Television has changed a lot over the past 30 years. Our nation’s TV laws have not.
October 5, 2022, marks the 30th anniversary of the 1992 Cable Act (opens in new tab), and American consumers continue to pay the price for these outdated regulations still on the books.
Just as the 2020s are an era of transformational change, so were the early 1990s. The Hubble Space Telescope launched, the World Wide Web debuted, the Soviet Union fell, and the United States elected a new president with fresh ideas and a new approach. And Congress enacted new cable legislation. The goal at the time was admirable — Congress wanted to protect consumers and promote localism. But what remains today of this outdated law does neither.
The Cable Act established retransmission consent fees or “retrans fees,” which are payments that TV providers make to local broadcasters to carry their TV channels. When broadcasters lobbied Congress to create retransmission consent, they told Congress the fees would cultivate localism and help local affiliates. Today, however, those fees mostly flow to network conglomerates and satisfy ever-increasing Wall Street demands.
- Today, the “Big Four” national broadcast networks have largely seized their local affiliates’ control over retransmission consent decisions. They often dictate the terms under which consent can be granted and demand a huge cut of the stations’ retrans fees — called reverse retrans.
- Retrans fees represent the fastest-rising portion of consumer pay TV bills. Over the last 30 years, big broadcast conglomerates have collected more than $74 billion (opens in new tab) in retrans fees.
- On recent earnings calls, broadcasters have trumpeted the success of their retrans cash hauls. America’s largest broadcast company, Nexstar Media Group, is twice the size (opens in new tab) of its nearest competitor and reported $4.6 billion in 2021 revenue — 52% of which is from retrans fees. Standard General and Tegna together reported $1.38 billion (opens in new tab) in retransmission fees from their 2021 revenue sum of $2.7 billion. Gray Television’s retrans revenue topped $1 billion in 2021, reporting total revenues of $2.6 billion. An increasing amount of these fees are going to hedge funds like Apollo Global Management and Standard General, who buy broadcast stations to collect these fees.
Worse yet, if pay TV subscribers do not concede to these demands for higher fees, broadcast conglomerates pull their signals — again, something the broadcasters promised would never happen back in 1992. This leaves the pay TV provider a choice: to either pay up or go dark. Either way, consumers lose with increased prices or by suffering through broadcaster blackouts.
Retrans blackouts are near epidemic levels, with consumers enduring more than 1,500 blackouts since 2010. At the height of the COVID-19 pandemic in 2020, when consumers needed access to local news and information the most, there were more than 350 broadcaster blackouts — a record for a single year — affecting tens of millions (opens in new tab) of pay TV viewers. Broadcasters continuously weaponize TV blackouts, deliberately targeting live sports and other must-see TV, blacking out the Super Bowl, NFL and college football postseason games, the World Series, the Grammys, and network TV premieres. When blackouts finally end, consumers get their programming back, often at a higher cost.
As often happens when regulating any industry, it’s difficult to predict its future. In 1992, Congress couldn’t have envisioned the creation of Netflix or YouTube — or foresee watching TV on a cell phone or tablet. Congress couldn’t understand how this new framework would eventually fail consumers.
Today, we live in an instant, on-demand digital world. Consumers have unparalleled choice and competition for video content. The market has changed. Retrans is broken. The American Television Alliance looks forward to working with members of Congress to pass video marketplace reform that benefits consumers.
It’s time to modernize the rules that favor broadcasters at the expense of consumers. It’s time to bring America’s television laws into the 21st century. ▪️
Mike Chappell is executive director of the American Television Alliance (ATVA).
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