SMALL CABLE OPERATORS TAKE ON BIG BROADCAST NETWORKS
CHICAGO -- Group representing small cable operators urged FCC to investigate retransmission consent practices of major broadcast networks and take steps to curb “tying” of retransmission-consent rights to carriage of networks’ cable channels. Picking up cause publicly embraced and then quickly abandoned by major MSOs and NCTA last spring, American Cable Assn. (ACA) charged that such media conglomerates as Disney/ABC, News Corp./Fox Network, GE/NBC and Hearst-Argyle had forced “costly tying arrangements on smaller cable companies,” making them carry unwanted cable networks. ACA, which represents 931 cable operators with total of 7.5 million subscribers, also charged that broadcaster-owned cable networks had taken control over retransmission consent rights from broadcasters’ own local stations. “By themselves, ACA and its members have not been successful in changing the behavior of media conglomerates like Disney, News Corp. and others,” group said in FCC filing purportedly on DTV must-carry rules earlier this week. “To the contrary, retransmission consent tying is getting worse.”
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In submission to Commission, ACA cites examples of: (1) ABC’s tying its stations’ retransmission consent rights to carriage of Disney Channel, Lifetime, Soapnet, other Disney cable properties. (2) News Corp.’s tying its rights to carriage of Fox Sports, Fox News, FX, National Geographic Channel, Fox Health Channel. (3) NBC’s doing same for carriage of CNBC and MSNBC and payment of surcharge for its cable networks’ Olympics Games coverage. “For ACA members, these examples show a marketplace suffering from serious malfunction,” group said. “No genuine substitute for network broadcast programming exists in smaller markets. The network owners wield overwhelming market power over smaller cable systems.”
ACA Pres. Matthew Polka said group’s submission to Commission was just first step in multipronged effort to stem what it saw as marketplace abuses by most, if not all, major TV programmers. Interviewed at NCTA convention here late Tues., he told us ACA would unveil “very detailed plan” for reforms next month, including “very specific legislative proposals and regulatory ideas” that could include changes in federal antitrust laws, prohibitions on tying arrangements and program bundling, elimination of nondisclosure clauses in network licensing pacts and extension and expansion of cable program access rules. “It’s the start of a very coordinated, detailed campaign to educate Washington about the problems we have with the programming industry,” he said. While top executives at such large MSOs as Charter Communications and AT&T Broadband have been complaining about higher sports programming costs, he said, “we see the problem much more broadly.”
Although ACA’s filing spared Viacom/CBS, Polka said he expected that broadcaster to follow leads of Disney, News Corp. and NBC in next retransmission consent cycle now that Viacom owned CBS, UPN and MTV, TNN, Nickelodeon and several other cable networks. Under current 3-year cycles, next set of retransmission consent pacts must be concluded by end of next year, meaning that broadcast-cable negotiations should start in earnest next spring. “We have no choice but to act and act forcefully,” said Polka, sounding like one of rebellious network affiliates also challenging broadcaster practices at FCC. “It really is a matter of survival.”
Questioned about small operators’ crusade at cable convention Wed., NCTA Pres. Robert Sachs said he had “a lot of sympathy for the concerns ACA expressed” but didn’t favor any legislative or regulatory action. Sachs, whose organization represents programmers as well as operators, unlike Polka’s, said he feared “the law of unintended consequences” if cable industry sought govt. aid. “For the last 5 years, NCTA has really been on a consistent track,” he said. “We don’t go to the government to solve business issues.”
Polka, who spent time in Chicago trying to recruit larger MSOs to ACA’s cause, said he didn’t expect NCTA to join effort because it represented both operators and programmers. “We expect to go it alone,” he said, noting that his group actually represented more cable operators than did NCTA: “We're the only ones who can do it.”