A traveling party of about a dozen Fox affiliate leaders will descend on Washington this week to voice its concern for a bill co-sponsored by Rep. Mike Ross (D-Ark). The group says the bill could rewrite the Designated Market Area map and put a major drain on station revenue. Led by Fox affiliate board chairman John Tupper, the group will meet with as many as 25 key Capitol Hill figures.
“We're trying to educate Congress as to what the consequences would be if the Ross bill were implemented,” says Tupper, who estimates that more than $700 million in annual revenue would be lost as a result of the legislation's passage.
With the analog shutoff behind them (see related, DTV Transition: Complete Coverage), broadcasters have moved the Ross bill and SHVERA (Satellite Home Viewer Extension and Reauthorization Act) to the top of their docket. Both pertain to the rules that govern a station's right to market-exclusivity for its programming. SHVERA, which the FCC says “created an opportunity for subscribers to qualify, via signal-strength tests, to receive distant digital television broadcast signals from satellite carriers,” comes up for renewal every five years, and is due for reauthorization by the end of 2009.
Enter Ross, who introduced the Television Freedom Act in 2007, which proposed, among other things, extending SHVERA to cable operators. As almost half of the nation's DMAs cross a state line, Ross wants to provide home-state programming to viewers who live in one state but whose DMA is in another—such as Arkansas residents who get Louisiana channels.
The bill aims to “give satellite and cable companies the ability to provide their customers local channels from their home state, allowing them to watch their local news, sports and programming,” according to Ross' Website. “Americans should not be bound by outdated laws that prevent them from receiving their home-state programming.”
Broadcasters say Ross' bill will allow pay television to siphon off significant amounts of station viewers, resulting in a major ratings drain and ad revenue decline. They also fear that the bill would undermine broadcasters' efforts to extract retransmission consent fees, as cable, satellite and telco distributors could avert a retrans stalemate by importing the signal from an affiliate in a neighboring market. Currently, cable and satellite providers are permitted to import out-of-market signals, albeit for a copyright fee and only where viewers can't get the local affiliate.
Ross, who did not respond to requests for comment, is expected to reintroduce the legislation in the coming weeks—perhaps this week at a House Intellectual Property Subcommittee hearing. It is believed that he'll either seek its passage as a freestanding bill or tie elements of it to SHVERA, which is by definition must-pass legislation.
The latter tack could be tough. Rep. Rick Boucher (D-Va.), who heads the House Telecommunications Subcommittee, has said he wants to do something about fixing split markets, but also wants a narrow bill that won't get bogged down because the satellite blanket copyright license expires at year-end. That means the split-market fix could be confined to satellite, or not make the final bill at all.
An NAB spokesperson says the Ross bill threatens to “diminish the territorial exclusivity” stations enjoy. “Once you start to unravel that thread,” he says, “you can do serious damage to the business model.”
According to Tupper, the implementation of the bill would affect 12.6 million households and mean some $650 million in lost ad revenue each year, along with another $60 million to $70 million in retrans cash. Such hardship could “reduce broadcasters' ability to provide viewers with the level of service they're currently getting,” he says.
The Fox party follows other affiliate groups who've marched on Washington. The ABC contingent, for one, met with more than 30 Congressional leaders about the issue on May 12. The heads of the NBC and CBS affiliate boards wrote to legislators in March, making the case that such a revenue hit from the bill could “threaten the viability of local news.”
American Cable Association President/CEO Matt Polka says broadcasters are trying to scare members of Congress with their “histrionics.” He believes the number of counties that would be affected nationwide by Ross' legislation is about 200—perhaps a few million people in total—and that the broadcast brass is primarily concerned with retrans. The cases where cable and satellite have imported signals from out of the market, Polka says, have not indicated a noticeable revenue drain for home-market stations. “I think broadcasters see changes to the DMAs as detrimental to their retransmission consent gravy train,” he adds.
The Fox affiliates acknowledged cable's considerable influence in Washington when they met in April, and vowed to up their Beltway presence dramatically. Tupper says Ross will not be one of the key figures the affiliates meet with on the Hill this week: “We've made a lot of attempts to explain the consequences of Mr. Ross' proposal to him. To my knowledge, he's stiff-armed all of them.”
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