New Year's Day Not Expected to Have Large Wave of TV Blackouts
Despite 2017 being a particularly active year for retransmission consent negotiations, cable and broadcast experts weren’t expecting a notable wave of new blackouts on Jan. 1 triggered by contracts that expired Dec. 31. The end of 2016 had a slew of retrans disruptions, and there were worries about sizably more at the end of 2017 (see 1701030046). Alaska's GCI emailed customers last week that they might lose local ABC and CW stations from their cable lineups on Jan. 1 and the local Fox station on Jan. 15 due to a retrans impasse with the stations' ownership.
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Fall was the deadline for full-power TV stations choosing between must-carry and retrans consent for the 2018-20 period. But most of the deals between the big MVPDs and big broadcast groups have moved off that three-year cycle so their agreements don’t necessarily link up with the election cycle, and the deals that were expiring Dec. 31 largely involve smaller MVPDs and/or smaller broadcast groups, said broadcast lawyer Dan Kirkpatrick of Fletcher Heald.
At least 15 million viewers experienced a blackout of at least one broadcast TV station on Jan. 1, 2017, said cable lawyer Gil Ehrenkranz of Manatt, Phelps. Since most retrans consent agreements co-terminate with the triennial must-carry/retrans consent election cycle that was in October, it was reasonable to assume there would be more blackouts on Jan. 1, 2018, than a year earlier, just because of the larger volume of deals being negotiated, he said. And there was the issue of MVPDs' willingness to retransmit a broadcaster's ATSC 3.0 signal, which wasn't part of past retrans consent negotiations, he said. But almost all blackouts ultimately are resolved, he said. "The upcoming NFL playoffs and Super Bowl see to that at least with respect to broadcast stations carrying football games," he said, adding blackouts involving independent stations might take longer to resolve.
Most if not all the retrans agreements he's working on were to be done by year's end, which is somewhat surprising given "the significant increases" broadcasters are demanding in retrans fees, said Cinnamon Mueller cable lawyer Scott Friedman. Kirkpatrick said the rate of increases broadcasters are seeking in retrans fees is slowing down. "We are still not caught up to where broadcasters should be, but it's getting closer," he said.
Even when there's a dispute, smaller cable operators and broadcast groups often still agree on carrying a signal during ongoing negotiations, Kirkpatrick said. Small broadcasters don't have much to gain from a signal going dark, he said, while small MVPDs have a lot to lose and thus are often more willing to make concessions to avoid losing a signal. Kirkpatrick said extensions are likely this year at least through the first week of January because of the lack of must-have content then, since college bowl games now are on ESPN.
American Cable Association President Matt Polka said it's hard to gauge how many blackouts there will be New Year's Day, "but there will be some." He said in talks with small and mid-sized cable operators, many broadcasters have offered take-it-or-leave-it prices or not responded to requests for negotiations.
Many experts said it's unlikely a retrans rules regime change will come either from the FCC or the Hill in the foreseeable future. "To me, it's somewhat baffling," given the FCC's broad push in the past year on deregulation, Polka said. "This isn't anywhere on the radar." In a letter to senators in December about concerns about the Univision/Verizon blackout, Chairman Ajit Pai said the FCC sees retrans consent negotiations as private contractual discussions, though it urges resolutions during disputes so consumers aren't affected. Friedman said one rule change that did moderate the rise in retrans fees was the FCC's 2014 prohibition on joint negotiations by non-commonly owned stations (see 1404010043). He said that resulted in a noticeable difference in rate asks by sidecar channels operated by large station owners.
TV Freedom said historically 99 percent of carriage-related negotiations are resolved without disruptions to consumers, and broadcast programming is always available via an over-the-air antenna. It also said however the retrans negotiations play out, pay-TV providers would "use the end of the year to increase prices for their customers" and cited recent double-digit percentage increases in price announced by Charter, Dish Network and DirecTV. NAB didn't comment.
New Year's Day will likely bring more blackouts than a year ago since broadcasters were on better behavior then, American TV Alliance said. The group said there were more than 200 blackouts in the U.S. by late November, making 2017 the worst year for carriage disruptions on record. It said 2016 had 104, and 2015 had 193. It also said it was cautiously optimistic about lawmakers reforming the retrans consent marketplace rules, noting attempts by Senate Commerce Committee Chairman John Thune, R-S.D., to overhaul retrans consent rules (see 1409080032).