NCTA estimates that as many as 5K retransmission consent contracts will expire at the end of 2008. Another cable system is looking for a six-month moratorium on for any new agreements. The NAB has offered a four week quiet period. What, if anything, is going to give?
The ultimate argument for a moratorium of any kind is to minimize consumer confusion on 2/17/09. When retransmission negotiations get ugly, on occasion broadcasters pull their station from a system or cable operators lock it off. If a station is unavailable on DTV day, the idea is to provide certainty to consumers that they have a reception problem of one kind or another, not a local retransmission squabble.
The ACA, which represents smaller cable systems and operators, has been particularly concerned with the entire retransmission process. "Broadcasters are increasingly taking advantage of the opportunity to use customers of cable operators as ATM machines," says ACA’s Matt Polka. He argues that broadcasters, squeezed from dwindling revenues from more traditional income sources, are trying to make back lost ground on the backs of cable operators.
Broadcasters counter that the programming they provide is of great interest to cable subscribers and has value to the operators. Broadcasters are entitled to compensation for this just as Disney is entitled to compensation for ESPN.
ACA is proposing a moratorium which would kick in before most existing retransmission contracts expire 12/31/08, that would last all the way to 5/31/09. The NAB has offered a two week window on either side of the deadline day, which would run from 2/4/09-3/4/09. NAB argues that any longer window is unnecessary. In the first place, negotiations between broadcasters and cable operators rarely become so rancorous as to cause the temporary loss of a station, and the four-week window will give consumers more than enough time to address real station reception problems without needing to worry about whether or not it’s a negotiation tactic. Even if it were such a thing, NAB pointed out, these situations have been amply reported in the local press and particularly by the broadcast stations and cable system on either side of the table, making it highly unlikely that a viewer of either would be unaware of the situation.
During testimony before the House of Representatives last week, FCC Chairman Kevin Martin said that imposition of a quiet period is under consideration which would ask for three weeks on either side of the deadline.
RBR/TVBR observation: The relationship between broadcast and cable operations has been in flux since the beginning of cable. In cable’s infancy, broadcast was almost the only thing cable had to offer – it was essentially a way to sell television stations to people who lived beyond the natural broadcast contour of a television station. The birth of HBO and the advent of subscriber/advertiser supported basic cable channels dramatically changed the equation, and the market realities of the new millennium are changing it again. It seems to us that the cable organizations are seeking to use the DTV transition to somehow gain leverage on the utterly unrelated retrans debate. While a six month moratorium would no doubt seem heaven-sent to them, there is no realistic need for three months of quiet on either side of the DTV deadline.