadcaster should be feeling. More like grief.

The loss of Oprah — one of broadcasting's biggest and most enduring stars — to cable is a terrible blow to broadcasting. The outpouring of stories last night and this morning about her decision attests to Oprah's high standing in American culture. No more needs be said about that.

Those same stories note that the move is another indicator of the shifting balance of power in TV from broadcast to cable. It's hard to argue with that.

As broadcasters watch Oprah share her plans with viewers — giving her stations yet another big ratings boost, no doubt — they should be thinking about what they need to do to stop the migration of their best programming to cable and what they need to do to get some new best programming.

When I think about it, I come up with only one answer: retransmission consent revenue. Way more of it. A couple of weeks ago, I said the rallying cry for TV stations in 2010 should be "A Buck a Sub." By that, I mean that in every new retrans deal, TV stations ought to settle for nothing less than $1 per subscriber per month.

That's the number Rupert Murdoch wants for his Fox stations. Why should any affiliate settle for less?

It's nice to think that the money broadcasters need for programming will come from a rebound in advertising or the planned expansion into mobile DTV. But I wouldn't count on it.

The full weight of broadcasting's predicament did not hit me until last year at this time when ESPN outbid Fox for the major college bowls, including the national championship game, and then took the Rose Bowl away from ABC.

Coincidentally, the bowl games go to cable for the first time in 2011, the same year as Oprah. It seems that the Mayan calendar for the broadcasting apocalypse is off by a year.

What's happened to off-net sitcoms is also telling. Before TV stations get a shot at airing them, they must wait a year while they get a weekly airing on some cable network. And then, when the broadcasters do get to strip them, they must do it at the same time a cable network is.

None of these moves, in and of themselves, are fatal. But they add up and they are causing the gap between broadcasting and cable to close — viewer by viewer.

Retrans helps in two ways. Not only does it give broadcasters more money to spend on programming in the form of syndication license fees and reverse comp, but it also takes away money from cable network rivals that have been nibbling broadcasters to death for the past 30 years.

Granted, a buck a sub will not be easy to obtain. Cable and satellite operators will push back hard and Congress may come to their aid thinking they are defending consumers.

But there is some talk of affiliates and stations working together in one fashion or another to increase the take. That's hopeful. Instead of fighting over pennies, they may cooperate to get and share dollars.

Let's do the math on a dollar a sub. A buck times 12 months times 100 million cable and satellite subs is $1.2 billion per year for the O&Os and affiliates of each network. Times that by four networks, and you have transferred $4.8 billion from cable to broadcast.

Broadcasters wouldn't use all that money for programming. They have a lot of debt to pay down and investors to satisfy. But billions would be available to hold on to the programming they've got and to bid aggressively against cable for new and better shows. When the next great sitcom becomes available, wouldn't it be nice to have it first and exclusively on broadcast?

And here's the real beauty part.

When a second-tier cable network like, say, The Oprah Winfrey Network, comes knocking on cable's door asking for a license fee hike, cable will have to say, sorry, we just did deals with the O&Os and affiliates of ABC, CBS, NBC and Fox. We're all tapped out.

Harry A. Jessell is editor of TVNewsCheck. You may contact him at 973-701-1067 or hajessell@newscheckmedia.com.

