Shut Down The FCC’s Retrans Rulemaking

The MVPDs continue to nag the FCC to regulate retrans, arguing that they are being forced to pay too much for broadcast signals. But new data from SNL Kagan once again confirms that broadcasters are being undervalued and underpaid by the MVPDs for their signals — and always have been. Broadcasters account for a third of the MVPDs' audience, yet they receive only 16.7% of the fees the MVPDs pay to programmers.

I see that the cable and satellite folks were back at the FCC, beseeching officials for help in warding off broadcasters with their retrans demands.

Reps of the American Cable Association, Mediacom and Dish pressed their case for rules that would weaken broadcasters’ hand in retrans negotiations or to replace the negotiation with mandatory arbitration.

The pay TV reps went down a list of fixes and assured the FCC officials that the agency had sufficient legal authority to impose any or all.

They didn’t get to their fundamental arguments — why the FCC should be considering any regulation of the negotiations at all. But we’ve heard them all before: broadcasters are charging too much and putting downward pressure on MVPD TV margins and upward pressure on subscriber fees.

And because of the broadcasters’ greed, they contend, negotiations are breaking down, broadcast signals are going dark on cable and satellite and widows and orphans are missing out on the NFL.

I’m sympathetic toward the ACA members, small cable operators who are being squeezed simultaneously by broadcasters and by the big cable programmers such as Turner and Disney, but ultimately unpersuaded.


I’ll leave it to others to say whether the cable programmers’ demands are justified (see Robert Prather’s recent comments: Basic cable is “crap”). I know that broadcasters’ are.

The one incontrovertible fact is that broadcasters are being undervalued and underpaid for their signals — and they have always been undervalued and underpaid.

I make this point for the umpteenth time because the latest retrans numbers are out from SNL Kagan, a unit of S&P Global Intelligence.

Its research shows that retrans revenue will continue to grow by nearly a third, from $7.7 billion this year to $10.1 billion in 2019. Good money, yes, but still not enough based on the audience that the broadcasters draw.

Broadcasters account for perhaps a third cable’s TV audience, yet the $7.7 billion amounts to only 16.7% of the fees the MVPDs pay to the countless basic cable networks and regional sports networks. In 2019, despite that big jump in retrans fees, the broadcasters will still be getting only 18.7% of the pie.

Until the gap is closed, it’s broadcasters who will have the right to gripe, not cable. Until the gap is closed, there is no reason for the FCC to step in to “reform” retrans.

Knowing that it can’t win the value argument, cable’s principal tactic has been to bang away at the idea that the blackouts are harming the voting public.

Such blackouts don’t happen often, but when they do, the cable PR machine kicks in so you would think (as some policymakers apparently do) that this is a genuine national crisis.

At the S&P Global TV & Radio Summit a couple of weeks ago in New York, NAB President Gordon Smith said that this is the only argument cable has that has gotten any traction. Lawmakers who ordered the FCC to consider regulating retrans “hate it when there is any kind of blackout.”

Nonetheless, Smith didn’t seem overly concerned that the FCC would take action that might significantly impact broadcasters’ ability to meet S&P Global’s projections.

That’s a testament, I think, to the NAB’s incessantly reminding policymakers that the blackout problem is bogus. “Let’s be clear,” Smith dutifully reported, “99% of … [retrans disputes] are resolved without any kind of disruption.”

Broadcasters also benefit from an appreciable amount of goodwill on Capitol Hill for the local service they provide, Smith said. Lawmakers are reluctant to endorse anything that might harm them financially, he said.

Meanwhile, I think the FCC is on to the MVPD’s game of creating retrans confrontations and blackouts to get the attention of Washington policymakers. Dish, among the most confrontational, has just about exhausted any sympathy it may have once enjoyed. It doesn’t seem to be winning friends in its on-going dispute with Tribune Media.

Speaking at the S&P Global conference after Smith, ACA President Matt Polka said he remains hopeful the FCC would do something to provide relief to the MVPDs — an anti-bundling provision, a stand still requirement, a ban on online blocking, mandatory mediation, elimination of the network non-dupe and syndex rules, something.

