Porter Novelli's Brian Frederick: "The NAB's charges [that the vast majority of retrans blackouts involve DirecTV, Dish Network and Time Warner Cable] are ludicrous, as anyone with even a basic understanding of how business works can attest. There is nothing more frustrating for TV consumers than blackouts so it's absurd to think that pay TV distributors would intentionally upset their customers and risk losing them. As long as distributors are prohibited from importing a distant network signal and broadcasters can drop signals on cable and satellite, broadcasters can demand whatever they want for a local signal, knowing that most viewers primarily just care about network programming anyway."
NAB Breaks Out Tin Foil Hats In Retrans Fight
The National Association of Broadcasters is currently trying to convince everyone that a few pay TV companies are engaged in some sort of conspiracy to cause blackouts in order to move Congress to change retransmission consent. The NAB claims that 89% of blackouts in the last two years have involved DirecTV, Dish Network and Time Warner Cable and if only those companies would work a little harder to reach resolutions with the broadcasters, there wouldn’t be any blackouts.
From TVNewsCheck: “According to NAB spokesman Dennis Wharton, TWC belongs to a tiny cabal whose members are taking turns causing blackouts so that they can convince Congress that Americans’ inalienable right to unlimited entertainment options is being threatened by greedy broadcasters and that their retrans rights have to be trimmed.”
The NAB’s charges are ludicrous, as anyone with even a basic understanding of how business works can attest. There is nothing more frustrating for TV consumers than blackouts so it’s absurd to think that pay TV distributors would intentionally upset their customers and risk losing them.
But let’s dissect that 89% figure that the NAB has been throwing around. First, those three companies make up nearly half of pay TV subscriptions. Second, DirecTV and Dish are available in virtually every home in America, so of course a higher percentage of retrans disputes are going to involve them. Third, the biggest pay TV distributor, Comcast, now owns NBCUniversal and has chosen to sit on the sidelines. (“Retransmission consent dollars is not a good thing for the cable side of Comcast, but it’s going to be a very good thing for NBCU,” NBCU chief Steve Burke told investors following the Comcast-NBCU merger.)
Fourth, and perhaps most importantly, in addition to the legitimate retransmission consent concerns raised by Time Warner Cable, DirecTV and Dish, consider what it is like for smaller cable companies that have to negotiate with today’s broadcast and network behemoths. The smaller distributors, like the members of the American Cable Association, who are also fighting to reform retrans, often have no choice but to capitulate to broadcasters’ extortionary tactics lest they lose the very lifeblood of their businesses.
TVNewsCheck says of the latest retrans dispute between CBS and TWC: “CBS was clearly the winner.” Of course they were! The broadcasters will always win as long as the rules are rigged to ensure that they don’t have to negotiate their terms in a free market.
As long as distributors are prohibited from importing a distant network signal and broadcasters can drop signals on cable and satellite, broadcasters can demand whatever they want for a local signal, knowing that most viewers primarily just care about network programming anyway.
If viewers truly did care about local programming, the broadcasters wouldn’t need to lobby to prevent the importation of distant signals. And if the local programming was compelling enough that viewers preferred it to the distant network signal, distributors would have every incentive to give it to them lest they lose customers to competitors offering the local channel.
By the way, can we please put an end to broadcasters’ hypocritical and false claims that the government shouldn’t intervene in “free market negotiations”? Gifted with incredibly valuable spectrum space and numerous rules and regulations, the video marketplace today is anything but a true free market.
Truth is that there aren’t just three companies that are justifiably calling for retrans reform. There are numerous cable, satellite and telecom companies. There are independent programmers, consumers groups and civil rights groups. In fact, virtually everyone other than the broadcasters is calling for retrans reform. And for good reason: blackouts continue to increase in frequency and duration and retrans fees are skyrocketing. Broadcasters will earn over $3 billion in retrans revenues in 2013 — something then-CBS CEO Laurence Tisch told Congress “certainly” would never be the case back when broadcasters were lobbying for retrans. And they are projected to hit $6 billion (if not $12 billion) by 2018.
So the NAB can float absurd conspiracy theories and try to distract everyone from the hard truth: the retrans system is truly broken and it is now simply subsidizing expensive network programming. (Perhaps Congress should ask the broadcasters to open their books as a condition of that free spectrum.)
Brian Frederick is VP of public affairs at Porter Novelli, a public relations firm retained by the American Television Alliance, which is a coalition of pay TV distributors, consumer groups and independent programmers. He can be contacted at [email protected] or at 202-973-2965.