Comments (20) - Post a comment

PhillyPhlash Nicknameposted 111 days, 16 hours, 44 minutes ago
PREDICTION: Oprah's total migration to cable won't happen, and she will do just what resident guru Harry suggested: She will continue her first run show in syndie broadcast, giving her cable net a second-day window -- and, most likely, she will produce and host a cable-exclusive Oprah magazine show that will differ in content and execution from the syndie strip. Oprah will follow Harry's advice because she will realize that the advert of digital multichannel broadcasting -- and what will prove to be a failed effort to grab broadcasting's spectrum -- will reinvigorate the local station business over the next two years. As broadcasters reassert their primacy, Oprah will come to realize that she will lose her strongest national platform if she entirely abandons broadcast TV. She followed in Donohue's footsteps on the way up -- she won't want to reprise his demise by getting lost in the vast swamp that is basic cable programming. One final point: Let's not forget that cable is PAY TV. Does Oprah really want to take away from her large audience a show that many of her followers are used to getting for free?
LeftField2010 Nicknameposted 111 days, 14 hours, 44 minutes ago
What are you smoking? She's done in syndication. Over. Finito. Deal with it!
PSIPthing Nicknameposted 111 days, 12 hours, 16 minutes ago
either that, or she and her staff are lying when they say she won't be doing a show on her cable network. Of course, she will still be present in syndication; it's just as empressaria, not hostess.
TooTrue Nicknameposted 111 days, 14 hours, 59 minutes ago
Blow to TV no way! Her ratings are in steady decline. She belongs on cable with all the other shows NO ONE watches
formergm Nicknameposted 111 days, 14 hours, 50 minutes ago
PhillyPhlash - you really need to take your meds.
PhillyPhlash Nicknameposted 111 days, 13 hours, 1 minute ago
TO: Roslyn Mazer, via algorithm, re: "take your meds" meme... more lame psy ops. Please alert DNI. Why are resources deployed here? There should be consequences.
PSIPthing Nicknameposted 111 days, 12 hours, 16 minutes ago
If the DNI (actually, NSA) cared about you, they'd be telling you to take your meds, too.
eagleeye1 Nicknameposted 111 days, 13 hours, 52 minutes ago
Oprah will soon come to realize after she migrates to cable only that her popularity will take a steep dive. Look at the ratings differences between ESPN football and MNF when on ABC. Look at the NFL Network vs. FOX, CBS or NBC. Look at the American League ratings vs the National League Ratings on cable. I look forward to seeing how the broadcasters react and succeed. They will find more successful shows to fill this great piece of real estate and Oprah will have to work 3 times as hard as she does now to try to get half the audience.
PSIPthing Nicknameposted 111 days, 12 hours, 14 minutes ago
but, isn't running and co-owning a cable network quite a different beast than fronting a show? This seems quite a bit different than Howard Stern going to satellite radio; the network she will be replacing is in 70mm homes at start. Perhaps even more by then.
RustbeltAlumnus2 Nicknameposted 111 days, 13 hours, 40 minutes ago
Her popularity is tracking Obama's. Under 50% in the latest Gallup

Which is why TV stars should not endorse blank-slate candidates
RustbeltAlumnus2 Nicknameposted 111 days, 13 hours, 39 minutes ago
Or as Newt said about Oprah's choice: "As an American I am not so shocked that Obama was given the Nobel Peace Prize without any accomplishments to his name, but that America gave him the White House based on the same credentials."
onlytheTRUTH Nicknameposted 111 days, 13 hours, 18 minutes ago
Lots of incitful comments. From the Truth: no this is not the demise of Broadcast TV as predicted again and again. Yes, its time for Oprah to go, her license fees are way out of whack for future revenue models. Yes she will suffer tremedous viewer decline but truthfully, she won't care. Even the oprahs of the world get real sellfish when there are extra 000's hanging out there. I'm certain there will be another Oprah type coming around only this time that successful person and program will be paid considerably less like the rest of the country. (As a side note...I like RustbeltAlumnus2 comment. At the end of 4 years we will be able to count the bullet points of his achievements on one hand...he does wave nicely)
PSIPthing Nicknameposted 111 days, 12 hours, 11 minutes ago
not so sure about another oprah type. Who was the previous oprah type?
TvViewer Nicknameposted 111 days, 12 hours, 56 minutes ago
TVNewsCheck can spin it any way they want, but the bottom line is not $4.8 billion being transferred from cable to broadcast, it is money from TV viewers pure and simple. Stating it is taking revenue from cable nets is dead wrong. Cable programmers have squeezed MSOs for more and more money, broadcasters want more and more retrans money and the viewers foot the bill. No cable network is going to lower their price just because retrans fees went up. The only transfer occurring is money from the viewers pockets to the broadcasters and cable nets. The MSOs and satellite distributors are just the middleman holding on to less and less of the video revenue.
PSIPthing Nicknameposted 111 days, 12 hours, 8 minutes ago
but, the money in question, in the grand scheme of things, is miniscule. It's a pittance of what cable networks or operators would charge to create a slate of programming just as popular as that offered by broadcast networks and local stations. There is no such thing as a free lunch (unless you only watch over the air television, but then the menu isn't quite as long as that offered by satellite and cable.)
onthesidelines Nicknameposted 111 days, 10 hours, 17 minutes ago
And so...we stick with the status quo? And watch ever more programming migrate to cable? What do you think will happen to the fees charged by cable networks when the only thing left on broadcast TV is court shows, infomercials, and public domain movies?