But the clock is running out. As even Polka acknowledged, the FCC has a full plate and FCC Chairman Tom Wheeler is counting down his days in office. (Traditionally, the chairman has departed with the president who appointed him.)

The consensus among the Washington reps I spoke with this week is that if the FCC does anything, it won’t be much, nothing that will significantly impact SNL Kagan’s growth curve for retrans revenue. In other words, Smith’s cautious optimism is warranted.

I would urge the FCC to act quickly and remove of threat of material retrans regulation that have cast a shadow of uncertainty over publicly traded station groups.

Citing the SNL Kagan figures, the FCC should confirm the retrans status quo and make clear that it has no intention of interfering with the private marketplace at least until someone provides evidence that broadcasters are asking for more than their viewership entitles them to. Case closed.

P.S. Here are some more fun facts from our friends at SNL Kagan. In 2006, retrans accounted for 1% of station revenue. This year, the percentage will swell to 24%, and, in 2022, it will stand at 31%.

The average TV station’s retrans fee per sub per month will rise from $1.40 in 2016 to $2.21 by 2022. The average masks a wide range of fees that are being collected by individual station groups. It stretches from $1.59 (Nexstar) to $1.16 (Sinclair) to $0.60 (Tribune).

The CBS O&Os were most dependent on retrans, deriving 45% of its revenue from it in the first quarter. Univision (41.5%) and Nexstar (38.1%) were right behind CBS. Tribune, whose biggest stations are not Big Four affiliates, get just 18.4% of revenue from retrans.

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

Comments (42)

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Wagner Pereira says:

July 1, 2016 at 3:29 pm

Yes, Wheelers days are counting down. However, the only person to hate the press more than Obama is Hillary. And on the off chance Trump actually won, depending on the day, he has no love for the Networks either.

Bob Dowden says:

July 1, 2016 at 3:33 pm

When the Broadcasters go dark and are only available to paying customers via MVPDs, OTT or tin can and string, then you can make the argument…until then, count the ble$$ing$ of the Comm Act AKA the Broadcasters Welfare and Retirement Act….#PullYourPlugJessell

    Wagner Pereira says:

    July 1, 2016 at 6:28 pm

    Cable’s free money from not paying for content ended and now all you an do is cry for the good old days when you could steal content. Cable Companies were no different then illegal warez sites on the internet today (or Aereo for that matter). Now it’s pay to play!

    Bob Dowden says:

    July 1, 2016 at 9:21 pm

    Steal? Really? I had broadcasters across the country BEG to be added to our lineups…BEG to extend their reach and improve the quality of their signals…we paid all the fees legally required – it was the crying’ B-casters who ran to the Government for a bailout…and got it.

    Wagner Pereira says:

    July 1, 2016 at 11:44 pm

    All fees legally required. Until you had to pay for content.

    Wagner Pereira says:

    July 2, 2016 at 12:04 am

    25 years ago many cities could not get rid of all their reclaimed water. They gave it to Golf Courses for free. Then they started offering it to residents. Water your lawn everyday! Take as much as you want! please! Then 5 years ago they started metering and charging for usage. Using your argument everyone should sue their local municipalities for now charging for reclaimed water that was free. Guess what, things change. That’s life!

    Wagner Pereira says:

    July 2, 2016 at 12:10 am

    20 Years ago Cable Systems put in Broadband Internet via RoadRunner, @home and others. Use all you want at the top speed we can deliver! Now MVPD’s want to change to a metered system – meter it out according to speed. Given your argument of new expenses, then perhaps MVPDs should give Top Speed and no caps as they did 20 years ago.

Brian Bussey says:

July 1, 2016 at 3:34 pm

the subscribers will ultimately decide this value.

    Kelsey Sharkey says:

    July 1, 2016 at 4:16 pm

    Yeah, right after they get to decide the value of all of the cable channels they’re paying for but never watch.

    Wagner Pereira says:

    July 1, 2016 at 11:55 pm

    Which is why they will decide on the value of the MVPD or go in other directions.

kendra campbell says:

July 1, 2016 at 3:43 pm

Around $120 a year for the “privilege” of watching free OTA television stations on cable. Ummm….no thanks.

