Found Money for CBS

It seems appropriate to catch Fools up on a media phenomenon that we discussed a few months ago: the efforts by broadcasting companies to exact retransmission fees from the nation's cable multi-systems operators (MSOs).

You'll recall that, after literally decades of watching their channels being picked up by the MSOs and rebroadcast to cable subscribers without compensation, the broadcasters have recently begun to demand payment from the cable companies for their programming. One of the major battles occurred last year and into 2007, when medium-sized cable operator Mediacom (NASDAQ:MCCC) and Sinclair Broadcast Group (NASDAQ:SBGI), the operator of 57 television stations, went head to head over efforts by Sinclair to gain rebroadcast payments from the cable operator. Mediacom blinked and acceded to the demands when Sinclair threatened to black out the Super Bowl for a number of cable subscribers.

At this juncture, the most important remaining questions in this emerging confrontation are the extent to which rebroadcast compensation will sweep across the cable industry and the degree to which their essentially found money will affect the broadcasters' financials. As to the first subject, a number of agreements have quietly been signed in the broadcast-cable arena, including one between the second-largest MSO, Time Warner Cable (NYSE:TWC), and Sinclair that actually predated Mediacom's Super Bowl-saving towel toss. What isn't clear yet is the extent to which cable industry leader Comcast (NASDAQ:CMCSA) will resist paying the broadcasters for signal rebroadcast.

A degree of clarity regarding the second question emerged last week when CBS (NYSE:CBS-A) CEO Leslie Moonves predicted at the Deutsche Bank Media & Technology Conference that his company will soon be receiving some $250 million a year from the MSOs. By my quick reckoning, since the majority of that money, excluding taxes, would drop unabated to the company's bottom line, the new agreements could boost that net income line for CBS by 10%-15%.

Presumably, that order of magnitude would hold for other broadcasters such as Sinclair, LIN (NYSE:TVL), and Hearst Argyle (NYSE:HTV). My inclination is that this changing set of circumstances could make this otherwise slow-growing television broadcast group meaningfully more interesting going forward than it otherwise might have been.

To rebroadcast related Foolishness:

• Comcast: A Rediscovered Highflier
• CBS Opens New Distribution Channels
• Should CBS Be Patient With Katie?

Fool contributor David Lee Smith does not own shares in any of the companies mentioned. He welcomes your questions or comments. The Motley Fool has a disclosure policy.