RETRANS REFORM GAINING TRACTION ON HILL

For the first time in more than a decade, TV broadcasters are starting to hope that they may eventually be able to extract cash from cable operators in retransmission consent negotiations. The hopes are boosted by the success of Nexstar and by the public assertions of CBS and Univision that they will settle for nothing less than cash in their next go-round with the operators.

But the high hopes could be deflated by Congress. Efforts by small and rural cable operators to limit broadcasters’ hard-earned retransmission consent rights are gaining ground in the Senate. Senator Ted Stevens (R-Alaska), the powerful chairman of the Senate Commerce Committee, has heard small operators’ complaints that they are being squeezed hard by broadcasters for cash and for carriage of affiliated cable networks. Responding to my e-mail, a Commerce Committee aide said yesterday that retrans could be addressed this year in planned DTV legislation—the very same legislation that broadcasters are counting on to carry their multicast must-carry provision and restore the broadcast copyright flag.

Stevens also thinks it might be necessary to examine retrans as part of the indecency debate. Some of the networks’ retrans deals tie carriage of broadcast channels with carriage of not-so-nice cable networks. Indecency is a hot button issue for several of Stevens’ colleagues on the committee, including Senator Jay Rockefeller (D-W.Va.) and Mark Pryor (D-Ark.).

While there’s not as much retrans heat in the House, the matter has attracted the attention of Republican Nathan Deal (Ga.) and Democrat Ed Markey (Mass.). Late last year, they and seven other Energy and Commerce Committee members urged FCC Chairman Kevin Martin to review retrans as part of the agency’s examination of family friendly tiers and a la carte cable offerings.

Leading cable’s charge is the Pittsburgh-based American Cable Association with its 1,100 independent small and rural cable companies. ACA also wants to revise network non-duplication and syndicated exclusivity rules. According to ACA President Matthew Polka, those rules make it hard for small cable systems to shop around and find better carriage deals from TV stations in the next market. And Polka says ACA members want to be able to offer stand-alone broadcast basic tiers as satellite does.

“Our problem is not with the small independent broadcasting groups,” Polka says. It’s the networks and groups like Sinclair, Hearst-Argyle, Nexstar and Gannett that are using their market dominance to cause the “lion’s share of the problems.”

Polka is particularly disturbed by some broadcasters’ practice of using retrans to leverage carriage of affiliated networks. “That’s what’s jacking up rates and forcing cost and content on consumers,” he says. “It’s no longer about promoting the local signal and making sure that there’s local programming available; it’s about corporate revenue and profit.”

NAB President David Rehr believes cable operators face “an uphill battle,” given an FCC report that says that retrans in working just as Congress intended it to.

Rehr is probably right. It is an uphill battle, especially since the National Cable & Telecommunications Associates has decided not to enter the fray out of deference to programming members who are beneficiaries of retrans. But the ACA is not alone. Big operators like Cox, Insight Communications and Bright House Networks are also working the issue.

And uphill battles can be won.