Local television broadcaster TEGNA will continue to seek higher fees from cable and satellite companies in exchange for the privilege of retransmitting dozens of its local stations to subscribers, the company affirmed this week.
The statement was made in a financial filing distributed to investors and submitted to the U.S. Securities and Exchange Commission on Monday, in which TEGNA executives said there was a “value gap” between “viewership of broadcast television and the subscription revenue we earn in the form of retransmission fees,” which it intends to leverage in order to “capture additional subscription value in the form of higher subscription rates” charged to pay TV companies.
The value of TEGNA’s portfolio of 60-plus television stations is only as strong as the programming those stations carry. To that end, executive reaffirmed TEGNA’s position as the largest independent operator of NBC affiliates in the country, with stations boosted by the network’s carriage of the Olympics every two years (NBC has the right to the winter and summer games) along with the Super Bowl rights every three years.
TEGNA also sees significant returns on investments made by the other three networks — ABC, CBS and Fox — through programming arrangements made with other major sports franchises, including the National Football League (NFL), National Basketball Association (NBA), National Hockey League (NHL) and Major League Baseball (MLB), among others.
In a regulatory filing this week, TENGA said that programming is expected to remain strong, as the broadcaster successfully negotiated new affiliation agreements that will keep network programming on its affiliates over the next several years.
DOCUMENT: Read the filing made to the U.S. Securities and Exchange Commission [Pro Access]
TEGNA’s affiliation agreements with ABC and NBC were renewed last year, with stations keeping ABC programming through 2026 and NBC shows through 2027. Affiliation agreements involving Fox and CBS were negotiated last year; Fox programming will remain on certain TEGNA stations through 2025, and CBS programming will continue on other TEGNA stations through 2028.
Strong network programming brings advertisers to TEGNA stations, executives affirmed, and allows the company to invest more in local news. It also allows TEGNA to charge higher fees through retransmission consent agreements with cable and satellite providers, and the company has started imposing similar terms on streaming cable-like providers such as Fubo, YouTube TV and Hulu with Live TV that generate extra income for the company, the filing said.
Like other broadcasters, TEGNA has taken an aggressive position in the amount charged to cable and satellite companies for its channels — something cable and satellite companies say are directly responsible for rising customer bills.
Some distributors have started to take a hard stance against broadcasters and their demands for higher fees. In late 2020, DirecTV dropped TEGNA-owned channels after the broadcaster demanded “the largest rate increase we have ever seen,” according to the satellite provider.
The situation repeated itself last December when DirecTV again dropped TEGNA’s 60-plus channels over a demand for more money. The satellite company offered to relegate TEGNA-owned channels to an à la carte package priced at whatever TEGNA felt was reasonable, but the request was turned down. Both sides ultimately settled the matter earlier this year.
The dispute with DirecTV was cited for a 21 percent drop in retransmission consent fee revenue at TEGNA during the last three months of 2023, according to the company’s financial earnings report released last month. Had the dispute not occurred, TEGNA’s retransmission fee revenue would have been 2 percent higher in 2023 compared to the prior year, the company acknowledged.
On Monday, executives said they were willing to stay the course with the company’s strategy of demanding more money from cable and satellite operators in order to fund their business initiatives.
“The larger our audience share, the more appealing our programming is to [cable and satellite companies], and they more they will be willing to pay for the right to distribute it,” executives said.
