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Cable One’s Might: Nexstar’s Not Winning

San Diego -- Cable One Inc.’s top official claimed Tuesday that the broadcaster that pulled its TV stations off his systems seven months ago has been badly bloodied in the battle, suffering ratings declines of up to 40% and seeing its stock price tumble.

“I’m going to show you the scorecard today,” CEO Tom Might told members of the National Cable Television Cooperative at their meeting here, referring to the impact of his company’s ongoing retransmission-consent battle with Nexstar Broadcast Group Inc.

During a luncheon address, Might for the first time talked about the subscriber losses his systems have endured and what has happened to the broadcaster’s dropped stations in Joplin, Mo., and Texarkana, Texas. Comparing the dispute to a three-ring circus, he claimed that Nexstar has been hurt worse than Cable One.

“I’ve decided that yes, we’ve had losses, but they are so small compared to what Nexstar has lost that it is to our advantage as Cable One -- and even the industry’s advantage -- that we be public about what losses we have had,” Might said. “You will be amazed at the difference … It says bluntly … broadcasters need us more than we need them. We now have the facts to prove it.”

Both Cable One and Cox Communications Inc. had stations pulled by Nexstar Jan. 1 when they refused the broadcaster’s demands for cash for carriage.

In both Joplin and Texarkana, Cable One lost about 7% of its basic subscribers after deleting the Nexstar stations, not the 20% the broadcaster was claiming, Might said. For example, in Joplin, the cable operator’s distribution of 40,000 went down to 38,500, according to Might.

But Cable One made up for more than one-half of that loss by signing up high-speed-data customers, so the drop in basic and high-speed subscribers combined was 3.7%, he added. In Texarkana, when Cable One’s basic and high-speed homes are combined, it saw a 4.6% drop in those customers, according to Might.

In comparison, ratings at Nexstar’s affected stations -- those dropped by Cable One -- have seen double-digit decreases. Total-day ratings for Nexstar’s three stations dropped 29%-40% from last November to May, according to Nielsen Media Research data cited by Might.

Yet even though that viewership is down, top Nexstar officials such as CEO Perry Sook have been telling Wall Street that they haven’t lost audience, Might said, citing quotes from those officials.

“I think this is called an untruth,” he added. “I don’t want to go further than that. I don’t want to be quoted. But [Sook] said this to the financial community.”

Might maintained that while Cable One had essentially been providing 29%-40% of Nexstar’s viewership at the affected stations, Nexstar was only giving the systems a 7% lift in their video-subscriber count.

“What greedy fool would want to end this 50-year relationship that has worked so well for both parties?” he added. “How are they going to make up the revenue losses? There is no way. They are in a very inferior business situation compared to cable … We know we make a lot of money on high-speed data. It doesn’t bother me at all to trade off a video subscriber for a high-speed-data subscriber.”

Nexstar’s stock is now trading at abut $5 per share, Might said, far below its high of about $14. “Nexstar is either desperate or nuts, or both,” he added. “Why would you jump from a wire without a net underneath you?”

TV-station owners that say they want to get paid for their programming, like ESPN, should then give cable operators the same things cable networks do, according to Might.

“Fair enough: If you’ll treat us like they treat us, we’ll pay for your content,” he added. “But here’s how they treat us. Stop the free distribution over the air. Take your antenna down. Offer us two minutes of avails on every hour. Give up the government-opposed retransmission and must-carry. Come to the table. Let the marketplace decide who gets carried or not. Be our partner, not our enemy … They want to be treated like a cable network: Act like one.”

Citing the steep decline in audience share that broadcast has suffered, Might added, “This is not our problem. Stop taking it out on us and our subscribers. It’s the cable network that you want to go punch in the eye. We didn’t take your advertising. We didn’t take your market share. They did.”

Cable One has offered broadcasters many different kinds of noncash compensation, such as buying advertising on their stations and carrying their local digital signals, such as local weather channels, according to Might.

“Our philosophy is that we did a lot of retrans deals for a lot of years, and we have a lot of good broadcast partners out there,” he added. “There should be a mutual benefit in the relationship. It shouldn’t be a one-way street.”

Fielding a question from the audience, Might acknowledged that his sister company, broadcaster Post-Newsweek Stations Inc., is seeking cash for retransmission consent. Cable One and Post-Newsweek are owned by The Washington Post Co.

Explaining that the parent company is very decentralized, Might said, “My counterpart who runs the broadcast division of our company is one of the ringleaders on the other side, unfortunately … Our parent company lets us each do whatever we want running our companies to maximize our results.”

Might then flashed a slide that included addresses, phone numbers and e-mails for Alan Frank, president of Post-Newsweek Stations, and Washington Post CEO Don Graham, suggesting that NCTC members contact both of those executives directly to complain about cash for carriage.

“Tell [Frank] to pick on someone his own size,” Might said. “Tell him to pick on Comcast [Corp.].”