    Keith ONeal says:

    July 1, 2016 at 9:07 pm

    I’d rather pay the $10 per month (than $78 per month for basic and internet) anytime!!!

    Wagner Pereira says:

    July 1, 2016 at 11:56 pm

    And you can put buckets outside to get free water instead of paying $100 a month for “free water” from the city water system.

simon wilkie says:

July 1, 2016 at 4:12 pm

Open STB ruling could create a direct to consumer a la cart scenario that would transition MVPD/ISP business models towards more of a IP common carrier allowing direct to consumer pricing and distribution.

Don Thompson says:

July 1, 2016 at 4:47 pm

“Honey, I missed 99 percent of the icebergs.” Last words of Capt. Edward John Smith, RMS Titanic …………….. Please Follow Me On Twitter: @TedatACA

    Wagner Pereira says:

    July 1, 2016 at 5:41 pm

    American Cable Ass. Ted’s math – 6/29/2016 “Sinclair ($SBGI), the largest TV station owner from here to Aldebaran, owns 165 TV stations or 990MHz total. The company has a $2.75B market cap based on Wall Street trading. And the FCC is paying $88.4 BILLION for 126MHZ or $701.5 million per MHz. That means Sinclair’s 990MHz is worth $694 BILLION based on the auction value today.” ROFLMAO

    Wagner Pereira says:

    July 2, 2016 at 5:35 am

    Are you better at Math than the ACA? Find the MISTAKE in the ACA’s 2014 Tax Form. I assure you it;s there, ROFLMAO. Absolutely AMAZING!

Don Thompson says:

July 1, 2016 at 4:48 pm

“Our safety record is 99 percent.” Harry Jessell’s Skydiving School … Please Follow Me On Twitter: @TedatACA

    Wagner Pereira says:

    July 1, 2016 at 5:42 pm

    99% of ACA Member’s Customers hate our service……

Don Thompson says:

July 1, 2016 at 4:48 pm

@nabtweets and the TV #cashcasters are involved in 100% of the signal blackouts | Please Follow Me On Twitter: @TedatACA

    Wagner Pereira says:

    July 1, 2016 at 5:45 pm

    MVPD’s are involved in 100% of the signal blackouts. 100% of the signal blackouts were because MVPD’s did not want to pay their fair share to Broadcasters.

    Cameron Miller says:

    July 1, 2016 at 7:11 pm


    Bob Dowden says:

    July 1, 2016 at 9:23 pm

    …or because broadcasters would not negotiate – its the broadcaster’s consent that is withheld that causes blackouts…..fact

    Wagner Pereira says:

    July 1, 2016 at 11:45 pm

    Fact, the MVPD could have paid (which they finally did) and prevented the interim blackout

Don Thompson says:

July 1, 2016 at 4:49 pm

“Never has the cost of free TV been so high.” Please Follow Me On Twitter: @TedatACA

    Wagner Pereira says:

    July 1, 2016 at 5:46 pm

    Never has the cost of MVPD’s been so high. In fact, even without paying ANY Retransmission, MVPD cost would be at an all time high.

    Veronica Serrano Padilla says:

    July 1, 2016 at 8:13 pm

    …with the rates ESPN and Disney charge you are quite correct.. no other alternative but to pass these outrageous programming charges to the customer…

Don Thompson says:

July 1, 2016 at 4:51 pm

“I’ll stop laughing when the author of this column supports the idea that every cable operator in the country should be able to negotiate retransmission consent with any TV station in the country.” Please Follow Me On Twitter: @MiltonFriedmanatACA

    Wagner Pereira says:

    July 1, 2016 at 5:49 pm

    As noted 50 times – and the author knows, every cable cable operator in the country can negotiate retransmission consent with any TV station in the Country FOR THE CONTENT THEY OWN RIGHTS TO. WTBS, WGN and other stations proved this point for years.

