Media General (MEG) Enters New Affiliation Agreement with NBCUniversal (CMCSA)
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On December 4, 2012, Media General, Inc. (NYSE: MEG) and NBCUniversal Media, LLC (NBC), a unit of Comcast (Nasdaq: CMCSA), executed a new affiliation agreement. The agreement covers the following stations: WCBD – Charleston, South Carolina, WSLS – Roanoke, Virginia, WSAV – Savannah, Georgia, WFLA – Tampa, Florida, WJAR – Providence, Rhode Island, WNCN – Raleigh, North Carolina, WCMH – Columbus, Ohio and WVTM – Birmingham, Alabama. The terms of the agreement are retroactive to January 1, 2012 and expire on December 31, 2015. Under the agreement, NBC provides programming in the given markets consistent with current practices and subject to certain local preemptions in addition to those mandated by FCC rules and regulations. Under the agreement, the Company makes certain cash payments to NBC for inventory management, NBC News Channel, distribution, Olympics and NFL programming, consistent with the past agreements. In addition, the agreement requires the Company’s NBC affiliates to pay a variable fee, quarterly, which is dependent on each station’s cable and satellite monthly retransmission revenue.
As indicated above, the terms of the agreement, including the referenced quarterly fee, are retroactive to January 1, 2012. The Company has accrued an estimated amount for this fee each month of 2012. As of September 23, 2012, the end of the third quarter, the accrued payable approximated $9 million. The Company anticipates paying approximately $11 million to NBC for 2012, based on the agreement. The amounts payable in future years will be dependent on future subscriber counts and the amount of retransmission revenues received by the Company. The Company currently estimates that the minimum payment amount will increase by approximately $8-10 million per year over the term of the agreement, although the rate of increase could be higher or lower depending on future subscriber counts and retransmission revenues. The Company agreed to increasing minimum payments, in part, because it expects to garner increased retransmission revenues from agreements it already has signed or expects to renew in the coming years.
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As indicated above, the terms of the agreement, including the referenced quarterly fee, are retroactive to January 1, 2012. The Company has accrued an estimated amount for this fee each month of 2012. As of September 23, 2012, the end of the third quarter, the accrued payable approximated $9 million. The Company anticipates paying approximately $11 million to NBC for 2012, based on the agreement. The amounts payable in future years will be dependent on future subscriber counts and the amount of retransmission revenues received by the Company. The Company currently estimates that the minimum payment amount will increase by approximately $8-10 million per year over the term of the agreement, although the rate of increase could be higher or lower depending on future subscriber counts and retransmission revenues. The Company agreed to increasing minimum payments, in part, because it expects to garner increased retransmission revenues from agreements it already has signed or expects to renew in the coming years.
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