Some Media Executives Foresee More Carriage Showdowns
Additional retransmission fee disputes between TV stations and cable operators are likely as broadcasters and the networks they're affiliated with each seek more money, executives from the industries predicted. TV stations want cable operators to pay them by the viewer more in line with what cable programmers get, and networks want additional money from the stations they own and their affiliates, they said. The deals that get public attention or cause short blackouts probably will remain few, agreed cable and broadcast executives and lawyers we surveyed.
Sign up for a free preview to unlock the rest of this article
Export Compliance Daily combines U.S. export control news, foreign border import regulation and policy developments into a single daily information service that reliably informs its trade professional readers about important current issues affecting their operations.
The dispute between Disney-owned WABC-TV New York and Cablevision (CD March 8 p7) that for 20 hours cut the station’s signals off to the cable operator’s approximately 3 million subscribers ended with little FCC involvement, commission officials said. Representatives of the Media Bureau and of Chairman Julius Genachowski’s office kept tabs on discussions, like they did with those that went down to the wire between Mediacom and Sinclair and News Corp.’s Fox network and Time Warner Cable on New Year’s Eve (CD Dec 31 p1), the officials said. They said the bureau and the chairman’s offices got updates from the sides in the latest dispute, which they passed along to others at the commission.
“I definitely think we'll see more” disputes, said Vice President Thomas Larsen of Mediacom. “The prices that we're seeing from the last deal to the new deal are going up so dramatically that you can’t help but have disputes. It’s very difficult to face 40-50 percent rate increases without putting up some kind of fight. … The networks are trying to go out and set the floor for their affiliates.” Further carriage fights could unite cable, direct broadcast satellite and telco-TV providers to seek changes in the retransmission- consent system set up by the 1992 Cable Act, he said. A Sinclair executive didn’t reply to a message.
“As broadcasters ratchet up their demands, it may be that some cable systems will balk,” said General Counsel Jerry Fritz of Allbritton Communications, which owns eight ABC affiliates. “But my sense is that there will soon be an equilibrium that’s reached and there will be a payment benchmark for network affiliates that will apply pretty much to all” subscription video providers. Network-owned stations and those owned by other large broadcasters are demanding more money, and what they get will set a benchmark, Fritz said. Allbritton’s affiliation deals with Disney don’t expire until the end of 2012, but Belo, Hearst, McGraw-Hill, Sinclair, Washington Post Co. and Scripps are among those with deals that recently came up for renewal, he said.
The FCC didn’t seem to put heavy pressure on WABC and Cablevision to settle, commission officials said. Hours before WABC was restored to Cablevision subscribers, Bureau Chief Bill Lake asked the sides “to quickly reach a resolution for the benefit of viewers,” because “consumers should not suffer due to the inability of these two companies to successfully negotiate a deal.” The FCC currently has no ongoing proceeding on retransmission consent, a spokeswoman said.
The NAB expects “few service disruptions,” consistent with the thousands of deals successfully negotiated since the Cable Act, a spokesman said: “For competitive reasons, pay- TV providers desperately need the highest-rated, most-watched programming offered by local broadcasters and our network partners.” Some cable systems in smaller cities have signed new retransmission agreements with network-affiliated TV stations without impasses and on terms considered favorable to the systems, a cable executive said. An NCTA spokesman declined to comment.
The “dramatic increase” in what stations charge cable operators for each subscriber who can view the stations is “really just a catch-up game because they've been getting so little for so long,” said an attorney for TV stations. “If the affiliates are required to pay money to the networks, they don’t want to be in the situation where they're paying out more money to the network than they [get] from the cable entity, so I think that’s going to put some upward pressure on the rates.” The “good news” is that “the marketplace for retransmission fees for broadcasters is starting to mature and as a result you'll see fewer rather than more disputes over retrans value,” said lawyer Robert Rini of Rini Coran, which has TV clients. “As the pie grows, there will be interest in dividing that pie among networks and affiliates. … The stakes are growing, so that means there may be more disputes between cable and broadcasters.”