Retrans Not Living Up to Promise of 1992 Cable Act, Professors Say
Retransmission consent fees aren’t being used by TV stations to fund local content, according to research by academics, including some funded by foes of the current retrans system, several professors said Monday. The 1992 Cable Act authorizing retrans payments to broadcasters by multichannel video programming distributors was meant to preserve and promote local programming, said Prof. Philip Napoli of Fordham University. There’s a “body of literature” showing that’s not now happening, he said at an event on Capitol Hill organized by the American TV Coalition, a group of MVPDs and nonprofits seeking to change FCC retrans rules. The NAB responded that TV stations are producing more and not less news.
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.
Retrans is among the rights given broadcasters that “sort of cloud” current efforts to use spectrum more efficiently, said Prof. Thomas Hazlett of George Mason University. “It really is an interesting regulatory regime” when one set of competitors in a market has certain rights over rivals, he said of must-carry, retrans and other privileges given to broadcasters. It makes it harder to “create business models that might be far more efficient,” said Hazlett, a former FCC chief economist. There’s long been a quid pro quo that broadcasters must live up to certain public interest obligations, “and then we'll forget that you must do stuff in the public interest,” he said. “That’s the game that’s been going on for a long time -- we know how it’s played."
That TV stations share retrans fees with broadcast networks “seems a deviation from the original congressional intent” of the system, said Napoli. “This is a large and growing ... revenue pool,” he said. Local news accounts for about 6-7 percent of broadcasters’ airtime, and “as many as a third of all local broadcast stations offer no local news of any kind,” Napoli said: “Recent data show news staffs continue to be on the decline,” so “we see a pattern of performance that doesn’t really suggest the retransmission consent rules or the revenue they are producing are having that fundamental revenue-enhancing effect” on local news. The trend won’t abate, he predicted.
Another professor identified a “movement across the country” of forming various joint service agreements between two or more stations within a market, of which 118 markets have some form of and more are likely to start. Shared services agreements “functioned exactly as the brokered stations said they would work: They achieved economies of scale -- properly so,” said Prof. Danilo Yanich of the University of Delaware. “Otherwise, the agreements would be a moot point.” Among the eight markets with SSAs he examined, about 65 to 75 percent of stories aired at stations in SSAs and similar accords were the same, he said. “What you had was the moving of a story from one station to the next, and it looked exactly the same,” Yanich said. He observed that in an “acute way” in Honolulu, where Raycom Media and another company have stations in an SSA, the professor said: “The only thing different is the commercials” between those stations.
"Contrary to commentary funded by the American Television Alliance, the record demonstrates there is now more local news on broadcast television than at any time in history, and that viewers find broadcasting to be the most trustworthy source for news,” an NAB spokesman said. “It is the revenues derived from retransmission consent that help pay for these community-based information initiatives,” he added. “Broadcasters proudly put our long record of local news coverage against that of our friends in the cable industry who are bankrolling the ATVA.” Hazlett’s work in the area, an issue of which he’s had a “long interest,” was supported by the alliance, while the Communications Workers of America backed some of Yanich’s SSA work and Napoli’s paper on retrans and localism was supported by the coalition, the professors said. Napoli also has worked for the NAB, he noted. The academics’ research is at http://xrl.us/bmv9s4.
The TV band has long been used as a “spectrum warehouse,” Hazlett told us, referring to the 29 channels that will likely exist after the FCC holds a voluntary incentive auction of broadcast frequencies. “Public policy has been geared to protecting TV stations from emerging media. This is how we got the compulsory license in the 1976 Copyright Act, and then ‘must carry’ and ‘retransmission consent’ in the 1992 Cable Act,” he said. “The market has cycled past the terrestrial broadcast TV platform” since by 2009 when all full-power TV stations went digital-only, and 91 percent of U.S. households bought MVPD service, Hazlett said. “Broadcast TV content is valuable, but it is most efficiently delivered over other media. In fact, the emergence of broadband video delivery puts the terrestrial platform some two generations out-of-date.”