Despite Carriage Dispute Keeping Its CBS Stations Off Fubo TV, Nexstar President Tom Carter Expects Bundle Revenue To Keep Flowing: “We Do Not See A Cliff”


Despite an impasse between Paramount Global and FuboTV, which has kept Nexstar stations off the air for weeks, Nexstar President and COO Tom Carter has a relatively upbeat outlook on pay-TV’s future.

“We are projecting subscriber attrition,” he said, with recent gains on internet-delivered bundles like Fubo, YouTube TV, Hulu + Live TV and others failing to offset deeper declines in traditional cable and satellite. “But make no mistake about it — we do not see a cliff. We’re not at a precipice here, or at a point in time where we’re at an inflection point.”

Carter made the comments in an appearance with Nexstar CFO Lee Ann Gliha at the Morgan Stanley Technology, Media and Telecom Conference.

Rather than a cliff or inflection point, Carter says, Nexstar expects more of a plateau. The company, which owns the largest collection of U.S. TV stations as well as national networks like The CW and NewsNation, has research suggesting about 75% of people older than 45 still have pay-TV subscriptions. “We think that’s sticky for at least the foreseeable future,” Carter said.

While any blackout is not ideal, Carter conceded, the stakes in the Fubo-CBS tangle involve “a relatively minor amount of money.” Virtual MVPDs like Fubo account for less than 10% of overall distribution revenue at Nexstar, which in turn is about half of total company revenue, which reached $5.2 billion in 2022.

Fubo, which ended 2022 with 1.445 million subscribers in the U.S., has opted to furnish its customers with the national CBS feed, but local news and other market-specific offerings remain in the dark pending a breakthrough in talks.

Station owners like Nexstar and others have said they feel unfairly disadvantaged by the contractual right of network programmers — Paramount, in the case of the Fubo situation — to negotiate carriage deals. Given that nearly 6 million customers ditched their pay-TV service in 2022, some content owners have opted to renew deals with vMPVDs in order to retain scale or achieve other strategic objectives. Stations have said that means agreements don’t always end up with fee increases they consider to be appropriate. Even CBS stations, under the same roof at Paramount, have made noises about their colleagues’ approach to carriage negotiations.

Carter largely left those internecine fights for another day, instead focusing on the financials. Because the revenue at stake is a manageable amount for both Paramount and Nexstar’s CBS affiliates, “it’s easy to pick Fubo as a fight to have,” he said. “Going dark on distributors is not a new thing in our business at all. … It’s something nobody wants to pull out and think they would use because it disrupts the consumer and that ultimately is bad for everybody, but it’s a tactic that is used from time to time when circumstances require it.”

Gliha added that Nexstar considers the matter with Fubo “a CBS-only issue, and it’s just driven by the specific circumstances that surround the CBS situation.”

Asked about trends in reverse compensation, which is what stations pay networks in exchange for the right to air their programming, Carter said it has been increasing at the same rate as retransmission revenue, i.e. what stations charge pay-TV operators. “Diversification by networks” into direct-to-consumer streaming and other forms of delivery has increased tension between parties, Carter affirmed. The “marginalization of content,” especially sports, has been a pain point. Nexstar is seeing signs of progress in those negotiations, Carter said. “What we’re seeing is an ability to reduce the rate of growth or the amount of payments because they’re monetizing

in new ways that compete with us.”

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