Retrans Good Place For Net-Affil Cooperation

There was a time when the affiliates had the upper hand in their partnerships with the networks. But that was long, long ago. The networks are clearly in charge. now.

They distribute their programming — once exclusive to the affils — on any just about any platform where they can make a buck, they demand tribute in the form of reverse comp and they crush any of their affiliates’ digital initiatives if it involves their programming in any way.

The networks dominate because they can. If an affiliate gets out of line, the network can turn to another station or move into the market with an O&O.

Nobody knows this better than Ed Ansin, the owner of the NBC affiliate in Boston, WHDH. NBC didn’t necessarily want to discipline Ansin, although he has been a troublesome partner over the years.

According to NBC, it simply wanted to  leverage the resources of its cable news network (NECN) and Spanish-language station (WNEU) in DMA 8 by launching its own station there. So, it has informed Ansin that it would not be renewing their affiliation agreement when it expires at the end of the year.

With just the one NBC affiliate, Ansin is in a weak position. But he’s a fighter and he says he will challenge the move at the FCC. I hope he is not counting too heavily on winning there.

The somewhat strained state of network-affiliate relations turned up in a surprising place last month — the FCC proceeding that is considering imposing new rules on retransmission consent negotiations to weaken broadcasters’ hand and appease MVPDs that have been whining about broadcasters having an unfair advantage.

In joint comments, the Big 4 affiliates associations dutifully dismiss the MVPDs complaints and argue against rules that would tilt the negotiations in the MVPDs’ favor. But about two-thirds in, they go after the broadcast networks, demanding a rule that would bar them from pressuring affiliates to allow them to negotiate retrans deals for them.

The networks should not be permitted to “confiscate or hijack the retransmission consent negotiation rights of their affiliates, either directly or indirectly through the threat of disaffiliation or the imposition of less advantageous affiliation terms,” the affiliates say.

“[A]any attempt by a … network to appropriate the statutory right (indeed, statutory responsibility) of an affiliate to negotiate retransmission of the affiliate’s signal raises fundamental questions of network overreach in violation of the core policies underlying the commission’s separate and longstanding network affiliate rules. It also raises a basic issue of abdication of licensee responsibility.”

That’s strong stuff.

The affiliates’ argument goes on in terms of their public interest responsibility, the kind of stuff that appeals to the FCC. Left unsaid is the real reason I believe the affiliates would like such protection, which is they don’t particularly trust the networks to negotiate retrans for them.

If a network “hijacked” the negotiations, the affiliates might never know how much the network was getting from the MVPD and, consequently, how big a share they were getting.

The affiliates also might never know if the network was charging less for retrans so that it could bundle in some of its cable networks.

The network would assume near total control over what’s become a vital revenue stream for the affiliates.

Under certain conditions, with guarantees of complete transparency, the affiliates might want the networks to represent them. After all, the clout that would come from fronting for 200 stations would likely yield the maximum possible retrans dollars.

But the affiliates don’t want to be forced into such arrangements and they apparently believe that an FCC rule might be the best safeguard to insure they won’t be.

I’ve called around on this and I don’t believe that the networks are currently trying to butt into retrans negotiations with the MVPDs.

However, the networks have taken the lead in similar negotiations with a couple of OTT distributors that want to include broadcast signals in their so-called skinny bundles — Apple TV and Sony PlayStation Vue,

In fact, the networks have blanket deals with Sony, and at least two, CBS and Fox, are now actively peddling them to the affiliates. Of the two, CBS is making more headway with the affiliates, I’m told. That may be due in part to the goodwill  CBS built up with its in-house OTT service, CBS All Access, which cuts in affiliates for what they feel is a fair share of the monthly subscription fee.

Apple TV has pulled back on its OTT ambitions, but it has not abandoned them. When they return, I would presume that it would prefer to work out something with the networks rather than all the individual affiliates.

These OTT deals are not retrans per se, but they amount to the same thing. They rely on straight copyright law with broadcast signals being treated more or less as cable networks.

If the networks can behave themselves and demonstrate to the affiliates that they can be trusted in making the OTT deals (transparency and no bundling), they may be able to convince the affiliates to tap them as their agents in dealing with the MVPDs on retrans as well.

And down the road, that may be the way to go. MVPDs are digging in on retrans and the FCC just might use the retrans proceeding to make things more difficult for broadcasters in the negotiations.

Perhaps 2016 will be a year in which the networks and affiliates, for the sake of keeping retrans spigot gushing, develop a little more peace, love and understanding.

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