No Subsidies for Free TV

Broadcasters complain they are entitled to receive compensation for carriage of their local television signals. Let's look at the facts.

In return for the obligation to provide local television signals to taxpayers, the broadcast industry has received billions of dollars in free government-granted spectrum. The federal government recently priced the return of broadcasters' analog spectrum at more than $11 billion.

Moreover, local broadcast stations make enormous money off of the sale of advertising. In 2005, local broadcast-TV ads equaled $24 billion in revenue. An important part of that total ad revenue comes in the value broadcasters receive when cable extends the reach of stations to viewers who could never receive their signals over the air.

That's not all. Copyright payments to broadcasters in 2004 totaled nearly $200 million.

But wait — there's more. The broadcasters wanted to move to digital television, and the federal government again stepped in to help, giving the broadcast industry about $70 billion in free digital spectrum.

All told, that's about $105.2 billion in value and revenue the broadcast industry has right now. Not a bad take.

How does the broadcast industry thank the U.S. taxpayer for this grant? By seeking hundreds of millions more in retransmission-consent payments from taxpayers who subscribe to cable to receive their free over-the-air television signals.

The broadcasters say, “We just want to be treated like other programming networks.” There's one thing wrong with this statement. Broadcasters are not like basic-cable programming networks. Unlike broadcasters, those networks pay satellite carriers for delivery to cable and direct-broadcast satellite companies and they don't receive taxpayer money and handouts to get their signals delivered.

Let's look at one egregious broadcast example: Sinclair Broadcast Group, one of the largest owners of taxpayer-granted broadcast licenses and recipient of hundreds of millions of dollars in free digital spectrum. In return for that favor, Sinclair wants cash payments from cable operator Mediacom Communications, and others, in exchange for its stations' signals. But those payments will be passed through to the taxpayers who choose to subscribe to Sinclair's stations via the local cable company.

Sinclair and other broadcasters say it's important for cable companies to pay retransmission-consent fees in order to “protect and promote localism.” How ironic then that Sinclair was one of the first major broadcasters to stop production of local news and weather reports to enlarge shareholders' profits.

Sinclair responds that it does care about the local customer, and that's why it has promoted a bounty deal with DirecTV to plunk off Mediacom customers at $100 or more per pop. Sinclair promotes this bounty deal on its free, over-the-air public airwaves.

It's time for taxpayers, not just the cable companies, to stand up to the powerful broadcasting companies. If broadcasters want to be treated like other cable programming networks, then they need to return their free taxpayer granted spectrum and have it auctioned off so that taxpayers are not charged twice. They also need to lose the exclusive market protection that allows them to prevent any competition.

This issue is no longer about Sinclair versus Mediacom. It's about local customers and taxpayers who should not have to pay twice.