All of the billions of dollars in retransmission consent fees that broadcasters receive, like found money, can be traced back to a single penny held in the hand of Duane Lammers, then COO of Nexstar Broadcasting.
In January of 2005, five Nexstar stations were off two cable systems in a retransmission consent dispute.
Nexstar wanted cash from the cable operators for the rights to carry their broadcast signals. The cable operators refused. They had never paid cash for the rights to carry local stations and it was a line in the sand they didn’t want to cross.
At the time, I was in my office at Nexstar’s corporate office in Irving where I was VP of marketing. One day, in the glass-enclosed conference room across from my office, I saw Duane Lammers holding something in his hand.
Whatever it was, it had the attention of the three, grim-looking people sitting in the conference center with Lammers.
After a few minutes, the door opened and the three people left with somber looks on their faces.
I asked Lammers what was going on.
He told me that the three people were from the cable system representing the markets where our signals were off.
Lammers said he started the conversation by holding up a penny in his hand. He told them that if they agreed that the signal from the Nexstar TV stations was worth at least a penny, Nexstar would immediately allow its stations to go back on the cable system while negotiations continued between Nexstar and the cable company. They refused.
Lammers would go on to negotiate more than $500 million in retransmission consent agreements over the years.
Perry Sook, Nexstar’s president, had the vision, the authority and the guts to be the first broadcaster to force the cable industry to pay cash for the rights to carry local TV stations’ signals. So he deputized Lammers to do the heavy lifting, the hand-to-hand, in-the-trenches negotiations with the cable operators.
If Hollywood ever makes a movie of Lammers role in the whole retransmission for cash story, they should call it The Retrans Man.
“Perry [Sook] was the one who had the courage,” said Lammers, “and backed me 100% and I can’t thank him enough for that. I had a lot of support from Perry and the industry kind of got on the bandwagon and I’m just real proud of what’s become of it.”
What’s become of it is an annual billion dollar revenue stream for broadcasters with zero cost for the stations, a lifeline that has dramatically changed the value of local television.
When I suggest that Lammers should have called the company, The Retrans Man, he laughed. “I didn’t want to take sole credit for what’s turned into a great piece of the industry and a lifeline to the industry.”
But when it comes to retransmission consent fees, Lammers says it’s no laughing matter.
“We’re not where we need to be and somebody has to carve that trail out and I think I’m the right guy to do it. I’ve got vast experience with every cable operator in the United States, done thousands of deals and generated over $500 million in retrains revenue. It’s a pretty compelling story, I think.”
MAX Retrans is a natural fit for Lammers, who has passionately championed local broadcasting cause for its rights to be paid for its signals by the cable companies.
“The name of the company says it all,” said Lammers.
“At a time like this in our business where things aren’t getting any easier, you have to have confidence that you’re maximizing your revenue for retransmission consent. Because the broadcast signal is still the most valuable thing the cable distributors carry, and we’re still not getting our fair share.”
Lammers says MAX Retrans is designed to fit into whatever anybody needs done.
“It can be as complex as completely turnkey to as simple as basically handling the contract negotiations, and getting the contracts papered up.”
“They don’t realize the value, they’re not extracting as much as they need to. Sometimes in certain situations, they feel bullied. I’m not going to be intimidated by them, it doesn’t work with me.”
Lammers says there’s no risk for broadcasters to talk to him about their retransmission consent issues.
“The whole MAX Retrans business model is built around only getting paid for what I generate, so I’m not walking in the door with my hands in the pocket of the retrains pie from day one, I only get paid on the incremental revenue I generate.”