Why Comcast Expects Retransmission Consent Fees to Rise in 2017

Comcast’s retransmission consent fees

Comcast’s (CMCSA) Broadcast Television segment earns most of its revenue through advertising, content licensing, and retransmission consent fees.

On June 15, 2017, citing research from S&P Global Market Intelligence, TV News Check reported that retransmission consent fees are likely to rise further in the coming years, with over-the-top services such as AT&T’s (T) DIRECTV Now and Sony’s (SNE) PlaystationVue becoming significant contributors to the rise.

Why Comcast Expects Retransmission Consent Fees to Rise in 2017

According to the report, retransmission fees are expected to be $9.3 billion by the end of 2017, and they’re expected to rise to $12.8 billion by 2023.

Comcast expects retransmission consent fees of $1.4 billion in 2017, a 65% rise compared to retransmission consent fees of $850 million in 2016. CBS (CBS) is another company that also expects a 25% year-over-year rise in its retransmission consent fees and reverse compensation fees in 2017.

Comcast stated at the JPMorgan Chase (JPM) Tech, Media, and Telecom Conference last month that considering the strong growth in its retransmission consent fees, it expects its growth trend to continue.

DISH’s rising retransmission consent fees

For a pay-TV company such as DISH Network (DISH), the rising cost of retransmission consent fees has been a cause for concern. In April 2017, DISH wrote a letter to Democratic Congresswoman Anna Eshoo stating that there have been 750 blackouts by broadcasters since 2010, and retransmission consent fees have risen 27,000% between 2005 and 2016.

However, a report from the National Association of Broadcasters cites research from SNL Kagan stating that the year-over-year growth in retransmission fees is expected to slow to 10% by 2018.

As many pay-TV subscribers move to over-the-top services such as Netflix (NFLX), which results in cord-cutting, pay-TV operators such as DISH have seen growing revenue pressures. As a result, pay-TV operators aren’t willing to pay higher retransmission consent fees.