Broadcast TV Not So Free After All

Broadcast TV Not So Free After All

BroadcastTVIn a recent column in the Bend Bulletin, Bob Singer, the general manager of KTVZ, wrote that the “retransmission consent” fees his station charges cable and satellite providers enable his station to provide “free” local programming and news.  Broadcast TV is in fact not “free” for the 90% of Americans who rely on cable and satellite services to watch their favorite shows.  Broadcast TV costs these consumers billions of dollars per year.  And these costs are increasing rapidly, at a rate far beyond inflation. 

Over the next five years, local TV broadcasters touting “free TV” are expected to make nearly $25 billion from consumers.  The TV blackouts Bob refers to occur when a TV broadcaster removes its signal from a cable or satellite provider due to a breakdown in a retransmission consent negotiation. These breakdowns happen because TV providers are trying to hold down costs to their customers while TV broadcasters, often under pressure from national TV networks, demand large increases in retransmission fees.

It wasn’t always this way.  For many years, the law guaranteed that cable subscribers would have access to local TV stations, often with a better signal than could be received over the air.  Under these rules, there were no blackouts of local stations.  But in the early 90’s, the broadcasters lobbied for and received special treatment from Congress in the form of laws that gave them the right to demand retransmission consent fees and to prevent a cable operator from showing broadcast signals from another market without the local broadcasters’ approval.  When this law was enacted, cable was often the only option for viewers who wanted to watch local TV signals, but couldn’t receive a good signal over the air.  Because cable and the local TV stations needed each other, Congress expected that demands for retransmission consent fees, if any, would be reasonable and would not result in blackouts.  But in the twenty years since that the retransmission consent law was enacted, much has changed.

Today, consumers have many choices for video services.  But the same old rules still apply that allow local broadcasters to blackout cable and satellite customers and prevent cable and satellite companies from substituting a different TV station for a local station when a blackout occurs.  While all parties are required to negotiate in good faith during retransmission deliberations, cable does so from a disadvantaged position given the outdated rules set by Congress many years ago.  Local broadcasters can play competing video providers off one another, blacking one out and suggesting viewers just switch providers.  Additionally, the law requires cable companies, such as BendBroadband, to carry local TV stations on a “basic” tier of service that all customers must buy, even if they can receive the local stations using an antenna.  KTVZ is a very profitable and well-run TV station. I believe KTVZ’s need for cash from our customers is less about supporting their operations, and more about the demands from the national network that supplies them with non-local programming.  As much as 50% of the retransmission consent fees that a station collects are sent back to the network’s headquarters.  Congress intended these retransmission consent fees to go to local stations, but they now are used to pay for expensive national network programming, such as sports and entertainment.

Broadcasters have special advantages granted by the government’s laws that give them leverage in negotiations with TV providers.  Congress needs to change these laws now in order to protect consumers.  If a local TV broadcaster blacks out customers from seeing their programming, maybe TV providers should be able to temporarily bring in another city’s broadcast affiliate so consumers don’t lose access to their favorite shows.  If the local station is truly valuable to consumers, consumers will demand the local station and we can respond.  That’s a market-based solution, and not one based on antiquated rules.

Finally, I want to make it clear that we value our relationship with TV broadcasters.  We also realize that while many of our customers can receive broadcast signals free over-the-air, they appreciate the convenience of receiving the stations from their cable system with the added value of services such as digital video recording capabilities and an accurate program guide.  We hope broadcasters likewise value our ability to carry crystal clear high definition signals to homes that may not receive a signal over-the-air.  Together we share the responsibility to provide our common customers the best cost effective entertainment and information services available.

The message in Bob’s article was intended as much for Congressman Walden as for the Bulletin’s readers.  As Chairman of the Congressional subcommittee that oversees the television industry, Congressman Walden already has begun looking at the marketplace changes that have taken place since the retransmission consent rules were first written.  We hope that Congress, as part of legislation that has to be passed this year to extend certain expiring FCC rules, will take the opportunity to consider updating the retransmission consent rules to benefit consumers.  Viewers deserve modern video rules written in the 21st Century.

Executive blog post by Amy Tykeson, BendBroadband CEO

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