Basically, there are two ways to fix the problem. One way (which is what Harry Jessell is proposing) is that broadcasters get to feed at the same carriage fee trough as their cable competitors. The other is to cut off the flow of money to the cable networks by regulating in some manner the fees that so-called basic cable networks can charge. Any channel that exceeded those fees would have to be offered as a separate add-on (as is the case with HBO and Showtime).

The second approach would be friendlier to cable/satellite customers -- and would, ultimately, probably be better from an economic viewpoint by forcing a little bit of efficiency into the system. Unfortunately, it also has zero chance of happening unless the political winds shift a lot further to the left than they have so far.
arthur marshall posted 111 days, 9 hours, 22 minutes ago
Just perhaps, think I, you have borrowed IL&M's smoke (?) and funny mirrors too in the calculation of that purported war chest to pay for superior network programing. Don't you think there might be a little temptation to take the money and run? Also, you failed to count those queenly fees you feel are extorted from the locals. How much should you have added to that tally for that? Shame on you Mr Jessell, the bright urbane observer of this evolving media drama. Others too, think you might have marginalized your soapbox by discounting Oprah. You miscalculate the power of this lady at your peril. Maybe this allegedly second tier channel will not be THAT at all. Perhaps the views expressed by you and some of your prior commenters herein are as archaic and relevent as the H V Kaltenborn era commentators of the broadcast scene who never dreamt that radio could ever be eclipsed by television. Many powerful AM execs could not comprehend that FM could ever be a force much less successful. And, my friend, could it be that some of the deterioration in ratings is due to, that which appears to bewilder you....the growing reach of cable. I think Ted Turner just might be smiling.
watchman Nicknameposted 108 days, 10 hours, 53 minutes ago
What will be really interesting is what happens when the American consumer wakes up and realizes how much they are spending on "unwatched" television. Cable networks progress has been made possible almost entirely on subsidized payments from subscribers if given the choice would drop in a heartbeat 75-80% of the networks they are forced to pay for but have no interest in watching . I always find it extremely ironic that the new darling of Fox News Glenn Beck, the Champion of free markets, his salary is a "cable hand out or subsidy" from about 95% of the cable audience who care nothing about his politics or care to watch him. Even our economic system nor the health care system is that flawed. Though not surprising given that he works for a Network that is foreigned owned but wraps itself in the American Flag. I'm sure they will oppose and lead the legal spending against any type of class action law suit that would ever give the television consumer freedom of channel choice. In a free economic system, with out forced sub fees, most cable networks would quickly fold.
therealdeal Nicknameposted 107 days, 16 hours, 43 minutes ago
The key is retrans, and ALL broadcasters are going to have to fight for every DOLLAR. Yes, I said DOLLAR, preferably PLURAL. "Watchman" is absolutely right -- every two bit cable network (including Oprah's when it launches) is built on the back of the audience that Broadcast Television brings to the cable table (even with the ratings declines.)
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