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Small MSOs To Get ABC Signal For Free

Washington—Small cable operators based inside television markets where The Walt Disney Co. owns the ABC affiliate will be able to carry the signal for free for the next three years, Disney announced Tuesday.

Disney owns 10 ABC stations, including outlets in New York, Philadelphia and Houston. Under terms of the agreement, 91 out of 113 cable operators with systems inside those 10 owned-and-operated markets will get free access to the ABC signal.

Disney intends to make the ABC signal available to "truly small" cable operators but not to big MSOs such as Comcast, Time Warner Cable and Cox Communications, a Disney official said.

Starting on October 1, local TV stations need to decide whether to demand cable carriage or instead negotiate a deal for compensation, including cash and carriage affiliate cable networks. Disney will make ABC available to eligible small operators without the need to negotiate a deal.

Disney's offer comes as Federal Communications Commission chairman Kevin Martin has the agency considering rules that would force programmers like Disney, NBC Universal and News Corp. to provide wholesale access to their TV stations and cable networks on an unbundled or a la carte basis.

The American Cable Association, a consortium of small cable company owners, has been urging the FCC to regulate the wholesale programming market, claiming that small operators are forced entities with market power to distribute more programs than they want, which puts upward pressure on retail cable rates.

In a statement released Tuesday afternoon, ACA president Matthew Polka called Disney’s decision “a banner day for the cable industry” because “a major programmer has finally admitted that the retransmission consent market is broken and does not work the way Congress intended.”

Polka went on to say that “in Disney’s mind, today’s announcement may be an olive branch to smaller operators, but this is far too little relief for far too few operators.”

“There should be no mistake—Disney’s offer does little to change the broken retransmission consent regulations,” he said in the statement. “Disney should not expect gratitude for lessening its abuse of the market, the system, or smaller operators.”

The ACA today also asked the FCC to support a “quiet period” that would bar broadcasters from removing their signals from cable systems after many retransmission-consent agreements expire on Dec. 31, 2008. The ACA asked the FCC to support a policy that, in the absence of retransmission deals, would maintain the status quo until May 31, 2009, citing the additional confusion that would result if stations are dropped around the time of the transition to digital television signals next Feb. 17.

Three-year retransmission agreements for 3,000-5,000 independent cable systems will expire on Dec. 31, the ACA said.