Cable Won’t Pay Cash for Carriage, Despite Viacom Demands
Viacom bids to get cash for carriage of CBS may flop, cable industry officials told us, hewing to retransmission consent negotiation tactics. Reaction wasn’t favorable to remarks by Viacom Pres. Leslie Moonves he will charge pay- TV firms the same fee for CBS they pay for USA Network (CD Sept 16 p7). Charter, Cox, Insight and Time Warner won’t do so, officials from those firms told us Fri. Many of those companies previously said they won’t pony up (CD July 22 p6).
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“We have no intention to pay any broadcast carriage,” a Charter spokesman said. Other cable operators we spoke with also stood firm. “As we've said in the past, we will not pay cash for carriage of broadcast networks,” a Time Warner Cable spokesman said. Cox, which balked at paying cash for some Nexstar stations (CD July 19 p16), hasn’t changed its policy, a spokeswoman told us.
Cable officials said broadcast networks continue to lose market share. “Cable is delivering over half of total TV viewing, and it just keeps increasing year over year,” a cable industry source said: “Broadcast has been showing declines year after year after year.” But Moonves called not paying for CBS an “injustice,” in remarks Wed. at a Merrill Lynch investor conference: “If cable, satellite and telecom companies want the NFL, Survivor and CSI, you are going to have to pay what you pay for USA.” Ad-supported cable had a 54.6% household share during primetime hours in the 2004-2005 season, vs. 41.9% for broadcast networks, according to the Cable Ad Bureau. In the 1999-2000 season, those figures were almost reversed: Cable had a 40.8% share vs. broadcast’s 53.6%.
Some operators are leaving the door open for noncash compensation. “We're in negotiations now with multiple broadcasters, and of course we're talking about other opportunities for them,” an Insight spokeswoman said. “But we have taken the position that we must protect our customers, we are not going to pay, or ask them to pay, for something that we get for free over the air.” Comcast signed a long-term carriage accord with Viacom at the end of 2003, and is still covered under that deal. “We believe that we already adequately compensate broadcasters for their signal in terms of preferred channel location, advertising [and] other news channel deals,” a Cox spokeswoman said. “They're given that spectrum for free, so we feel that we are already adequately compensating them for their signal.”
If CBS is successful, it would drive up cable rates, a cable executive said. Broadcasters said they wish Moonves luck. “I hope he (Moonves) is successful,” said Shaun Sheehan, vp, Tribune Co. Tribune’s WGN-TV (WB) Chicago, and its other stations could benefit if CBS were to succeed in its cash for carriage quest, Sheehan said. Analysts have said nonnetwork broadcasters such as Tribune could profit if CBS were able to win cash payment from cable operators by renegotiating their own contracts. But CBS unsuccessfully sought such negotiations during drafting of the 1992 Cable Act, Sheehan said. Granite Bcstg., another nonnetwork broadcaster, said it was too premature to comment on CBS’s effort.