CBS Retrans Win Is One For All Broadcasters

Like every other media reporter in America, I don’t know what the terms of the CBS-Time Warner Cable retrans settlement are so I have no real way to analyze it. The one thing the parties to these disputes always agree to from the get-go is not to share the details with the public, even as they vow that they really have the interests of the public at heart.

But CBS was clearly the winner. You could tell just from the what the two sides had to say after the four-week blackout ended on Monday.

Appearing Wednesday on CBNC’s Squawk Box, CBS CEO Les Moonves sure sounded and acted like a winner, even though his words were measured. “I am very pleased with the deal,” he said as he bantered with his hosts and noted repeatedly that CBS is the No. 1 network.

Meanwhile, the best Time Warner Cable CEO Glenn Britt could muster was that it could have been worse (TWC “ended up in a much better place than when we started”). The real giveaway is that he continued to whine about the inequity of the whole retrans process.

“The rules are woefully out of date, are the primary reason cable bills are rising,” he said. “We sincerely hope that policy makers heed that call and take action to prevent these unfortunate blackouts soon.”

Being the winner means that on the key issue — retrans fees for the CBS O&Os — CBS went a long way toward achieving its goal of getting $2 per sub per month over the life of the agreement. Maybe that is $1.40, $1.50 or $1.80. In any case, it represents a big jump. According to SNL Kagan, CBS is now averaging just 65-75 cents.

The NAB theory is that TWC is not a loser, but is simply playing the long game.

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 unfortunate reality is that in the last two years, 89% of all retransmission consent disruptions have involved three companies: Time Warner Cable, DirecTV and Dish,” said Wharton upon news of the CBS-TWC settlement.

“Rather than create a manufactured ‘crisis’ that would inject government into the free-market, these three firms might better spend their time working toward amicable resolutions over TV programming most valued by viewers.”

If that’s cable’s strategy, so far it doesn’t seem to be working. Congress has shown little interest in revisiting retransmission consent. Lawmakers seem to understand that the blackouts are rare exceptions to the rule, which is that most retrans deals are negotiated quickly and amicably.

If TWC could have held on in this latest round until after the start of the NFL season, it might have sparked some old-fashioned congressional outrage. But we’ll never know. TWC didn’t have the stomach for depriving millions of its paying subscribers of their Sunday football.

At the FCC, Acting Chairwoman Mignon Clyburn dutifully encouraged the two sides to settle, but she rightly did not take sides. Her pronouncement early in the standoff that she was ready to “take appropriate action if the disputes continues” turned out to be empty rhetoric.

That all said, broadcasters cannot let down their guard. It doesn’t always take a long history and heaps of evidence to move legislation. Sometimes, all it takes is the one egregious case and one powerful lawmaker on a mission.

 A year ago, we reported that if the cable and satellite interests were to make a big push for retrans reform, they would probably do so when Congress considers renewing the Satellite Television Extension and Localism Act. The law, which enables satellite TV to carry broadcast signals under copyright law — subject to retrans, of course — comes up next year.

In fact, a House judiciary subcommittee has scheduled a hearing on STELA for next Tuesday and, sure enough, at least one witness, Earle MacKenzie of Shentel Cable and the American Cable Association, will be making the case for curtailing broadcasters’ retrans rights.

I am less worried that the FCC will intercede. First, its authority here is limited and, second, Tom Wheeler will take over as permanent chairman within the next few months.

That he was once cable’s chief lobbyist prevents him, I think, from tinkering around the edges of retrans to help out his old cable friends. In other words, he’s too close (or perceived to be too close) to be of much help.

The real question for broadcasters who aren’t CBS, NBCUniversal, Disney-ABC or News Corp., is, will there be a trickle-down effect? Has CBS set a new higher benchmark for retrans fees?

If the CBS O&Os deserve $1.50 or $2, doesn’t every CBS affiliate? I would argue yes, especially since the affiliates are being forced to share a big portion of their retrans take with their networks. But it doesn’t necessary follow.

Retrans is a game of leverage. And if you don’t have a lot of leverage — because, for instance, you operate only a handful of stations, or you don’t also own popular cable networks, or you are up against a cable operator with unusually large percentages of subscribers in your markets — you are still a long way from CBS kind of retrans money.

In its latest analysis, SNL Kagan agrees. “Even as large owners are discussing moving from $1/sub/month to higher levels, in the first quarter of 2013, we calculate that the average station owner was still in deals producing sub fees averaging $0.59/sub/month.”

In any case, regardless of leverage, the CBS-TWC settlement makes all broadcasters  winners, assuming they can continue to ward off government intervention. The deal demonstrates the continued attractiveness of broadcasting programming (particularly sports) and its puts upward pressure on all retrans fees.

I may not know exactly what CBS is getting in its new TWC deal, but smart broadcast retrans negotiators will.

Harry A. Jessell is editor of TVNewsCheck. He can be contacted at 973-701-1067 or [email protected]. You can read earlier columns here.