NBCU to push rate hikes with contracts for 75% of distributors up for renewal
While revenue at Comcast's (Nasdaq: CMCSA) NBCUniversal subsidiary jumped nearly 9 percent to $6 billion in the second quarter, CEO Steve Burke said it is poised for more growth, with the contracts for about 75 percent of its distributors coming up for renewal in the next few years.
Burke told analysts on an earnings call Wednesday that NBCU signed new carriage deals with about 25 percent of its pay TV distributors "in the last year or so," and that the company has made "good progress" in extracting fee hikes from distributors and advertisers that are similar to those that other programmers which own TV stations and cable networks are receiving. But he said NBCU believes "there's clearly a gap" between the fees rival programmers are receiving and the fees NBCU collects for retransmission-consent for NBC-owned-and-operated stations and cable networks such as USA Network, NBC Sports Network, Bravo, Oxygen and SyFy.
"I think over time we'll have an opportunity to eliminate that gap," Burke added. Burke said there is also a gap between the CPMs (cost per thousand impressions) that other programmers are charging advertisers, but that NBCU made progress in driving increased ad revenue during the recent upfront period.
Comcast reported that NBCU's cable networks generated $2.41 billion in revenue in the second quarter, an increase of 7.7 percent compared to this time last year. Distribution revenue rose by 4.4 percent at the cable networks and ad revenue jumped by 5.7 percent.
Its broadcast television segment saw revenue increase 11.6 percent to $1.73 billion. Ad revenue jumped by 13 percent from the broadcast segment, and NBCU said it also collected increased retransmission-consent revenue from its NBC and Telemundo stations.
Michael Angelakis, the CFO of NBCU parent Comcast, has said previously that NBC should be getting a similar level of retransmission-consent fees that rivals CBS and Fox are collecting from cable and satellite TV providers. "Frankly, we're behind some of our peers or competitors," Angelakis said at a Morgan Stanley conference in February.
- see the earnings release
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