NCTA Says Cable Must-Carry Would Cost $116 Billion or More
Multicast must-carry legislation backed by broadcasters would cost cable $116 billion or more in lost revenue and other expenses, NCTA said, citing a study it commissioned. Congressional passage of such legislation, while far from certain, would mark an unjust taking of property violating the 5th Amendment, NCTA Pres. Kyle McSlarrow said. NAB disagreed, and several law professors said NCTA wouldn’t have much of a chance in court. McSlarrow said he hopes NCTA won’t have to weigh a lawsuit.
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The Kane Reece Assoc. study estimates vary widely, from $4.2 billion to more than $115.6 billion. NAB rejected those figures’ validity, and has hired a firm to analyze the NCTA study, a spokesman said. Another telecom industry official said the high end of the NCTA estimate may be aggressive. “Only in the Orwellian world of giant cable cartels does more competition equate with higher cost to consumers,” NAB said in a statement: “We're optimistic that Congress will reject the call of the cable monopolist and embrace more choice for local television viewers.”
Broadcasters may have to wait for congressional action. DTV is on hold while the House and Senate Commerce Committees work on hurricane relief (see separate story this issue). A multicast provision is controversial and not among items easily gaining consensus among members. Still, McSlarrow, in remarks to reporters after an NCTA briefing, said he expects the Hill to deal with DTV this fall. “So far as I can tell, every fiber of [NAB’s] being is dedicated to getting” multicast must- carry, he said: “I'm assuming it gets a vote at some point… We're going to have to deal with it.”
The high end of NCTA’s cost range represents the missed opportunity of 10 years’ future revenue from bandwidth that could be used for multicasting, Kane Reece said. The study takes set-top box, plant upgrade and headend conversion costs into account. It uses a discounted cash flow model, similar to how analysts calculate the value of stocks. An official at Kane Reece was unavailable to comment, NCTA said. “Regardless of which number is the right number… the point is that the value is a number that talks about the opportunity cost going forward,” McSlarrow said. He stood before a poster depicting a bear clutching a man in its claws that read “Broadcasters seek another free ride.”
Multicast must-carry may not violate the Constitution, professors said. “From a 5th Amendment standpoint, their case is likely to be relatively weak -- courts have never looked to see just what is the magnitude of the loss,” said Prof. Stewart Sterk, who teaches property and copyright law at Benjamin Cardozo School of Law at Yeshiva U. “They have a pretty hard sell in this case, I think, because it’s unlikely that their investment was dependent on having control over every speck of bandwidth.” His comments were echoed by George Washington U. Law School Prof. Roger Schechter. “In a purely abstract way, the concept of private property implies a complete freedom of use,” he said. “But that’s a complete fiction. All property has always been subject to some governmental limitation.”
NCTA officials we spoke with disagreed. Utilities have been compensated in court for takings of their property, said Senior Vp-Law & Regulatory Policy Dan Brenner: “Where people occupy bandwidth that you own, that has been entirely privately bundled, and we now can’t use it for the purposes that we want, we think that constitutes a taking.”