Deadlines on year end carriage contracts between broadcasters and pay TV companies have come and gone, and the usual suspects in DC Telecom World are trying to draw attention to a handful of retransmission consent impasses. The American Cable Association, joined by the American Television Alliance — a DC front group for the biggest pay TV operators — have yet again jumped at the opportunity to create a narrative that serves their self-interest.
“Retrans isn’t working and we need government to fix it for the sake of consumers” screeches ACA and ATVA. And if you are willing to blindly believe a yarn weaved by pay-TV companies pocketing billions in profits, maybe that’s a storyline you’ll follow.
But it is a new year and we are all making resolutions to be our best. So let’s look beyond the pay TV rhetoric and take a look at the facts:
First, the notion that ATVA and ACA members are “just trying to protect consumers” is absurd. Laugh out loud absurd. “Anthony Wiener Is a Good Role Model” absurd. Need evidence? Then just look at the history of anti-consumer pay TV behavior (annual rate hikes at twice the rate of inflation; abysmal customer service, etc.). It’s a sad and sordid tale, and it’s no wonder the list of ATVA and ACA members are considered among the least liked businesses in America.
Take DISH, for example: accused by the Justice Department of violating the “Do Not Call” list; settling with state AGs to reimburse customers in Wisconsin, Colorado and Washington; and trying to collect a debt from the wrong person. Here’s what judges, regulators, and citizen’s groups have said about DISH.
That DISH and the big pay TV companies continue to bankroll the ATVA effort to “fix” retransmission consent should come as no surprise. After all, DISH was involved in 63 percent of the station level programming disputes in 2015 and 2016. DISH is also the leader in a cynical ATVA/ACA-backed hardball strategy that goes like this: Forget the impact on viewers. Just force enough programming “blackouts” to get Congress and/or the FCC involved.
“Blackouts” That Weren’t
Indeed, ACA and ATVA talk a good “blackout” game in those rare instances of a retransmission consent impasse. What they don’t admit is that a broadcast signal is never truly “blacked out.” Local TV always remains available to viewers via an over-the-air antenna.
Moreover, broadcast TV is also on alternative pay TV platforms in the event of a retrans disruption — something you’ll never hear from ACA or ATVA. The reason? Because their members create a web of roadblocks centered around early termination fees (ETFs) that disincentivize customers from switching to a pay TV competitor. It works like this: When a cable customer is affected by a carriage impasse, she’s often stuck in a long-term two-year contract. ETF fees can be as high as $480, a clever business model designed to trap customers from switching to another pay TV service.
So much for being “pro-consumer”.
Here’s another topic you’ll never hear from ACA and ATVA: refunds to viewers for loss of service after a retrans impasse is resolved. Why? Because they don’t offer them.
No big surprise, perhaps, because ATVA and ACA members also don’t give refunds for frequent “blackouts” of pay TV service caused by sorry service or passing thunderstorms. Funny, but for all the professed “concern for consumers”, our ACA and ATVA friends don’t tell you about downdetector.com. That’s an independent website launched out of frustration over scores of pay TV “blackouts” of local TV stations related to lousy ATVA/ACA member customer service. (And in case you were wondering, the number of “blackouts” because of weather and bad service far outnumber the few retrans impasses that occur every year).
Also conspicuously missing from their rhetoric? The fact that retrans fees are just a fraction of the programming fees paid for basic cable channels, regional sports networks, and premium channels. This despite broadcast stations typically averaging much-higher viewership than these channels. Just one example: 47 of the top 50 shows from the 2015-2016 season were on broadcast TV.
So now that the “pro-consumer” hypocrisy of ATVA and ACA has been exposed, let’s state an unvarnished truth about broadcasters: Local TV stations are not in business to deny people our programming. A loss of viewers means loss of ad revenue. Because, unlike the cozy world of pay television, broadcasters don’t get away with charging for a service we don’t provide.
That’s why 99 percent of retransmission consent negotiations are successfully completed — with little commotion and no disruption to viewers. You would be hard pressed to find an example of a 99% success rate considered a failure (I know, Siri told me).
Let’s recall that the Federal Communications Commission has looked time and again at the issue of retransmission consent, and has wisely chosen not to meddle in the free market. The FCC, under former Chairman Julius Genachowski and current Chairman Tom Wheeler (neither of whom will go down in FCC annals as “pro-broadcaster”) conducted thorough retrans reviews. Both the Genachowski FCC and Wheeler FCC ruled against tipping the retrans scales in favor of ATVA and ACA.
Per Wheeler: “What we need is not more rules, but for both sides in retransmission consent negotiations to take seriously their responsibility to consumers, who expect to watch their preferred broadcast programming without interruption and to receive the subscription TV service for which they pay.”
Value of Localism
Broadcasters do take seriously our responsibility to consumers –the tens of millions of viewers who tune in to local TV every day. That’s why stations re-invest retransmission consent coin into local news, investigative journalism, lifesaving emergency weather reports, charity fundraising, AMBER Alerts and, of course, the most watched programming on television.
Retransmission consent revenue also enables broadcast networks and local TV affiliates to continue carrying the NFL playoffs, the Super Bowl, the World Series and The Masters. On broadcast television, those shows are available to everyone, and most importantly to the nearly 20 percent of Americans who can’t afford or choose not to subscribe to pay TV. If ATVA and ACA have their way, all marquee sporting events will migrate to a pay TV platform. Any guess who would foot the bill for that?
Bottom line: ATVA and ACA members have spent more than three decades decrying government intervention in the pay TV business. “Keep Washington Out” has been pay TV’s rallying cry beginning with 1984 cable deregulation. That continued with the 1992 Cable Act and the 1996 Communications Act, and is the pay TV mantra today over issues like net neutrality, ISP privacy regulation, and the AT&T/Time Warner merger.
Yet when it comes to free market broadcast/pay TV retransmission consent negotiations, ATVA and ACA are first in line, hat in hand, clamoring for help and salvation from Washington. The game plan of some ACA/ATVA members seems well-rehearsed: Refuse to engage in serious retrans negotiations; try to force a disruption in service; blame “greedy” broadcasters for difficult negotiations; and whatever you do, don’t acknowledge that the vast majority of retrans deals are completed successfully. And oh yeah, hope for a Beltway bailout.
We won’t hold our breath, but perhaps 2017 will be the year when the ACA/ATVA game playing stops. That truly would be a benefit to all pay TV watchers.