LIN Retrans Blackout Spurs Mediacom CEO to Send Genachowski Critical Letter

Commisso took a swipe at Genachowski’s priorities, in his three-page letter Thursday. “Frankly, the harm to consumers from the practices of television content owners is far greater than that flowing from many of the issues to which you have devoted so much of your personal attention and the Commission’s resources,” the CEO wrote. Genachowski can’t protect consumers by continuing “to ignore the escalating wholesale costs for television programming” with FCC inaction, Commisso wrote.

"Your remarks when you were first appointed as Chairman encouraged us to believe that, under your leadership, the Commission would finally address the problem,” Commisso wrote. “I regret to say that it is now almost three years later and nothing has been done.” Broadcasters have said retrans works, and there’s no need for the agency to issue an order in the current proceeding. LIN has reached deals “that recognize our fair market value with every major cable, satellite and telecommunications company,” a spokeswoman said.

The FCC has been on the sidelines in the LIN-Mediacom dispute, as with others that were higher in profile such as one between the broadcaster and Dish Network in March, industry and agency officials said. Dish-LIN was this year’s biggest dispute in terms of number of affected MVPD subscribers and TV stations. By the American TV Alliance’s (ATA) count, there have been four other blackouts in 2011. In this blackout and one in 2007 between Sinclair and Mediacom, where the commission declined to intervene, it “put the interests of broadcasters ahead of those of the viewing public,” Commisso wrote.

The Media Bureau and commissioners have gotten updates from LIN and Mediacom on the blackout, the same as during other broadcaster-MVPD clashes, agency and industry officials said. The bureau didn’t reach out to representatives from the companies as it did in prior instances, and instead was contacted by the companies, industry officials said. Commisso’s letter said tens of thousands of Mediacom subscribers are affected. The markets range in size from No. 41 Grand Rapids, Mich., to 152-ranked Terre Haute, Ind. Norfolk, Va., area stations WAVY and WVBT remained on Mediacom systems under a seven-day extension lasting through 5 p.m. on Sept. 7, spokespeople for both companies said: That’s because the area was hit by Hurricane Irene.

Long outspoken on programming prices, Commisso took swipes at cable and broadcast content in seeking rules for MVPD subscribers to purchase channels individually or in smaller packages, and not in bundles. He wants a “carefully designed” a la carte system. “I am deeply disappointed with the Commission’s lack of interest in keeping multichannel television service affordable,” Commisso wrote. Retrans fees are the fastest growing part of programming cost hikes, but cable networks “also keep pushing their charges higher and higher,” he wrote. “Content owners have been unwilling to exercise the slightest measure of self-restraint, and are emboldened by the Commission’s unwillingness to even try to impose some limits or speak out against programmers’ practices.” The NCTA declined to comment.

Mediacom made a “sudden conversion” to a consumer advocate, which “strains the bounds of credibility,” an NAB spokesman said. “For years, cable operators have hiked subscription fees more than double the annual rate of inflation, yet programming costs account for only a fraction of their expenses. The truth is that retransmission consent fees account for only two-tenths of 1 percent of cable revenues today, and according to a recent study, analysts predict they will never rise above 1 percent.” TV stations are committed to negotiating “fair” rights fees reflective of the value of their popular programming, he added.

There’s “no excuse” for the FCC not to issue new rules, Commisso wrote, citing its “vast authority” and his goal to bring back “a semblance of balance to the video programming market.” There’s “nothing to lose if its actions are successfully challenged in court and much to gain if, as we fully expect, its authority is confirmed by the courts,” he continued. Mediacom “refused to surrender” to LIN’s “exorbitant and discriminatory demands for triple-digit increases” in retrans payments, the CEO wrote. Mediacom posted a letter to subscribers on the dispute (http://xrl.us/bmb7x8).

LIN pointed Mediacom subscribers to other MVPDs to get the broadcaster’s programming (http://xrl.us/bmb734), while the cable operator said switching providers won’t work because LIN has previously blacked them out, too. “The number of impacted viewers is a relatively small share of each market and each of our stations is available from at least two other pay-TV providers or free over-the-air,” the LIN spokesman said. “We know that our programming is very important to those viewers and we will continue to work hard to reach an agreement.” Neither side has ended talks, said Mediacom Vice President Thomas Larsen.

A small, family-run Rhode Island cable operator has had a blackout for most of this year of Entravision’s WUNI Warren, a Univision affiliate. Full Channel Vice President Levi Maaia said his cable operator instead is carrying a feed of the network’s programming to digital video subscribers. Since the feed has no local content, it’s “a substitute but perhaps not an equal to WUNI,” he said. Entravision representatives had no comment. The retrans “system remains broken and the rules must change,” Maaia said. “The present system gives broadcast stations the ability to demand exorbitant and ever-increasing cash fees from MVPDs in exchange for carriage. These demands are a major cause of increasing customer cable bills.” Maaia, a member of the American Cable Association, has been outspoken on retrans.

LIN’s “deplorable” decision to pull its programming from Mediacom is a “warning” to the FCC to “expect much more of the same as cable operators prepare to renew thousands” of contracts expiring at year’s end, ACA President Matt Polka said. “It’s clear that the broadcasters aren’t going to temper their behavior this year just because the FCC has a retransmission consent rulemaking going on. New rules are needed.” It’s the fifth time since 2007 that LIN’s had a blackout with an MVPD, said the ATA. Members include the ACA, Mediacom, the two U.S. DBS companies, the two largest telcos and many cable operators. “This broadcaster bullying is not going to stop until Congress or the FCC level the playing field by changing outdated rules,” the alliance said.