Saturday, September 06, 2014

Opinion: local TV versus distributers (caution: nerdy)

Nobody asked me, but here's my opinion on the too-often carriage contract disagreements between local TV stations and services that distribute TV over cable or satellite (right now KOLD-13's parent company is in a contract dispute with DirecTV resulting in customers being unable to watch KOLD's programming). This opinion doesn't apply to cable-only channels such as Discovery, Fox News, etc.

Local stations are licensed by the federal government and are available over the air for free. In some areas, because of terrain, mountains, distance, etc, a local station might not be available over the air to your location. Cable TV originally started as a way to get local channels to fringe areas. Over time, other cable TV channels came along such as Discovery, Food Network, CNN, etc).

Local TV stations make their money by selling advertising. In the last few years, however, they've been able to charge distributers such as Comcast, DirecTV and others for the right to carry their programming. This often amounts to very large amounts of revenue to the TV station, and an incentive to create these carriage disputes, often at the expense of service to their local area.

I'm all for content creators such as local TV stations being compensated for their programming. However, these programs are already available in their license area for free over the air. Because they are licensed to serve their communities, and potentially because it could  be a matter of public safety (weather, local emergencies, etc), customers who are eligible to receive a local station's programming because they live in that area should be able to get the programming for free, regardless of if it is over the air, via cable, or satellite.

When these disputes happen, the two companies often point fingers at each other - blaming the other for the unfair treatment or alleged increased costs of carrying the programming. They place their customers in the middle, with each one asking their customers to call the other company and lodge their complaints.

It's my opinion that distributers should be REQUIRED to carry all local TV stations in a service area that they want to do business in. Local TV stations should be PROHIBITED from gouging distributers like cable and satellite companies for retransmitting their programming.  Both distributors and local TV stations should be PROHIBITED from placing their customers in the middle.

In general I'm not a fan of federal regulation, but because neither side can be trusted to play well with the other (proven time and time again by Raycom vs. DirecTV, Time Warner Cable vs. Fox, and others), in the event that broadcasters and distributers can't come to an agreement, which results in the TV station pulling their programming from the distributer, the distributer should be allowed to substitute programming from an adjacent market. In the current example of KOLD-13 vs. DirecTV, DirecTV would be allowed to substitute programming from the local CBS station in Phoenix. This would continue to provide at least semi-local service to the community in lieu of the disputed station.

Broadcast radio and TV are, in many cases, essential to public safety. They are licensed to their service areas with the expectation of local public service. They should be available without interruption to customers who desire them.

I understand that it is costly to run a TV station. TV stations must be careful not to abuse this arrangement, or else they risk wind up facing government regulation in this area. Pulling their signal from the distributor is a disservice to their viewers and means they are reneging on their promise of service to their community - which should be grounds for license revocation. THAT should be the negotiating power on behalf of the citizens on the community the TV station serves.

If local TV stations want to become pay-TV stations, then they should be free to do so, if they agree to give up their broadcast license. It would then be assigned to someone who agrees to serve the community.

Putting the viewer in the middle of this dispute serves nobody.

Lastly, this dispute doesn't affect me because although I'm a DirecTV customer, I have east and west ABC, CBS and NBC and FOX, and am grandfathered in. So I'll be watching the NFL on either WCBS-New York or KCBS-Los Angeles tomorrow. Who wants to come over??


Kevin Gossett said...

Well said, Buzz! Those in charge of the current paradigm (Networks, Cable Satellite) are terrified of the disintermediation coming, where the people who produce the content are able to contract with individual consumers of their work. There will come a day when you don't wait for the September 9th premiere of "Sons of Anarchy" on F/X, you wait for the release of the "Sons of Anarchy - Season 7" APP that costs $24.99. Who needs Cox, Dish or Time-Warner? Kurt Sutter gets my money and I get the show.

Until then, the providers are just fighting over a bunch of meat on the floor, determined to get as much as they can before it spoils.

Anonymous said...

You're leaving out several key facts in many of these retransmission battles.

I worked for a station where they were introducing these fees for the very first time, and they entered into a brutal battle with DISH Network.

Here's what I learned from talking to the station's owner some years back.

First, before retrans fees because the norm for several broadcast entities, cable and satellite providers would take that free signal provided over the air and charge a markup for it, which should be illegal because, as you say, it's essential to public safety.

This is actually public knowledge if you look at your bills. Cable/satellite providers have gouged consumers for years, charging for what's already freely available.

Second, networks like NBC and others in years past would pay affiliates for the usage of their programming. Now they charge -- per viewer -- which represents a markup that many stations have to figure out a way to equal out without causing layoffs.

In the case of my former employer, they began charging in order to avoid that. DISH, which had been profiting from those viewers for a number of years without paying a dime, refused to pay for the signal, and the station cut them off.

I look at it like this: charging for a free signal isn't justified at all. It's just plain wrong.

But when an affiliate is already being charged for its subscribers/viewers (many of which are on cable and satellite), how is it wrong to pass some of that charge on to the cable/satellite providers in question?

The short answer here: it's not.