Network Fees Create Drama for Broadcasters

Broadcast television have been relying for some time on fees they charge cable and satellite operators for the right to carry their signals. Known as retransmission fees, these have high margins and have been an important source of profit growth. But amid continuing weakness in advertising, the networks have been increasingly turning to a different party with their hands out: owners of local broadcast stations.

As the networks see it, the broadcasters, which also receive retransmission fees from pay-TV providers, are reaping the benefit of their content, especially for sports programming like the National Football League. Local stations produce their own newscasts, but most contribute little else in the way of programming. Meanwhile, some station owners enjoy operating margins of as much as 40% versus about 25% for CBS, a gap that likely rankles networks.