How To Solve Retrans Sharing? Draft Smith

By this time next week, I may be able to report that the broadcast networks and their affiliates have reached some kind of understanding on retrans sharing, one that gives the networks the funds they will need to assemble the best of all possible programming and doesn’t break the backs of affiliates that now count on retrans revenue for much of their cash flow.

The entire Fox affiliate body and the affiliate boards of the Big Four networks are meeting in Las Vegas next week during the NAB convention. Those forums will give the parties the opportunities to come together and divvy up the retrans loot like the reasonable gentlemen and ladies I know them to be.

But I am not optimistic. Relations are badly strained, particularly among Fox and its affiliates. Fox has shoved a rate card in front of its affiliates and is threatening to dump any that refuses to pay the rate card price. Fox says it is prepared to move its affiliations to rival stations for carriage on subchannels. CBS and ABC are making similar demands, but no overt threats as far as I know.

If Fox were to make good on its threats, it would damage not only the recalcitrant affiliates, but the entire industry. Nothing could be worse for broadcasting than a bunch of stories in the general press about how affiliations are being yanked because the fat-cat networks and their fat-cat affiliates can’t figure how the split hundreds of millions of dollars that is ultimately coming out of the pockets of beleaguered pay TV subscribers.

Cable and satellite operators would stroke such stories and use them to convince the FCC to modify its retrans rules in a way that makes it tougher for all broadcasters to negotiate for retrans fees in the first place. The golden goose would be cooked.

While I was in Washington last week for Tack Nail’s memorial service (the inimitable TV reporter got a wonderful send off by hundreds of his friends), I had breakfast with a prominent communications attorney. If the networks and affiliates can’t get their act together soon, he said, they should hire a “statesman” whom everyone respects to mediate, to remind both sides of their mutual interests and to get them working together against cable and satellite and not against each other.

But who? Who is this statesman or stateswoman who could save broadcasting from itself? We kicked around a few names.

My thought was NAB President Gordon Smith. First of all, he looks the part. Really, if you were casting a statesman for your next movie, wouldn’t you immediately grab him? He’s also the kind of guy who can quote Lincoln about divided houses and all that without sounding silly or pretentious.

Second, broadcasters are already paying him. When he took his oath of office, he swore to protect broadcasting from all enemies, foreign and domestic. This falls under domestic, I think. He would be saving broadcasting from ripping itself apart.

Third, he is someone “that everybody respects.” Since arriving at NAB in 2009, he has won over every segment of his diverse constituency. I have not heard a discouraging word about him. He could do this. He has created the necessary reservoir of goodwill. For the sake of the industry’s overall health and well-being, he could step in and at least try to settle this before someone gets hurt.

That said, I am not sure I could in good conscious insist that he take the job. At the risk of overextending a metaphor, that reservoir of goodwill can drain quickly if he lands on the wrong side of the wrong issue.

We all know what happened to Eddie Fritts. A decade ago the big network-affiliate wedge issue was the national ownership cap. The networks wanted Congress to relax it so that they could buy more stations. Fearing that they would be forced out of any decent market by the networks, the affiliates wanted to keep the cap just where it was.

As NAB president, Fritts got right in the middle of that mess, and paid the price. Before it was all over, the networks had all quit NAB and the affiliates had fired Fritts, believing that he was somehow too cozy with the networks.

Fritts could hardly avoid getting involved. The ownership cap was put into play by the FCC and was bound up in a larger deregulatory push. This retrans dispute is between private parties. Smith can side step it if he wishes.

I can’t insist that Smith play peacemaker, but hope that he does. What until now has been a private feud will burst into the public policy arena if Fox or CBS or ABC starts shuffling affiliations around. Then, broadcasting will have a problem in Washington. Smith will have no choice but to get involved.

Smith should also keep this in mind: It all worked out for Fritts.

After leaving NAB, he opened his own lobbying shop and quickly signed on some well-heeled clients. He’s probably making more now than he did as NAB president.

And next Monday morning at the Las Vegas Hilton, NAB will present Fritts with its Distinguished Service Award, an honor that recognizes true industry statesmen.

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