Echoing the fiery remarks he made to networks regarding retrans revenue at the TVB Forecast Conference in September, Nexstar Broadcasting Group Chairman/President/CEO Perry Sook warned the networks to keep away from the group's retransmission consent cash if they're unwilling to add to the pile.
The battle between station groups and networks over sharing retrans revenue has been building. Addressing investors on Nexstar's third-quarter earnings call this morning, Sook said Nexstar's affiliate agreements with the networks are in place for the time being, so retrans negotiations are not occurring right now.
As for future negotiations on the topic, Sook said Nexstar deserves every bit of the retrans cash it has fought for. "I don't understand why the networks would feel they're entitled to a piece of a revenue stream that we developed, that they had no hand in negotiating, documenting or collecting," he said. "With all due respect to my friends at the networks, I contend that the network programming is not the main reason that we're receiving compensation--it's the local programming."
Nexstar reported a 14% drop in revenue for the quarter, compared to the third quarter last year. Retransmission revenues increased 27.4% to $7.9 million.
During his B&C Broadcaster of the Year speech in September, Sook likened the networks to "the bully on the playground" for their efforts to share the cash station groups have extracted from the pay television operators to air their programming.
Sook believes a $35 million retrans haul for 2010 was a realistic possibility. He said he's willing to work with the networks on growing retrans for all parties. "If the networks are able to negotiate better deals on behalf of all the affiliates and their O&Os than I'm able to negotiate as a small company, then I'd be willing to share that upside with them on a 50-50-basis," he said.
But if they're not working together, Sook suggested the networks are in for a scrap if they want a piece of Nexstar's action, declaring, "We'll fight just as hard to keep that retrans revenue as we did to create it in the first place."
While local broadcasters are increasingly concerned about the long-term viability of the network-affiliate relationship, Sook said the networks would suffer more from a divorce. "I think the local affiliates are more valuable to the network than the network is to the affiliates," said the Nexstar chief. "This distribution system of branded local stations...are what allows the network to distribute beyond their owned and operated universe, to create big-event programming. We are in a local community, we have a 50-year-old brand, and both buyers and sellers on both sides of the cash register know who we are."
Sook said retrans, political spending and e-media, along with an improved economic picture, should have Nexstar on much better footing in 2010.