Five media executives testified 11/17/10 before the Senate Subcommittee on Communications, Technology and the Internet on the subject of retransmission consent, two from big cable companies, two from big broadcasting companies and one from a small cable programming service. Click through for a summary of what each had to say.
* Glenn Britt, President and CEO, Time Warner Cable: Reform is needed. Congress created retransmission to subsidize broadcasting, but back then both were virtually monopolies. Now they occur in a vastly different environment. Broadcasters are still monopolies, but cable has robust competition, and broadcasters play one off the other to extract unreasonable concessions. TWC wants the FCC to exercise new rules to protect consumers. Despite wide support and a growing number of disruptive disputes the FCC has failed to act. Consumers bear the brunt of the FCC’s inaction. Broadcasters are clearly willing to hold consumers hostage by pulling programming as a negotiating tactic. Higher fees will ultimately be paid by subscribers. TWC agrees that free markets are preferable, but retransmission is not that, it is a special privilege given to broadcasters along with must-carry, market exclusivity and free access to the airwaves. Congress should encourage FCC to pursue rule-making to protect consumers, as well as pursue legislative changes.
* Joe Uva, President and CEO, Univision Communications Inc.: Univision stations traditionally used must-carry just for that, without compensation. This was helping propel the growth of the distribution partners. First began seeking fair compensation in 2008. Univision has successfully negotiated over 150 agreements, without disruption of service. Company required addition resources from dual revenue stream. Viewership is larger than many other programming sources. Also enters into partnership with MVPD partners, such as VOD service. There have been no problems in these negotiations, because both sides have an incentive to get a fair deal completed – both lose money and audience otherwise. We are concerned that a government mandate forcing programming to continue during a dispute takes away necessary leverage to the detriment of the broadcaster, and incentivizes the MVPD to avoid good faith negotiation.
* Tom Rutledge, COO, Cablevision Systems Corp.: Kerry draft legislation is a good starting point for fixing the retransmission system. The current set-up is not a free market negotiation, and since the government created it, only the government can fix it. Broadcasters get a government sanctioned in-market monopoly for the provision of national network programming. Plus cable has to offer the stations to subscribers whether they want them or not. Must-carry gives broadcasters unfair leverage. Cable can’t dump a station during sweeps but broadcasters can pull the channel any time. Broadcasters also abuse the process to gain coverage for their own cable channels. FCC can start now – limit agreements to the carriage of broadcast only. Require transparency – fees should be public. Stop discrimination between competing MVPD platforms.
* Chase Carey, Deputy Chairman, President and COO, News Corporation: Proposed rates in recent negotations have been more than fair, yet Fox was asking for a fraction of what the top cable channels get. We’re already seeing major sports migrating to cable; and loss of revenue could eventually lead to the loss of local news programming. IN the new environment, broadcasters need the same dual revenue streams competing cable channels get. The negotiation process is not broken – most negotiations are concluded successfully, and broadcasters are asking for far less than systems pay for channels with far fewer viewers. Fox tried to work with Cablevision for over a year with no luck, even though Fox was asking for exactly what it was getting from a direct competitor. Everyone should take note that Cablevision is a repeat participant when disruption of service occurs and it is not a coincidence. Retrans is experiencing growing pains because broadcasters are relatively new to the game, but it will settle down as soon as distributors recognize their need to pay a fair price.
* Charles Segars, CEO, Ovation: Ovation is a viable, independently owned service. The detrimental effect of retrans affects channels like Ovation. The old rules are outdated, and the words ring true for an independent producer. It enables the largest broadcast companies to bundle channels and demand higher fees. They want to get paid for local broadcast, and cable channels the broadcast demands allowed them to launch in the first place. Retrans will top $1.3B in 2012, and distributors will have to tap subscribers for the cash, and it will kill off services like Ovation.
Pictured: Univision’s Joe Uva