Over the past two years, the pay-TV industry has been pushing for video marketplace changes in Congress in the name of ‘consumer protection,’ targeting retransmission consent fees TV broadcasters receive from cable and satellite TV systems to air their respective local TV station’s programming.
Pay-TV service providers are seeking to curtail broadcasters’ flexibility in retransmission consent negotiations and eliminate a series of rules that ultimately will force all consumers to pay more for access to the most popular TV programming. The truth is TV stations aren’t causing monthly cable bills to soar. Cable bills go up every year because consumers are being forced to pay significantly higher fees across the board.
The pay-TV industry is notorious for padding its revenue through a barrage of questionable billing and business practices, including erroneous overbilling, excessive equipment rental fees, and ‘extra’ service charges. For example, though Apple TV and Kindle Fire TV devices retail for $99, the pay-TV industry won’t allow them to be connected directly to their systems. Pay-TV operators instead prefer to bilk consumers for $7 billion annually in monthly rental fees for outdated equipment that stymies innovation and competition. In addition, pay-TV consumers are paying inflated prices for cable channels that few watch.
Pay-TV service providers are using blackouts to divert attention from their abusive business practices. They created the American Television Alliance (ATVA) to make local TV stations the Washington scapegoat for increasing cable bills.
ATVA claims the retransmission consent rules are responsible for a ‘record number’ of TV blackouts without acknowledging the hundreds of retransmission consent deals that are reached between broadcasters and pay-TV operators nationwide each year.
Public data reveals that just four retransmission consent disputes that began on or after Jan. 1, 2014 have resulted in TV blackouts. All but one have been resolved, with two deals struck between parties within hours of the initial impasses.
Amidst hundreds of deals negotiated in 2013, a total of 19 retransmission disputes unfolded that resulted in disruptions to pay-TV viewers’ access to local broadcast TV news and programming. What’s important here though is that the vast majority of these 2013 cases were settled quickly after being blocked by pay-TV systems.
Do these statistics highlight a glaring problem? No.
The fact of the matter is that pay-TV service outages occur across the country at a remarkably higher rate due to bad weather or lousy service than as a result of retransmission consent disputes. Indeed, thunderstorms often knock satellite TV systems off the air, especially for consumers with outdated equipment, on a routine basis.
The pay-TV industry claims it’s innocent in retransmission consent disputes, but talks between parties are sometimes complicated by their negotiating tactics and desire to push broadcast TV content behind the ‘pay-wall’ on every platform, including the Internet. In seeking exclusive online content distribution, cable and satellite TV operators have, in the past, demanded that TV broadcast networks stop making the majority of their popular programming available to other highly successful digital consumer outlets, such as Amazon, Hulu and Netflix. That is anti-consumer.
In contrast, TV broadcast networks recognize the potential negative consequences of these exclusive deals on consumers and the industry, and have consistently refused to give such incredible gatekeeper power to pay-TV service providers in today’s broadband world. Those demands may increasingly cause a divide between broadcasters and pay-TV companies in retransmission consent negotiations.
This is something Congress and the FCC should be paying attention to. They should be questioning pay-TV’s motives for asking for such concessions from broadcasters, particularly in an industry in which there is a fierce ongoing debate among all stakeholders about how best to protect consumers’ legal access to online content.
The pay-TV industry’s motives for changes to the retransmission consent system are crystal clear. It seeks to control access to all TV content, drive up prices for America’s cable and satellite TV subscribers, and diminish the ability of broadcasters to serve as a viable market force in delivering popular programs to consumers on a variety of competitive digital platforms.
Considering the questionable business practices of pay-TV operators and their anti-competitive demands in retransmission consent negotiations with local TV stations, one must ask: are their calls for regulatory and policy changes genuinely being made in the interest of consumers?
Robert C. Kenny is the director of public affairs for TVfreedom.org, a coalition of local broadcasters, community advocates, network TV affiliate associations, and other independent organizations; he formerly served as press secretary at the FCC.
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