MVPDs, Broadcasters Agree Congress Watching TV Blackouts Disputes
Disputes about retransmission and carriage agreements have drawn the attention of lawmakers, said media executives whose opinions vary on which way Congress might lean. At a Senate Commerce Committee hearing last month on updating the 1992 Cable Act, lawmakers said constituents have complained to them about recent blackouts due to retrans negotiation disputes between programmers and cable and satellite-TV distributors (CD July 25 p5). Disputes resulted in blackouts in cities in Wyoming, West Virginia, Illinois and other states. They were followed by high-profile disputes between Viacom and DirecTV (CD July 12 p10) over cable channels like Nickelodeon and Time Warner Cable and Hearst Television, which affected 15 TV stations (CD July 11 p18).
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NAB said the disputes aren’t ignored by Congress. But “policymakers understand that the market is working as Congress intended,” said a spokesman. Nearly all negotiations are resolved without any disruption in service, he said. “There are thousands of deals with no publicity [and] no sensational headlines. They're done quietly in the marketplace.” At the Senate Commerce hearing, “there didn’t seem to be a huge interest in getting involved in this,” he added: “There seems to be a recognition that the broadcasters provide the most-watched programming and the highest-rated programming and broadcasters ought to be fairly compensated."
The hearing heightened awareness that there’s a problem in the current retrans model, said Andrew Reinsdorf, a DirecTV senior vice president. The hearing “made clear that the debate shifted from ’there isn’t a problem, deals are getting done’ to ’this is a significant problem for our constituents and the video marketplace,’ and that needs to be fixed,” he said. DirecTV has carried stations for 13 years, he said. “We've had seven blackouts and four have unfortunately already occurred this year.” Viacom had no comment.
Congress may be motivated by the innovation in the market to revisit policy on broadcast retrans and pay-TV carriage agreements, said Thomas Larsen, Mediacom vice president: “They don’t want to be married to an outdated technology.” Congress is finally recognizing that broadcasting is an old technology and that it’s very set in its ways, he said. Broadcasters “haven’t really innovated with respect to how they deliver their signals,” but other, more-recently started companies figured out a better way to deliver video to consumers, he added.
Some multichannel video programming distributors said many blackouts get resolved, but the consumers still lose. “Blackouts are disruptive and they're increasingly prevalent,” Reinsdorf said: “When the signal is put back up, hopefully you got a better deal, but [instead] you're paying more and the viewer is paying more for what was once free.” Deals are reached but “the issue is they get resolved always at a higher price for consumers, so it’s not like a resolution on the carriage issue is a win for the consumers, because the price they're paying goes up and up and up,” said Larsen. “They lose with a blackout and they lose with a resolution because a resolution means a higher price.” DirecTV and Mediacom are among the MVPDs that are members of the American Television Alliance, which seeks changes to FCC retrans rules and a new law.
Negotiations are especially difficult for small- and mid-size distributors like Mediacom, which has mostly rural markets, Larsen said. “Sometimes the biggest distributor doesn’t ever see a blackout because they have the leverage to really hurt a broadcaster’s advertising dollars, whereas a smaller operator in the same marketplace is going to pay … two to 10 times more.” That’s bad for consumers, he said. “It’s a system that’s actually punishing rural consumers because they're paying more for a signal they can’t see over the air for free and the only way they can get it is through a cable or satellite provider."
Time Warner Cable, Dish Network and DirecTV manufactured a crisis “in hopes that Congress will absolve them of having to sit down at the table and strike fair deals,” the NAB spokesman said of those MVPDs’ recent broadcaster and cable programmer blackouts. The association recommends distributors issue refunds to customers who lose TV stations in blackouts and notify customers 60 days before a carriage agreement expires, he said: Broadcasters “can do a better job educating our viewers about the free TV option,” which requires an antenna.