|
Human
Events...
TV
Watching
Dollars at Stake in Complex Policy Battle
By John
Hayward
6/20/2012
Broadcast
television stations have a complicated relationship with cable and
satellite
television providers. A broadcast TV station is beaming its content
into space,
where it can be freely received and viewed by anyone with a suitable
antenna.
But the good old days of “rabbit ears,” wired into television consoles
that
could be used as furniture, are long behind us. Most people get their
TV feed
from cable or satellite companies now… and they’ve got the rabbit ears.
Local
broadcast stations have always felt they deserved compensation when the
pay-TV
industry “re-transmits” their content—essentially repackaging work they
grabbed
out of the sky for free, and selling it for a profit. In the early
’90s,
Congress created a legal framework around the concept of
“retransmission
consent.” In essence, this means broadcasters must consent to the
retransmission of their content by cable, satellite, and telecom
providers.
Naturally,
broadcasters expect to be paid for granting their consent. The
production of
television programming is a costly process, involving expensive
equipment and
labor.
A massive
regulatory apparatus grew around retransmission consent, while
technology
marched onward. Video programming is now routinely watched on
computers, and
even tiny smart phones. The pay-TV industry believes the current rules
are
slanted in favor of broadcasters.
Pay-TV
providers are required to purchase certain broadcast programming in
their area.
Negotiations with broadcasters are regulated in a way that negotiations
with
cable TV stations, such as the History Channel or Discovery Channel,
are not.
Negotiations have occasionally broken down, leading to rare instances
of
content blackouts by certain pay-TV providers.
Broadcasters
counter that emergency information and public-affairs programming are
vital
community services, and most viewers simply don’t have the equipment to
easily
receive those signals over the air any longer—consumers are largely
dependent
on their cable, satellite, or telecom provider. Also, without the
revenue from
retransmission fees, it would become impossible for local broadcast
stations to
continue providing the expensive round-the-clock news and weather
services
viewers rely upon.
Local
broadcasters find it difficult to compete with big cable networks for
national
advertising dollars, making them more dependent on retransmission fees.
Those
fees have increased nearly 700 percent over the past five years, from
$215
million in 2006 to $1.5 billion in 2011. Pay-TV providers say consumer
rates
for cable and satellite services have been driven up accordingly.
However, the
fees paid to basic cable networks are, collectively, much higher, and
they’ve
increased dramatically as well—from $16 billion to more than $26.5
billion in
the same period.
Pay-TV
provider competition rises
One key
issue in this dispute is the rise of substantial competition among
pay-TV
providers. In 1992, when the current regulatory regime was conceived,
many
cable TV companies had an effective monopoly in their service areas.
Now there
is vibrant competition between cable, satellite and telecom providers.
This
gives local broadcasters more leverage when they threaten to black out
a
particular provider.
At the end
of 2011, Sen. Jim DeMint (R-S.C.) and Rep. Steve Scalise (R-LA)
introduced the
Next Generation Television Marketplace Act, which would remove the
“must-carry”
mandates, repeal ownership limitations imposed on local media
operators, and
most significantly remove the “retransmission consent” regulations.
Instead, a
de-regulated environment in which pay-TV providers pay for the use of
copyrighted material would prevail.
“What we
now have is a complex web of outdated regulations that must be
addressed
comprehensively and cannot be dealt with individually, in isolation
from one
another,” explained DeMint. Scalise added, “The government should not
be in the
business of picking winners and losers, and the Next Generation
Television
Marketplace Act ensures that by removing the heavy hand of government,
the
market is free to operate in a way that continues to benefit consumers
and
encourage innovation.”
The
National Association of Broadcasters counters that existing regulations
have
created a competitive environment for negotiations, rather than
distorting it:
“These negotiations are fair and market-driven, and there is no need to
change
the process that Congress established and has worked well for nearly
two
decades. Eliminating broadcasters’ ability to negotiate for the value
of
broadcast signals would mean less choice for viewers and fewer dollars
for
stations to dedicate to local news, public affairs programming,
coverage of
emergency weather events and community activities.”
Dennis
Wharton, NAB executive vice president, said the industry fears
“compulsory
copyright” provisions in the DeMint-Scalise bill would not be
sufficient to
allow broadcasters to secure an equitable fee for their content, and
might not
even survive the legislative process at all. If Congress ended up doing
nothing
more than eliminating retransmission consent protections, the days of
pay-TV
providers repackaging expensive broadcast content at little or no cost
might
return. “It’s the most anti-free-market idea to come along in a long
time,” he
said, describing an environment in which cable and satellite companies
could
“profit from the sale of content they don’t own, and didn’t pay for.”
Remove
antique FCC regulations
Wharton
did, however, speak favorably of the Next Generation Television
Marketplace
Act’s measures to remove antique FCC regulations against broadcast
companies
purchasing newspaper outlets, which date from a 1960s era in which only
three
TV networks existed. This could provide rescue for struggling
newspapers.
Retransmission
is a complex issue, and the battle lines are a little blurry. Notably,
the
American Conservative Union, which favors portions of DeMint and
Scalise’s
de-regulatory bill, is not comfortable with completely stripping away
the
concept of retransmission consent. ACU chairman Al Cardenas wrote in
March,
“The reality is that today we have a functioning market in which
opposing
parties are able to bring value to the negotiating table. By stripping
away the
right to compensation for the use of the signal the government would be
tipping
the scales heavily to the side of the pay-TV companies. It would
distort the
marketplace and allow an uncompensated use of broadcast signals and
content and
is certainly not ‘deregulation.’”
The debate
rages on, largely unnoticed by television viewers, who tend to take a
great
deal of what they see for granted. But local TV stations are not just a
desk, a
couple of monitors, and a van with a big antennae on top; cable
television
providers consist of more than a little control room surrounded by
satellite
dishes; and the cost of packing our big-screen TVs with thousands of
hours of
content is far greater than many of us realize.
Read this
and other articles at Human Events
|
