TV Stations Flip-Flop On Consumer Choice

Here’s some news you might have missed: Choice is coming to the TV industry. In recent days, CBS announced the rollout of a product called CBS All Access. For $5.99 a month, consumers can watch their local CBS stations, including the network’s highly rated primetime dramas and sitcoms, without a cable subscription. I’ll say it again: Without … A … Cable … Subscription. Talk about found money!

Unfortunately, there’s a catch. CBS All Access isn’t available to cable subscribers. Only broadband Internet subscribers may purchase the product.

That’s a huge disappointment because cable subscribers deserve the right to access not just CBS All Access but all fee-seeking local TV stations on a station-by-station basis. Fortunately, Sens. Jay Rockefeller (D-W.Va.) and John Thune (R-S.D.) — respectively, the chairman and ranking member of the Senate Commerce Committee — have shown great leadership on behalf of consumers and have proven that bipartisanship is alive and well in the communications policy space.

In August, Rockefeller and Thune unveiled their TV reform plan called Local Choice. It has just a few components and each is very easy to understand. Essentially, each TV station that wants to be compensated would sell its channel directly to pay TV consumers and keep all the money. Bottom line: Retransmission consent negotiations with pay TV providers would be abolished and the record-setting number of signal blackouts initiated by TV stations would plunge to zero.

The Rockefeller-Thune Local Choice proposal makes a powerful statement in support of the proposition that consumers, once and for all, should have to power to decide how much they want to pay for what the broadcasters like to call “free TV.”

Although there isn’t a meaningful difference between Local Choice and CBS All Access in the eyes of a consumer, broadcasters — based on some unexplained logic — savaged Local Choice when it was first proposed.  

Broadcasters’ opposition forces included the likes of TVFreedom.org. This front group of some members of the National Association of Broadcasters claimed that Local Choice was invented by the pay TV industry to gain an unfair regulatory advantage and “drive local TV stations off the air.” TVFreedom insisted on the need to retain current law as is and keep on requiring every cable customer to buy the local TV signal package before any other channel sold by the cable operator.

Consumers’ inability to rely on Local Choice to bypass expensive local TV stations will cost them big time. According to Wells Fargo Securities, retransmission consent payments to TV stations from pay TV companies and the customers they must charge for these “free” signals are going to reach $12 billion in 2019, up from about $3.7 billion this year. 

Before Local Choice was a legislative proposal, the idea of giving consumers more choice in subscribing to individual TV stations was a recommendation crafted by the CEO of Time Warner Cable in an effort to end CBS’s blackout of 3 million Time Warner Cable and Bright House Networks cable subscribers on the eve of the 2013-14 NFL season.  In an open letter to CBS CEO Leslie Moonves, Time Warner Cable CEO Glenn Britt offered to provide CBS stations to those who request them at any price chosen by CBS, with every penny flowing to CBS.

“This way, rather than our debating the point, we would allow customers to decide for themselves how much value they ascribe to CBS programming,” Britt said.

Moonves gave Britt the back of his hand: “As to your groundbreaking ‘offer’ to go a la carte: Anyone familiar with the entertainment business knows that this is an empty gesture.”

Fourteen months later, and just weeks after CBS and its broadcast brethren killed Local Choice on Capitol Hill, Moonves decided the idea of selling local TV stations to consumers individually was so dreadful on its face that he’d race to become the first broadcaster to offer a copycat version on the Internet. Anyone familiar with the entertainment business knows that Moonves has now taken “borrowing the concept” to whole new level.

So far, not a single independent CBS station (of which there are about 200) has called Moonves on his Local Choice flip-flop. Michael Fiorile, board chairman of the CBS station affiliates, embraced CBS’s decision to give consumers choice.

“I keep looking for a fault in the plan and I don’t see it,” Fiorile said. “I think people are generally pretty pleased.”

To date, neither Moonves nor Fiorile has articulated a rational basis for making CBS All Access available to broadband customers but not to cable subscribers. That’s because there isn’t one. Although TVFreedom has been silent since the news broke about CBS All Access, the NAB members’ proxy has not taken down blog posts slamming Local Choice as “a frontal assault on free and local TV”  and blasting consumer choice as something that has “significant economic flaws” and will have a “negative impact” on “TV programming diversity.”

Clearly, the arrival of CBS All Access means at least two positive developments: The forces in favor of consumer choice have won the debate and critics like TVFreedom need to find a new agenda because it is impossible for broadcasters to explain how it’s possible to be “just a little a la carte.”

Matthew M. Polka is president and CEO of the American Cable Association. He can be reached at 412-922-8300, ext. 14.