Don Thompson says:

July 1, 2016 at 4:58 pm

I just saw the FCC is going to eliminate the “free market” UHF discount, a broadcaster-invented loophole which allows Sinclair $SBGI to reach 78% of U.S households when the legal limit set by Congress is 39%. Every time I hear the words “UHF discount,” I start comparing it to the carried interest tax loophole, which means the people who vacuum NAB’s offices each night pay a higher margin tax rate than the private equity executives engineering the massive TV station consolidation wave ….. Please Follow Me On Twitter: @TedatACA

    Wagner Pereira says:

    July 1, 2016 at 6:25 pm

    American Cable Ass. Ted – You JUST saw this news? Seems you do not follow the News closely as you are too busy spamming sites. But regardless, considering your major MATH ERROR 2 days ago, one would think you would be extra careful in your statements. But once again you FAIL. Sinclair has TV stations in 79 of the 210 Markets – not 78% of the US Households. In fact, because most of the markets lower ranked DMA, the actual TVHH in USA that Sinclair reaches IS ONLY 37.66% WITH NO UHF DISCOUNT. Once again, MAJOR FAIL TED. How can anyone believe ANYTHING that comes out of your mouth?

Don Thompson says:

July 1, 2016 at 5:01 pm

How about an “ACA discount?” Under this FCC rule, ACA members would pay retransmission consent fees equal to one half of what Comcast pays in retransmission consent to NBCU — which, as we all know, as an accounting matter is zero. Yes, ACA members would gladly pay 50% of zero any day and sign the contract without even reading it. Please Follow Me On Twitter: @TedatACA

    Wagner Pereira says:

    July 1, 2016 at 5:51 pm

    American Cable Ass. Ted – How about the ACA and NCTA shut down so Customer’s Bills will go down when not funding your spam?

    Veronica Serrano Padilla says:

    July 1, 2016 at 8:18 pm

    Couldn’t the same be said for shutting down NAB? After all, NAB charges TV stations for all the lobbying (rather successful lobbying one should add) they do and that cost ultimately is reflected in what MVPDs are charged.. You know, what’s good for the goose is good for the gander…

    Wagner Pereira says:

    July 1, 2016 at 11:53 pm

    TV would charge same price in Retransmission with or without NAB or NAB Membership based on comparative prices MVPD pay other Channels. MVPDs will charge consumers for ACA/NCTA fees regardless, so no, not the same.

    Wagner Pereira says:

    July 2, 2016 at 5:28 am

    @RidgelineTV – Seems you are as good as American Cable Ass. Ted in checking your figures. From 2014 (as NCTA and ACA cannot file their taxes on time) NCTA Membership Dues $61,534,072 + ACA Membership Dues $4,101,184 = Total Membership Dues of $65,635,256. NAB Membership Dues (THIS IS TV AND RADIO) $13,010,240. Even if you give 50% of NAB to TV (instead of a more likely 66%), that is still only $6.5M from TV Stations. So the ACA and NCTA clearly are taking much more than the NAB from their Membership that has to be recouped!

Ellen Samrock says:

July 1, 2016 at 5:06 pm

This is nothing more than Ted-spam and should be treated as such.

Bob Dowden says:

July 1, 2016 at 9:24 pm

Ted Hearn speaks the truth – and broadcasters can’t handle the truth…

    Wagner Pereira says:

    July 1, 2016 at 11:50 pm

    As proven multiple times this week, American Cable Ass. Ted is having a rough week now that ACA filed AGAINST their biggest member at FCC and worrying about what happens to his job when Dish says goodbye. Must be hitting it pretty hard this week with all the mistakes that a 3rd grader would never make.

    Ellen Samrock says:

    July 2, 2016 at 1:56 am

    The only “truth” I’m seeing here is Harry’s column–statements backed by facts. I have never read anything Ted has written that is even remotely true. What he writes is little more than petty grievance-mongering surrounded by a reality distortion field with a dash of sour grapes thrown in for bad measure.

    Wagner Pereira says:

    July 2, 2016 at 5:31 am

    American Cable Ass. Ted not doing a very good job this week of earning his $151k salary.

    Don Thompson says:

    July 2, 2016 at 8:01 am

    Dish is not an ACA member. Please Follow Me On Twitter: @TedatACA